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Profiled trade policy events:
(i) Underway, in Harare: Trade Law Centre, in collaboration with Zimbabwe National Chamber of Commerce and Zimbabwe Network of Customs and Excise Experts, are hosting a AfCFTA awareness workshop in Harare (16-17 April).
(ii) Underway, in London: Commonwealth Business Forum 2018 (16-18 April). Follow #CBF2018 for Twitter updates
(iii) Underway, in Durban: BRICS Customs Cooperation Meeting (16-19 April)
(iv) Starting tomorrow, in Kampala: EAC meeting to develop a OSBP performance measurement tool
(v) Diarise: India-South Africa Business Summit (29-30 April, Sandton)
Rwanda: AfCFTA bill headed for Lower House (New Times)
Following Wednesday’s cabinet approval of the African Continental Free Trade Area (AfCFTA) agreement, the first major domestic step toward ratification of the trade framework, the instrument is now ready to be tabled before the Lower House, officials have said. The Director of External Trade at the Ministry of Trade and Industry, Alice Twizeye, told this newspaper that all the ministry was waiting for now is for parliament to set the date when the Executive will introduce the bill on the floor of the House.
Kenya in all-out bid to host crucial global trade forum (Daily Nation)
Kenya is planning to roll out a massive diplomatic offensive in a bid to host over 3000 international delegates for the 12th World Chambers Congress. A delegation of top officials from the Kenya National Chamber of Commerce and Industry was in Beijing to bid for the global forum slated for July 2021.
Egypt’s exports to South Africa increased by 69% in 2017 (Egypt Independent)
Egyptian commodity exports to South Africa in 2017 increased by 69%, reaching about $99m, compared to $58.5m in 2016, Trade and Industry Minister Tarek Qabil announced. Egyptian imports from South Africa declined in 2017 by 14% to $181m, compared with $210m in 2016. The minister said the coming period will witness further growth in the trade size between Egypt and various African countries, especially in light of the launching of the African Free Trade Zone in March in the Rwandan capital Kigali.
Towards improved Nigeria-South Africa relations (ThisDay)
A delegation of Nigerian businessmen under the aegis of Nigeria-South Africa Chamber of Commerce was in South Africa recently on a mission to help stimulate trade between the two biggest economies in Africa. The Lagos-based chamber was inaugurated 18 years ago to encourage trade between both countries and this particular visit was just one of many over the years. However, there was added significance considering it was the first trade mission by the chamber since the leadership change in South Africa with a new President Cyril Ramaphosa - himself a renowned businessman and former Chairman of MTN - at the helm of affairs.
Senegal economic update: recent growth drivers, the role of agriculture in developing a resilient and inclusive economy (World Bank)
Senegal’s economy maintained its wide‐based, strong growth in 2016 and the first half of 2017. GDP growth accelerated from 6.5% in 2015 to 6.7% in 2016, positioning Senegal among the fastest growing economies in the African continent. All sectors of the economy contributed significantly to growth in 2016 with services being the sector that contributed the most due to its large size as a share of GDP. Until mid‐2017, growth maintained its strong performance, though at a slightly slower pace (from 6.4% in H1‐2016 to 5.6% in H1‐2017) mainly due to a deceleration in the agriculture sector. Exports remained the main driver of growth from the demand side, as it continued its rapid expansion due to recent reforms and a robust external demand. The solid performance of exports, which grew on average by 10.5% in 2015‐2016, resulted from stronger foreign demand in addition to structural and sector reforms implemented over the past years. Other demand components performed well, but their role as growth drivers were not as strong as exports.
Liberia: Rapid eTrade Readiness Assessment (UNCTAD)
The governments of the Lao Peoples’ Democratic Republic, Myanmar and Liberia – among the world’s least developed – are looking to new horizons and e-commerce to boost trade and create jobs. Each country asked UNCTAD to carry out a Rapid e-Trade Readiness Assessment to guide them in building the right “e-commerce ecosystems” and provide their policymakers with a blueprint for harnessing the economic and developmental potential offered by online trade. The reports were showcased on the first day of e-Commerce Week on 16 April. Mr Tarpeh highlighted the importance of this assessment for Liberia – the first of its kind that UNCTAD has carried out in Africa. “When shaping the right framework for e-commerce in Liberia, at stake lies not only our innovation capacity, but also the need to repair the broken linkages between our local industries and across our country. E-commerce is as much about widening our frontiers as creating much needed jobs, particularly for our youths and women-led small and medium-sized enterprises,” he said. [Data privacy: new global survey reveals growing internet anxiety]
East Africa’s used clothing sector: commentaries by Anzetse Were (Why banning mitumba is a bad idea) and Ngovi Kitau (Cotton returns as used clothes)
Central Corridor Transport Observatory: funding update (Africa Business Communities)
TradeMark East Africa and the Central Corridor Transit Transport Facilitation Agency have signed a financing agreement geared towards strengthening and enhancing the Central Corridor Transport Observatory. The financing will specifically improve monitoring of the Central Corridor performance in order to support evidence-based advocacy and decision making to remove trade barriers. To that effect, TMEA will provide a total of $1.3m over a three-year period from 2018 to 2021.
WCO’s Working Group on E-Commerce finalises the Framework of Standards on Cross-Border E-Commerce
Through the course of 4 days, delegates were intensely engaged in constructive and robust discussions that led to the finalisation of a draft Framework of Standards. This draft Framework of Standards will be submitted to the April 2018 Permanent Technical Committee and the June 2018 Policy Commission and Council for their consideration and adoption. This Framework of Standards is expected to be a comprehensive instrument for assisting WCO Members in developing E-Commerce strategic and operational frameworks, working in close cooperation with E-Commerce stakeholders. It will be equally useful for Members who are seeking to enhance existing frameworks in order to effectively meet the requirements of new and evolving business models.
Africa Climate Week: Africa crafts message of sustainability for international climate negotiations (UN Climate Change)
“Africa can, should and will be the leader of ambitious climate change action in the world,” said David On’are, a Director at Kenya’s National Environment Management Authority, citing a key message coming out of regional ministerial discussions that took place this week in Nairobi. “There is the need to raise ambition, interest, innovation and mobilize the necessary means of implementation to address climate change.”
Today’s Quick Links: India’s exports as percentage of GDP lowest in last fourteen years India’s trade deficit nearly doubles to $87.2bn in FY18 India’s trade deficit with China up twofold in a decade to 2016-17: can India benefit from US-China trade war? GSP review: $5.6bn Indian exports may be hit as US weighs tighter policy Hannah Ryder: Why poor countries won’t lose out from the US–China trade war Mozambique thermal coal to compete with South Africa for MENA market South Africa’s wheat import tariff revised downward by 45% Kenya: Sugar prices fall as millers compete with cheap imports South Asia Economic Focus: jobless growth? East Asia and Pacific Economic Update: enhancing potential |
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Rwanda: AfCFTA bill headed for Lower House
Following Wednesday’s cabinet approval of the African Continental Free Trade Area (AfCFTA) agreement, the first major domestic step toward ratification of the trade framework, the instrument is now ready to be tabled before the Lower House, officials have said.
The bill could be tabled before parliament as early as next week when lawmakers return from recess for an extraordinary session, The New Times has learnt.
The Director of External Trade at the Ministry of Trade and Industry, Alice Twizeye, told this newspaper that all the ministry was waiting for now is for parliament to set the date when the Executive will introduce the bill on the floor of the House.
“We are happy that cabinet has approved our draft document and are ready to move to the next step, which is tabling the bill before the Chamber of Deputies,” he said.
The bill is expected to be tabled by the Minister for Trade and Industry, Vincent Munyeshyaka.
The trade deal was signed by 44 African countries during the 10th extraordinary summit of the African Union in Kigali last month. The framework, agreed after years of negotiations led by the African Union, seeks to create the world’s largest trade bloc.
At the signing event on March 21, the African leaders agreed that countries would be given six months to conduct further internal consultations and go through the requisite domestic ratification processes.
MP John Ruku-Rwabyoma, a member of the parliamentary standing committee on Foreign Affairs, Cooperation and Security, said he does not anticipate any difficulty in passing the instrument in parliament.
“Most parliamentarians support this continental trade deal,” he told The New Times. “It will sail through parliament without significant resistance.”
Rwanda becomes the second country after Kenya whose cabinet has backed the trade framework, with several other countries, including Nigeria, which is yet to sign the agreement, having also started internal consultations about the deal.
‘Good progress’
The Head of the AfCFTA Unit at the African Union Commission, Prudence Sebahizi, welcomed Rwanda cabinet’s endorsement of the trade framework, adding that they have been observing progress across the continent since the signing of the agreement last month.
“We are happy to see these steps being taken domestically and would like to encourage other countries to expedite the process as well. I know that Kenya is on the right track too,” he said. “We have also received notifications from countries that didn’t sign the agreement in Kigali saying they are ready to sign, countries like Ivory Coast.... there is good progress.”
Sebahizi says that the AU was mobilising member states through their diplomatic representation to expedite the ratification process, adding that the focus was being put on making the AfCFTA implementable.
At the Kigali AU summit, it was agreed that 22 ratifications would be enough for the protocol to come into force.
The deal will see signatory nations progressively eliminate tariffs and non-tariff barriers to trade in goods, liberalise trade in services, cooperate on investment, intellectual property rights and competition policies, and cooperate on all trade related areas between state parties.
Should the deal be ratified by all the 55 African nations, it will create a market of over 1.2 billion people and a combined Gross Domestic Product of over US$3.5 trillion.
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India-South Africa Business Summit to strengthen investment
Business Summit seeks to maximise the potential of the economic and commercial partnership between South Africa and India
The Department of Trade and Industry (the dti) in partnership with the High Commission of India, Ministry of Commerce and Industry of India, Invest India, the Confederation of Indian Industry, and the Federation of Indian Chambers of Commerce and Industry will host the India-South Africa Business Summit under the theme “United by Legacy, Unified for Prosperity”.
The Business Summit will be held on 29-30 April 2018 at the Sandton Convention Centre, Johannesburg and seeks to maximise the potential of the economic and commercial partnership between South Africa and India leveraging both the ‘Invest SA’ and Invest India’ initiatives.
South Africa’s Minister of Trade and Industry, Dr Rob Davies described South Africa’s relationship with India as strategic. He said that even though South Africa’s total investment to India increased to R10.3 billion in 2017 from R1.4 billion in 2003, a lot needed to be done to increase investments and create jobs in both countries.
He mentioned adding value to products as important, and could change the current picture of trade between the two countries, which is based more on exporting raw materials than manufactured products.
“Between January 2003 and September 2017, South Africa recorded a total of 29 FDI projects to India. These projects represent a total capital investment of R10.3 billion which is an average investment of R358.83 million. During the period a total of 5871 jobs were created,” said Minister Davies.
The event will open with a Dinner and a Tribute to Nelson Mandela and Mahatma Gandhi choreographed by UNICEF Goodwill Ambassador Mr. Gavin Rajah on 29 April 2018.
“India and South Africa share a strategic partnership that is over 200 years old. There are over 130 Indian companies in South Africa with an investment of about US $ 8 billion, employing approximately 18,000 South Africans,” explains Mr Suresh Prabhu, Minister of Commerce and Industry of India ahead of the summit. This Summit seeks to chart the way forward for the India-South Africa relationship.
The Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry will lead business delegations from India to the event. Companies from both countries will have exhibition booths at the Sandton Convention Centre and business to business meetings for interested companies will be facilitated on-site.
Both Ministers Shri Suresh Prabhu and Dr Rob Davies will deliver the keynote address. The Summit will also see the participation of the Premier of Gauteng Province, Mr David Makhura as well as Ministers, Chief Executive Officers and industry specialists from both South Africa and India.
2018 marks a significant year in South Africa-India relations, being the 25th year of establishment of diplomatic relations; 125 years of the Pietermaritzburg train ‘incident’ and the centenary of President Nelson Mandela.
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Africa crafts message of sustainability for international climate negotiations
Action on climate change and sustainable development together is the way forward for Africa. That is the top-line message that regional, public and private sector delegates will carry to international climate negotiations after a week of deliberations in the Kenyan capital.
Some 800 delegates from 59 countries, including ministers and other high-level government and international officials, together with non-state delegates, offered their insights into the challenges and possible responses to climate change, and harvested those insights for consideration in the official international climate negotiation process.
The collecting of views – under the banner of the year-long Talanoa Dialogue launched at negotiations in Bonn, Germany, in November 2017 – was a key part of Africa Climate Week that just concluded in Nairobi.
At the first regional Talanoa event since the launch in Bonn, delegates distilled their deliberations into key messages:
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Finance – Public finance must be instrumental in unlocking private finance
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Markets – Carbon markets are about doing more together, and doing more with less
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Energy – Energy is a high priority, affecting everything. Financial instruments should be put in place to de-risk investment and enhance involvement in smaller and medium-sized enterprises
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Sustainable Development Goals (SDGs) – Achieving the SDGs, including the climate one is the only way forward
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Technology – Businesses are ready to pick up new technology solutions, provided there is a good business case. The voice of the private sector is needed now more than ever.
The top-line message of delegates, that action on climate change is essential for sustainable development, was echoed in remarks by Erik Solheim, Executive Director, UN Environment, at the closing of the first Africa Climate Week, and of the Week’s cornerstone event, the 10th Africa Carbon Forum.
“We are engaged across most of the Sustainable Development Goals and clearly focusing on how to create synergy between the different goals and especially with the climate goal, which is essential for achievement of all the other goals,” said Mr. Solheim.
The UN’s 2030 Sustainable Development Agenda details 17 global goals covering poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, urbanization, environment and social justice.
“Africa can, should and will be the leader of ambitious climate change action in the world,” said David On’are, a Director at Kenya’s National Environment Management Authority (NEMA), citing a key message coming out of regional ministerial discussions that took place this week in Nairobi. “There is the need to raise ambition, interest, innovation and mobilize the necessary means of implementation to address climate change.”
Countries agreed in Paris in December 2015 to limit global average temperature rise to 2 degrees Celsius and work toward a safer 1.5-degree goal. In coming to their agreement in Paris, countries also recognized that success will require broad-based climate action by all sectors of society, both public and private, and by individuals.
“To achieve our goals, we need more ambition and action. Not just by national governments – they cannot do it on their own – but by all levels of government, business, investors and everyday people working together,” said Patricia Espinosa, Executive Secretary, UN Climate Change, at a high-level session on Thursday. “The good news is that momentum is picking up and we’re beginning to see the transformational shifts we need.”
Africa Climate Week, 9-13 April, was hosted and supported by the Government of Kenya and organized by the Nairobi Framework Partnership, together with NEMA. The Nairobi Framework Partnership (NFP) is celebrating this year its 10th anniversary, as is the Africa Carbon Forum, which was launched by NFP to spur investment in climate action through carbon markets, mechanisms and finance.
The NFP members include: the African Development Bank, Asian Development Bank, International Emissions Trading Association, United Nations Environment Programme (UNEP), UNEP DTU Partnership, United Nations Conference on Trade and Development, United Nations Development Programme, UN Climate Change, and World Bank Group.
Cooperating organizations include: Africa Low Emission Development Partnership, Climate Markets and Investment Association, Development Bank of Latin America, Institute for Global Environmental Strategies, Inter-American Development Bank, Latin American Energy Organization and West African Development Bank.
Quotes from the other Nairobi Framework Partnership Partners
Al Hamdou Dorsouma, Manager for Climate and Green Growth Division, AfDB:
“The African Development Bank believes that Nationally Determined Contributions (NDCs) are an opportunity for African countries to put sustainability at the center of their long-term development. The dialogue at this first Africa Climate Week demonstrated the ambition and determination by both state and non-state actors, as well as development partners, to push for expanding green and resilient investments, which enable Africa to leapfrog to high impact and clean technologies in productive sectors. The African Development Bank fully supports this ambition through its High 5 priorities, that, when fully implemented, will help Africa to achieve about 90% of its Sustainable Development Goals and 90% of its Agenda 2063.”
John Christensen, Director, UNEP DTU Partnership:
“We have had very interesting 3 days in Nairobi. The 10th Africa Carbon Forum shows that countries in the region are moving forward on the implementation of the Paris Agreement in spite of the still limited international climate finance resources. No doubt this will be challenging and countries in the African region will while taking the lead need support from more developed countries and a private sector that takes part of the responsibility while ensuring it happens in effective and wealth generating ways.”
Venkata Ramana Putti, Program Manager, Carbon Markets and Innovation, World Bank:
“Carbon markets and pricing has huge potential to help tackling climate change, and contributing to sustainable development, hence the need to give it attention through a strong collaboration at domestic and regional levels.”
Dirk Forrister, CEO, IETA:
“The strength of Africa’s response to the climate challenge is rooted in how well African business can become a partner in the effort. Many African businesses are interested in how the market incentives of regional cooperation can unleash important new climate business potential in the region.”
“Once again, ACF explored this market growth potential and the innovative policy ideas for accelerating climate action.”
Quotes from partners in the Africa Climate Week
Jukka Uosukainen, Director, Climate Technology and Network Centre (CTCN):
“Since the Paris climate Agreement in France in 2016, African governments have started asking for technological support in tackling climate that adversely affects the continent. By serving as a bridge between developing countries’ technology needs and the proven expertise of finance, private sector and research experts from around the world, the Climate Technology Centre and Network (CTCN) builds partnerships that achieve countries’ climate and development objectives. This forum was a great opportunity to share best practices and lessons learned in Africa.”
Tony Simon, Director General of the World Agroforestry Centre (ICRAF):
“As a Climate Technology Centre and Network founding consortium partner, ICRAF has contributed to knowledge resources of CTCN. Through new challenges like climate change and CTCN demands and your own wishes and needs we have seen that knowledge services that we offer is what CTCN is all about. The food system is under pressure from climate change. Locally-relevant options that enhance agricultural productivity, climate change adaptation and mitigation need to be adopted. Explore innovative finance instruments. Private equity offers a huge amount of money. Use the money from CTCN and other sources to pull in other funds and use that as an opportunity to blend financing for climate change initiatives.”
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Working Group on E-Commerce finalises the Framework of Standards on Cross-Border E-Commerce
The World Customs Organisation (WCO) Working Group on E-Commerce (WGEC) met for the 3rd time at the WCO headquarters in Brussels from 9 to 12 April 2018.
This meeting brought together more than 150 delegates from Customs administrations, other government agencies, the private sector, other international organizations, e-vendors/platforms, express service providers, postal operators, freight forwarders, Customs brokers and academia to mainly discuss and develop a ‘Framework of Standards on Cross-Border E-Commerce’.
In her opening remarks, Ms. Ana B. Hinojosa, WCO Director Compliance and Facilitation applauded the work done by the WGEC thus far. Noting the expectations of WCO Members and stakeholders, she underlined the importance of the ongoing work relating to the development of a Framework of Standards that could provide a globally harmonized approach to ensure the speedy delivery of parcels across borders, while ensuring compliance with all regulatory requirements including safety and security and revenue collection.
The Co-Chairpersons Mr. Xiangyang Sun (China) and Ms. Marianne Rowden (the Private Sector Consultative Group) outlined the priorities and work programme of the WGEC with a view to delivering a pragmatic and standardised framework on cross-border E-Commerce that could optimally meet expectations of all stakeholders.
Through the course of 4 days, delegates were intensely engaged in constructive and robust discussions that led to the finalisation of a draft Framework of Standards. This draft Framework of Standards will be submitted to the April 2018 Permanent Technical Committee (PTC) and the June 2018 Policy Commission and Council for their consideration and adoption.
This Framework of Standards is expected to be a comprehensive instrument for assisting WCO Members in developing E-Commerce strategic and operational frameworks, working in close cooperation with E-Commerce stakeholders. It will be equally useful for Members who are seeking to enhance existing frameworks in order to effectively meet the requirements of new and evolving business models.
Going forward, the Framework will be supported by an implementation strategy and action plan, as well as a robust capacity building mechanism to ensure its harmonized and expeditious implementation, based on national and regional needs and imperatives.
The Group also held a preliminary discussion on the data elements for effective risk management and speedy clearance of E-Commerce shipments, together with who would have that data and who could provide it in a timely manner.
In addition, the WGEC approved an updated version of the Immediate Release Guidelines that have been adapted to the E-Commerce environment for supporting an expeditious release/clearance of increasing cross-border E-Commerce shipments/parcels.
Regarding the next steps, the draft Framework of Standards would be further enriched with Technical Specifications, guidelines and case studies for harmonised and effective implementation of the Standards. The WGEC agreed to continue work on identified issues through constructive engagements with relevant stakeholders.
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Senegal Economic Update: Recent growth drivers and the role of agriculture in developing a resilient and inclusive economy
This Senegal Economic Update (SEU) evaluates the recent (2016‐17) growth performance and macroeconomic policies in Senegal, thus providing a basis for the policy dialog with the Government and other stakeholders.
The first section of the Economic Update evaluates the drivers of growth and the macroeconomic framework. Three‐year perspectives are also included, underlining risks and challenges. The second section evaluates the agricultural sector in more detail focusing on the recent evolution of the agriculture sector and on the impact of public sector involvement.
The State of the Economy and Outlook
Senegal’s economy maintained its wide‐based, strong growth in 2016 and the first half of 2017. GDP growth accelerated from 6.5% in 2015 to 6.7% in 2016, positioning Senegal among the fastest growing economies in the African continent. All sectors of the economy contributed significantly to growth in 2016 with services being the sector that contributed the most due to its large size as a share of GDP. Until mid‐2017, growth maintained its strong performance, though at a slightly slower pace (from 6.4% in H1‐2016 to 5.6% in H1‐2017) mainly due to a deceleration in the agriculture sector.
Exports remained the main driver of growth from the demand side, as it continued its rapid expansion due to recent reforms and a robust external demand. The solid performance of exports, which grew on average by 10.5% in 2015‐2016, resulted from stronger foreign demand in addition to structural and sector reforms implemented over the past years. Other demand components performed well, but their role as growth drivers were not as strong as exports. Total investment grew by 8.8% in 2016 (up from 6.3% in 2015) as a result of the investment program adopted as part of the Plan Senegal Emergent (PSE) (particularly transport and energy) as well as policy interventions in specific industries. While the strong import component of investments reduces their short‐term impact on growth, the increase in both public and private investments bodes well for future growth, particularly if the efficiency of public investment can be enhanced. Private consumption accelerated also as its growth rate increased from 5% in 2015 to 5.3% in 2016 thanks to higher income and optimistic expectations about the future of the Senegalese economy.
Data limitations prevent full understanding of the reasons why faster economic growth did not translate into gains in terms of employment and lower unemployment. Despite faster growth, the economy is still showing slow job creation – particularly in the formal sector – which in turn generates an increase of unemployment in a context of a steady increase of labor supply. The unemployment rate, for instance, increased from 15.7% in June 2015 to 16.6% at end 2016. Further research is needed to explain this outcome, but some hypothesis can be advanced as poor employment creation may be caused by: skill shortages, long‐standing structural rigidities in the labor market, and high costs of labor. Unfortunately, data limitations prevent us from empirically distinguishing between these potential channels and examining the causality chain between growth and employment, specifically in urban areas.
In addition to boosting growth, strong exports helped further strengthen the current account balance despite higher imports which were uplifted by total investments. The strong growth of exports outpaced the increase in imports in 2016, boosted by gold, cement and phosphoric acid; these are sectors where significant reforms have been implemented in past years. Higher imports were driven by machinery and oil, which are linked to stronger total investment and energy demand in relation to higher growth. As a result, the trade deficit decreased, and the current account deficit narrowed further, reaching 5.6% of GDP in 2016, almost half of its 2012 level. However, in the first eight months of 2017 (8M‐2017), the trade balance worsened as rising imports driven by machinery and higher oil prices more than offset the increase in exports which were negatively affected by lower fishing production.
On the fiscal side, the balance has improved due to the recent consolidation efforts – but, in 2017, lower than expected revenues and delayed payments reveal a growing fiscal stress. The fiscal deficit of the Central Government shrank to 4.2% of GDP in 2016 from 4.8% in 2015 because of (i) rationalized current spending stemming from the current fiscal consolidation efforts and (ii) higher revenues driven by better collection of custom taxes. This fiscal space has allowed the government to increase public investments, focusing on significant infrastructure and energy projects that are critical for future growth, as commanded by the PSE. Up to 8M‐ 2017, revenues are lower than expected and, as a result, there is emerging information of non‐ quantified delayed payments. The fiscal balance is still estimated to reach 3.7% at end 2017, but delayed payments reveal underlying fiscal tensions.
Public debt has continued to rise because of below‐the‐line treasury operations; and although the risk of debt distress remains low, this situation might change if debt maintains its upward trend. Despite the fiscal consolidation process, public debt maintained its upward trend and reached 60.6% of GDP in 2016 (while a more modest increase to 60.8% of GDP is expected for 2017), mainly due to ”below the line” treasury operations which relate to the financing needs of public entities that are not part of the central government’s accounts. According to the latest IMF‐WB debt sustainability analysis, public debt in Senegal remains classified at a low risk of distress, but indicators of debt distress – such as the ratios of present value of debt to GDP+remittances, and of debt service to revenue – are showing emergent strains with respect to sustainability. Further deterioration would place Senegal in the category of countries that are subject to a moderate debt risk. In the first eight months (8M) of 2017, slightly lower revenues and strong public investment slowed down the improvement in the fiscal deficit, which declined only marginally from an estimated 5.7% of GDP in 8M‐2016 to 5.6% of GDP in 8M‐2017.
Despite a prudent monetary policy at the regional level, inflation, which has recently increased due to pressures stemming from the stronger economy, remains well under control. The improved economic performance has exerted upward pressure on prices. As a result, inflation increased from almost zero in 2015 to 0.8% in 2016. During the first eight months of 2017, inflation increased further to reach 1.9% on average, reflecting continued strong economic activity despite the recent appreciation of the Euro that helped moderate the prices of imported goods and services. Nonetheless, inflation remained under control and below the 2% target set by the regional central bank thanks to the prudent regional monetary policy, exchange rate stability and ongoing fiscal consolidation efforts.
In line with the ongoing growth performance, the financial sector has expanded from a relatively underdeveloped position, but financial inclusion remains a significant challenge. The stock of total assets and deposits held within the financial sector have been growing at healthy rates over the past few years, from 48.7 and 35.7% of GDP in 2015 to 53 and 37.3% of GDP in 2016, respectively. This is in line with the strong overall economic growth, but is also due to the relatively low degree of initial development. Moreover, the sector is relatively stable and liquid, although concerns about the high – and rising – level of loan concentration persist. Meanwhile, digital financial services are spreading rapidly, but remain very limited due to restrictions in the regulatory and institutional framework. Overall, the financial inclusion of households and SMEs remains poor due to low income and high required collaterals. In that context, a new regional strategy to facilitate financial inclusion is currently underway.
Concerning the economic outlook, growth is expected to remain strong over the next years, but the prospects are subject to downside risks. The World Bank projects that real GDP growth could converge to 7.0% in 2019, if the current internal and external conditions continue supporting this trend. Supported by robust macroeconomic fundamentals, Senegal is expected to remain one of West Africa’s top growth performers. Exports would remain a key driver of growth, particularly due to higher exports from the agriculture, fishery and extractives sectors. The government’s commitment to further increase public investment, with a focus on transport infrastructure and energy, is expected to support growth. However, risks can reduce growth expectations. First, the effects of the PSE program could be undermined if projects are postponed, the quality of public investments deteriorates, or reforms do not address key bottlenecks due to non‐technical motivations. Second, and despite recent improvements in competitiveness and diversification, the agriculture sector would continue to be adversely exposed to volatile climatic conditions, particularly if reforms (for instance, facilitating access to land and enhancing the effectiveness of existing subsidies) are not properly implemented. Third, growth could be constrained and the fiscal and external balances could worsen if oil prices rise, mainly due to their impact on energy costs. Fourth, the appreciation of the euro (to which the FCAF is pegged) may constrain competitiveness.
On the fiscal side, consolidation is expected to continue, but the growing public debt and arrears accumulated poses risks to long‐term macroeconomic sustainability and challenges for treasury management. In baseline expectations, consolidation is still expected to drive the fiscal deficit to 3.0% of GDP by 2019 (in line with WAEMU’s fiscal convergence criterion), if tax revenues and public investment stabilize and current expenditures decline further. Public debt would start declining as a ratio of GDP in 2019. However, for this to happen, additional efforts are needed to increase revenues on the one hand, and rationalize expenditures and manage accumulated arrears and below‐the‐line operations on the other hand. Otherwise, the fiscal situation may deteriorate instead, increasing public debt and placing Senegal at moderate risk of debt distress.
On the external front, the projected continued decline in grants and remittances is expected to slightly worsen the current account balance over the projected period, despite a smaller trade deficit. Growing exports are expected to help reduce the trade deficit. However, the projected improvement in the trade balance would be more than offset by the continued falling trend of grants and remittances. The net result would be a slightly larger current account deficit.
The Agriculture Sector
The agriculture sector has played a critical role in the Senegalese economy, but remains vulnerable to weather shocks, which are likely to intensify with climate change. The agriculture sector, grew at an average rate of 3.2% between 2000 and 2016, but volatility around that average was large. The big swings in agriculture growth, which are highly correlated to large changes in the overall growth rates, are mainly the result of weather and climatic hazards which heavily impact pastoralism and rain‐fed crops such as groundnut, millet and other cereals that have traditionally dominated the sector. This suggests that for Senegal to maintain the high output growth attained since 2015, more efforts are needed to protect the agriculture sector against climatic variability and enhance livelihood resilience in rural areas.
The production of key staples has surged in the past few years due to the expansion of cropped areas and an increase in the use of inputs encouraged by public policies. In addition to making efforts to ease financing constraints in partnership with the private sector, the Senegalese government has adopted several policies to modernize and develop the agriculture sector over the past few years. These policies, such as developing the skills and financial capabilities of farmers, subsidizing of high quality seeds, and supporting agricultural mechanization, have helped boost agriculture yields and production, in cereals, horticulture and pulses. Main beneficiary crops include those tagged as priority value chains under PRACAS (rice, onions and groundnuts, with steady increases by 160%, 74%, and 108% between 2013 and 2017, respectively). Continued public support for rice over the last two decades – by increasing investments and implementing reforms in the irrigation management systems and expanding low land (and rainfed) cropping systems – is paying off with higher rice yields, surpassing the African average and closing the gap with the World average. The private sector has contributed to the improvement in agriculture productivity due to the modern processing units that were developed along the Senegal River Valley.
Recent improvements in agriculture output is linked more to stronger input use than to productivity increases, and had a limited impact on job creation. Labor productivity did not improve over time – and even decreased for certain crops – mainly due to a decreasing land‐to‐ labor ratio. In fact, the increase in agriculture output was largely due to an expansion of input use per unit of land, and to a much lesser degree to overall improvements in Total Factor Productivity (TFP), such as innovation and skills. Therefore, to achieve the objective of poverty reduction – which remains prevalent in rural areas – and drive the transformation agenda, total factor productivity, and labor productivity in particular should be significantly improved. This necessitates creating more jobs for the rural workforce (‘move‐out’ track), while supporting farmers to modernize and better connect to the value chains with the ret of the economy (‘move‐ up’ track).
Agribusiness, particularly the emerging horticultural industry, has the potential to boost agriculture productivity and create new jobs. Despite its relatively small size within the economy, the agribusiness industry could play a major role in agriculture development as it would improve the efficiency of farm production and mitigate the uncertainty associated with the lack of post‐production outlets, hence allowing farmers to earn higher returns. In fact, horticulture, which has been growing rapidly over the past few years, could yield several socio‐economic benefits: improve food security and nutrition, increase farm‐nonfarm linkages and empower women by boosting their on‐farm income and off‐farm employment opportunities and consequently reduce poverty rates, particularly in the rural regions. Moreover, the agroprocessing sector needs to expand significantly from its current low base as it accounts for around 5% of GDP, 10% of the total firm revenues with 97% of agroprocessing enterprises making less than $200,000 as revenues per year.
While public policies have helped boost production, concerns about efficiency and sustainability remain; thus the need to redress public spending to productive factors that would help achieve the transformation agenda. Government policies included high public spending on agriculture with less than proportional impact on the added value created in the economy. While three quarters of the budget allocated to agriculture was spent on crops, only half of the agriculture GDP growth stemmed from crop production, thus raising concerns about the efficiency and sustainability of these expenditures. In fact, inputs subsidies have boosted agriculture production but not the overall total factor productivity. For instance, the government’s support to groundnut prices through state‐(re)owned SONACOS has proven ineffective as it distorts competition among players for groundut collection. It is also delaying the modernization and realignment of the groudnut sector to the international markets trends, thus diverting critical government resources that could otherwise support the agriculture resilience agenda and/or strengthen social protection programs in rural areas. In this sense, the government may reorient its agricultural spending from less productive fertilizer subsidies to productivity‐enhancing input factors such as agricultural R&D, climate change resilient technologies and advanced irrigation techniques. This could be paired with well targeted social protection mechanisms to support the poorest rural households.
In order to deepen the reforms in the groundnut sector, the government should anchor a stable policy framework for whole nut exports, including specific protection against swings in revenues. Reforms undertaken by the government since 2014 to liberalize the groundnut market started yielding results, with stronger exports of nuts and new investments in the value chain (storage, deshelling facilities, with significant potential in term of off‐farm employments). However, distortive policies to keep alive a less profitable processing of crude oils segment prevented farmers from getting the full value of expanding to global whole nuts markets. Within that context, a new value chain centered on producing high quality groundnuts for wholenuts exports and confectionery industry is needed. This requires establishing a level playing field for the private sector to invest and innovate in the processing and marketing segments. A key step in this direction would be to privatize SONACOS. Such reforms should address the issue of revenues volatility, including safety net mechanisms when both international prices and domestic production are low.
Several additional steps need to be implemented in order to achieve a sustained rise in agricultural production and productivity. The agriculture sector should be better integrated with other sectors of the economy, starting with the local food transformation industry that frequently uses imported inputs. Senegal should also improve its risk management mechanisms to shield itself against volatile climatic conditions. This can be done by (i) developing sufficient livestock related infrastructure, (ii) improving farmers’ resilience to weather shocks through developing climate‐smart technologies such as high‐yielding, drought tolerant and early‐maturing varieties, (iii) developing irrigation systems to better control water and gradually move away from rain‐fed agriculture, and (iv) improving access to weather forecasts. To improve productivity, a stronger cooperation between research centers and agricultural advisory councils is required to facilitate knowledge transfer. It is also important to reinforce the technical capacity of small farmers in order to boost productivity. Moreover, it is critical to support and encourage the private sector to play a bigger role in the development of agriculture. Finally, efforts should be made to improve the reliability of agricultural statistics by relying more on new information and communication technologies (ICTs), GPS and drones along with adequate estimation methodologies.
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African ports: Strengthening Africa’s gateways to trade (PwC)
This report was compiled by PwC’s Capital Projects and Infrastructure Transport and Logistics team using a combination of information obtained from interviews with port authorities and port operators, together with detailed research and incorporating our extensive knowledge of the port, trade and transport sector. Extract: New drivers for African ports (pdf). Ports around the world are changing, not only in terms of how they integrate into the logistics chain and the role they play in economic development, but also in terms of how they are operated and managed. Some key trends that are directly applicable to Africa, include:
(i) Tracking and digital platforms are the norm: Logistics service providers and customers are increasingly using radio-frequency ID tags and tracking devices to accurately determine vehicle and consignment locations. (ii) The paperless port. Through increasing utilisation of digital technology and a shift by customs and excise authorities to use the internet as the means of processing shipments, there has been a significant decrease in the use of paper at ports. (iii) Improved inland terminals. These help consolidate freight flows and act as important hubs from where corridors may diverge. Because of border control requirements, they are often located close to border points and also often offer bonded warehouse facilities. (iv) Hub ports. They have developed in most parts of the world and demonstrate a shift towards greater maritime freight consolidation. Their emergence has been driven to a large extent by the global trade in containers, which continues to grow and is reducing the size of the break-bulk and in some instances even the bulk market. (v) Improved back-of-port logistics facilities. The area behind the port has become increasingly sophisticated and specialised in recent years. Holding facilities for specialised commodities, such as edible oils, foodstuffs, etc. are now common in areas close to the port.
Table of contents: PwC’s blueprint for sub-Saharan port investment, The African context, Volumes, Port performance, Liner shipping changing port infrastructure needs, Future drivers of investment, Moving forward: summary of conclusions. Appendices: Hub attractiveness score; Sub-Saharan GDP growth data; Port performance ratings.
Sub-Saharan Africa will drive global wheat imports during 2017-18 season (USDA)
Global wheat trade is forecast at a record for 2017/18, with Sub-Saharan Africa projected to have the strongest year-over-year import growth of any region (pdf). In fact, over the last decade as a whole, Sub-Saharan Africa has been a major driver of rising global wheat trade. Stagnant production and rapid consumption growth have been the main motivators of rising import demand in the region. Consumption is escalating on long-term trends of urbanization, rising incomes, and population growth. This year specifically, record global production and relatively low prices have further catalysed import demand in Sub-Saharan Africa. Russia is an increasingly important supplier for the region as many of these markets are primarily focused on obtaining low-priced supplies. In light of Russia’s record crop and large exportable surplus, Sub-Saharan Africa’s demand growth has provided an outlet to absorb some of those excess supplies. [West Africa Brief: The 2017-18 agro-pastoral campaign]
Nigeria’s domestic wheat plan falters with imports set to surge (Bloomberg)
Nigeria produced an average of 80,000 metric tons of wheat a year for decades until the introduction of a new variety in the 2012-13 season that tripled the average yield as more areas were cultivated, according to the Lake Chad Institute. Output fell sharply to 60,000 metric tons in the 2016-17 season after reaching a peak a record of 350,000 tons in 2013-14, according to Turaki, with farmers also hurt by the Boko Haram Islamist insurgency in some of the growing regions. He sees a further production decline in the current season to 50,000 tons. In contrast, Nigeria’s wheat imports, which reached 4.6 million tons in 2017, are expected to expand by 9% to 5 million tons next year and to double from that by 2030, according to the US Department of Agriculture, as demand surges for wheat-based foods such as pizza, pasta and bread. The West African nation estimates it spends $4bn to $5bn annually on wheat imports. [Related: Nigeria’s maize import hits N146.8bn; How smuggling stalls rice self-sufficiency target]
How EU milk is sinking Africa’s farmers (Politico)
Multibillion-euro dairy multinationals are exploiting rock-bottom European milk prices to expand aggressively into West Africa. Over five years, they have nearly tripled their exports to the region, shipping milk powder produced by heavily subsidized European farmers to be transformed into liquid milk for the region’s booming middle class. West Africa, with its growing population and demand for dairy, was an obvious destination. Between 2011 and 2016, milk powder exports from the EU to West Africa jumped from 12,900 metric tons to 36,700 tons — most of it flowing to plants in Senegal, Ivory Coast, Ghana and Nigeria, which re-export the product to their neighbouring countries. As global players such as Danone, Arla and FrieslandCampina set up reconstitution plants to process imported European milk, West African farmers are struggling to compete. Although local production has never fully met demand, experts warn that the recent milk deluge risks smothering the local industry, miring the region in dependency.
Swazi hawkers optimistic AfCFTA will help them trade across Africa (Swazi Observer)
Chairman of Butimba Bemaswati Hawkers Association Isaac Masombuka feels that hawkers are constrained by many things such as the lack of choice in the goods they purchase. The association comprises about 270 men and 470 women hawkers, whose source of income is buying goods in South Africa and Mozambique to sell them in Swaziland. He said South Africa, for instance, was regarded as a hawkers haven, when in reality, all that country mostly has to offer are China produced goods for the average Swazi hawker and very little else. In Masombuka’s view, apart from the made-in-China products, South Africa has a good range of upmarket products which are mostly too expensive for the target market in Swaziland. Masombuka said as far as he understands it, the ACFTA would give hawkers like himself the opportunity to explore other African countries apart from South Africa and Mozambique with ease to get diversified products which they can introduce to the local market.
IGAD congratulates Kenya for approving a bill to ratify the Africa free trade area
The IGAD Secretariat congratulates the Government of Kenya for being one of the first countries to approve the framework establishing the AfCFTA on 27 March 2018. The IGAD Secretariat also welcomes the signature of the AfCFTA by all member states of IGAD (Djibouti, Ethiopia, Somalia, South Sudan, Sudan and Uganda) and will endeavour together with the African Union to work alongside its Members States to facilitate efforts to enhance free trade within its respective region and across the continent.
SADC: Regional industry protocol on the cards (SARDC)
The SADC Secretariat is developing a legal instrument that will improve the policy environment for industrial development and support implementation. The development of a regional industry protocol should strengthen the economies of countries in SADC and ensure that they are driven by industrial development and not based on exports of raw resources. SADC Executive Secretary Dr Stergomena Lawrence Tax said the proposed protocol will provide for a supportive policy environment for the implementation of the SADC Industrialisation Strategy and Roadmap across sectors. The final draft protocol is expected to be ready by the end of 2018.
Nigeria, Malaysia establish special trade corridor (Punch)
The Nigeria-Malaysia Business Council has collaborated with the Nigeria Export Promotion Council and the Malaysia Department of Trade to set up a special trade corridor that will enable Malaysian businesses and Nigerian farmers and exporters to collaborate with a view to adding quality to goods exported from Nigeria to Malaysia. According to NEPC, special focus will be on crops such as cocoa, palm produce, rubber and solid minerals that are mostly exported in their raw form to Malaysia and other markets. The Malaysian Trade Commissioner, Moamar Kareem, said that Nigeria was the most lucrative country to trade with, adding that the commission recently relocated its office from Nairobi to Lagos for this reason.
Multi-billion dollar trade opportunity for G7 in emerging markets (Standard Chartered)
Standard Chartered has launched its G7 to E7 Trade Performance Index (pdf), which examines the trading partnerships of the G7 with E7 (Emerging Seven) economies – Bangladesh, China, India, Indonesia, Nigeria, Pakistan and Vietnam. The UK, US and France stand to realise the greatest gains if they can fulfil their E7 trade potential. Germany tops the performance table as the only country to currently exceed its total E7 trade potential. The Index reveals that G7 nations and companies are underperforming in their export trade to the E7. Of the 49 trade routes between individual G7 and E7 countries, only nine currently exceed or meet expectations. The remaining 40 trade routes underperform by a total of $162bn against their export potential. This constitutes a 30% annual growth opportunity for the G7 to the E7. The E7 represent a critical highway to future growth for the G7 in 2018 and beyond.
J Miguel Santos: How embracing open skies can help Africa close in on economic greatness (Business Day)
Boeing has instituted an internship programme to help nurture young talent in Africa, and works closely with airlines across the continent, as it has done for more than 60 years. One example is aviation firm Comair, which now has a 40% share of the South African market and has operated profitably for more than 70 years. It now trains pilots and cabin crew for 37 airlines and its training facility is doubling in capacity to meet demand. In 2019 Comair will take delivery of the first of its eight Boeing 737 MAX8s as the final phase of its fleet replacement strategy for its two brands, kulula.com and British Airways. There is no single catalyst to realising Africa’s potential for socioeconomic development, but liberalisation of aviation, modernisation of the sector and empowerment of human capital to embrace opportunities in that sector could be a powerful driver of growth in the coming years. Watch this airspace. [The author Boeing sub-Sahara Africa managing director]
Afreximbank wants Nigeria to establish a national carrier (BusinessDay)
Global Head, Client Relations, Afreximbank Rene Awambeng, made the call at the Roadshow for Russian Aviation Products and Capabilities in Africa held in Abuja on Thursday. “Why can we not develop our own national and regional airline companies and private sector airlines to bring down the cost of travels for our people? Why must air France dominate all the routes to the francophone west Africa? Why can we not have an African champion in the air industry?These are some of the questions our Nigerian leaders and industries should think and take responsibility.”
USTR announces new GSP eligibility reviews of India, Indonesia, Kazakhstan
“GSP provides an important tool to help enforce the Trump Administration’s key principles of free and fair trade across the globe. The President is committed to ensuring that those countries who receive GSP benefits uphold their end of the bargain by continuing to meet the eligibility criteria outlined by Congress,” said Deputy U.S. Trade Representative Jeffrey Gerrish. “We hope that India, Indonesia, and Kazakhstan will work with us to address the concerns that led to these new reviews.” For India, the GSP country eligibility review is based on concerns related to its compliance with the GSP market access criterion. For Indonesia, the review is based on concerns related to its compliance with the GSP market access criterion and the GSP services and investment criterion. Kazakhstan’s eligibility review is based on concerns related to its compliance with the GSP worker rights criterion. A public hearing and comment period for the new GSP reviews of India, Indonesia, and Kazakhstan will be announced in an upcoming Federal Register notice. [Bloomberg: Get ready for the unintended consequences of Trump’s trade war]
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Regional industry protocol on the cards for SADC
The SADC Secretariat is developing a legal instrument that will improve the policy environment for industrial development and support implementation.
The development of a regional industry protocol should strengthen the economies of countries in the Southern African Development Community (SADC) and ensure that they are driven by industrial development and not based on exports of raw resources.
SADC Executive Secretary Dr Stergomena Lawrence Tax said a draft of the protocol is in place following consultations with member states.
“I am glad to report that during the year, drafts of the SADC Regional Mining Vision, and Protocol on Industry were prepared and consultations were held with relevant stakeholders,” Dr Tax said at the SADC Council held in late March in Pretoria, South Africa.
She said the proposed protocol will provide for a supportive policy environment for the implementation of the SADC Industrialisation Strategy and Roadmap across sectors.
The final draft protocol is expected to be ready by the end of 2018.
According to the costed action plan of the pdf SADC Industrialisation Strategy and Roadmap (2015-2063) (2.34 MB) , the protocol is expected to be have been adopted by the end of 2020.
Once completed, the protocol will provide the legal mandate for the SADC Secretariat to coordinate the implementation of regional industrial activities, programmes and projects, including the SADC Industrialization Strategy and Roadmap and its related pdf Costed Action Plan (1.51 MB) .
The SADC Industrialization Strategy and Roadmap aims to accelerate the momentum towards strengthening the comparative and competitive advantages of economies of southern African countries.
The proposed protocol is expected to strengthen the level of industrial development in the region and facilitate the harmonisation of policies and strategies in member states.
Where member states already have such policies and strategies, these should be reviewed and aligned to the SADC Industrialisation Strategy and Roadmap.
A report presented during the SADC Council of Ministers revealed that the Secretariat has obtained resources to update the SADC Industrial Upgrading and Modernisation Programme (IUMP).
According to the report, SADC member states are expected to have developed national IUMPs by the end of 2018 and to have implemented these by December 2020.
The SADC IUMP was adopted by the SADC Committee of Ministers of Trade in 2009 to implement the component of the Regional Indicative Strategic Development Plan (RISDP) that dealt with industrialisation. The RISDP was subsequently revised in 2015 by front-loading industrialisation ahead of trade.
National industrial upgrading programmes should be in line with the SADC IUMP, which provides the basis for a sector-specific approach to industrialisation in the region, focusing on upgrading existing manufacturing capacities, modernising productive facilities, reinforcing the institutional support infrastructure, and strengthening regional capacity for research and innovation.
To encourage the creation of regional value chains and participation in global processes, the region has identified five priority areas where the value chains can be established and for which regional strategies should be developed by 2020.
These are in the areas of agro-processing, minerals beneficiation, consumer goods, capital goods, and services.
Detailed value chain studies are proposed for specific products or services in the priority areas.
As part of the process of promoting value chain participation, there are plans to develop model legislation and regulations for intra-SADC agro-processing, minerals beneficiation and other manufacturing activities and services.
See also the pdf Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020: Summary (1.04 MB)
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African ports: Strengthening Africa’s gateways to trade
Ports are a vital part of the supply chain in Africa with each port having a far-reaching hinterland often spanning a number of countries.
Africa, despite its enormous size, still represents only a small portion of world trade. Exports are largely commodity based and include oil, coal, iron ore, ferrochrome, precious metals, cocoa, palm oil and timber. Yet, Africa is growing and many of its larger economies are beginning to diversify away from a traditional commodity focus.
Ports represent the gateways for these commodity exports, but as countries grow and develop, ports are also essential for sustaining and improving more robust and diverse growth in African economies through the import and export of manufactured goods and other products.
Africa needs to take advantage of the economic potential of its ports and shipping sector if it is to realise its growth ambitions. Globally, ports are gateways for 80% of merchandise trade by volume and 70% by value. Investment in ports and their related transport infrastructure to advance trade and promote overall economic development and growth is therefore vital – particularly in emerging economies that are currently under-served by modern transportation facilities.
Why ports matter
Globalised supply chains have enabled goods and services to be transported across the world to meet the ever-increasing demands of populations. Ports are gateways for 80% of global merchandise trade by volume and 70% by value. As an emerging market region endowed with vast natural resources and a young and growing population, SSA must accelerate its market access and trade both across the region and with the rest of the world. This is important to stimulate economic growth, diversify its economies, reduce the inflationary effects of weak transport and logistics infrastructure, become globally competitive, create employment and reduce poverty.
Sub-Saharan Africa’s economic outlook
Volumes
The economy of SSA gained strong momentum up until 2014 when several factors led to a severe slowdown in growth. Major oil producing countries, notably Angola and Nigeria, were hit by falling oil prices, while South Africa saw contractions in its mining and manufacturing industries and had to deal with the effects of drought on the agriculture market.
The 1.2% growth estimate for 2016 is the lowest SSA has experienced for two decades and worse than that seen in the aftermath of the 2008/9 global economic crisis.
Performance
The efficiency and effectiveness of a port and port terminals is critical to success. Performance also has a direct impact on the efficiency and reliability of the transport network in which the port is just a node for the transfer of goods. High quay productivity does not mean much when ships have to wait at anchorage, while cargo delivery processes are slow and inland transportation networks are poor.
A range of physical, organisational, technological and institutional elements all play an integrated role in determining port capacity and efficiency. Although the report analyses each component separately, it is important to recognise that they contribute in an integrated manner to port capacity.
Liner shipping changing port infrastructure
Historically, ports and terminals had to compete on the basis of price leadership or value-added services. Over the last few decades, however, many locations introduced special economic zones around ports to further enhance the appeal of both the port and the economic benefit of the jurisdiction around the port (and thus the host country).
A further trend has emerged with ports positioning themselves as hub ports for transshipment to smaller neighbouring ports. This trend is particularly prevalent in West Africa where a number of ports are attempting to market themselves to provide such a service.
Notwithstanding these ambitions, in practice only a few African ports can truly be classified as a hub port. In addition to the fact that most do not have the supporting landside regional transport system essential for the concentration of cargo flows required at a hub port, hub ports and terminals must also be able to accommodate larger ships and handle large volumes efficiently.
Future drivers of investment
Many countries in sub-Saharan Africa remain dependent on port infrastructure built before the 1960s, when port standards were very different. Today, larger deepdraught vessels require a depth of 10 metres or more, while the ports developed in the past offer no more than seven metres. Furthermore, these established ports are often major trade hubs that are congested and difficult to expand given their position within the bounds of rapidly growing cities.
New port developments are multifaceted in that they are increasingly multisectoral in nature, involving a number of ancillary projects across a broad range of sectors, often focussing on back-of-port economies and linkages by other modes of transport. The report assesses current investment in SSA’s ports and reveals a number of trends:
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Ownership and service models are gravitating towards greater private-sector involvement;
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Increasing competition between ports is driving investment decisions;
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Shipping lines and port operators are increasingly driving port investment;
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Externally-funded commodities and consumer goods are driving investment;
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Appetite for large greenfield investment is waning;
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Focus on intermodal facilities and dry ports is increasing; and
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Greater awareness of infrastructure interdependencies.
This report was compiled by PwC’s Capital Projects and Infrastructure (CP&I) Transport and Logistics team using a combination of information obtained from interviews with port authorities and port operators, together with detailed research and incorporating PwC’s extensive knowledge of the port, trade and transport sector.
Download: Strengthening Africa’s gateways to trade: An analysis of port development in sub-Saharan Africa | April 2018 (pdf)
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Sub-Saharan Africa drives growth in global wheat imports
Global wheat trade is forecast at a record for 2017/18, with Sub-Saharan Africa projected to have the strongest year-over-year import growth of any region.
In fact, over the last decade as a whole, Sub-Saharan Africa has been a major driver of rising global wheat trade. Stagnant production and rapid consumption growth have been the main motivators of rising import demand in the region. Consumption is escalating on long-term trends of urbanization, rising incomes, and population growth.
This year specifically, record global production and relatively low prices have further catalyzed import demand in Sub-Saharan Africa. Russia is an increasingly important supplier for the region as many of these markets are primarily focused on obtaining low-priced supplies. In light of Russia’s record crop and large exportable surplus, Sub-Saharan Africa’s demand growth has provided an outlet to absorb some of those excess supplies.
After Sub-Saharan Africa, the region with the next largest projected growth in imports this year is the Middle East. There, higher imports are offsetting Iraq’s lower crop quality and Turkey’s diminished stocks. In contrast, the largest forecast reduction from 2016/17 is for South Asia on account of sharply lower imports for India due to its ample 2017 harvest. Also down from the previous year are imports for North Africa (larger crops for Algeria, Morocco, and Tunisia) and South America (reduced demand in Brazil).
Wheat: World Markets and Trade Overview
For 2017/18, record global production is raised slightly this month, mainly on a larger crop for Morocco. Global trade is forecast down fractionally but remains a record. Imports are forecast up for Algeria, Japan, Kenya, Philippines, and Turkey. Exports are projected higher for Argentina, Kazakhstan, and Russia but lower for Australia and the European Union. The U.S. season-average farm price is unchanged at $4.65 per bushel.
Growth in Demand Seen Across Many Markets in Sub-Saharan Africa
Sub-Saharan Africa is the region propelling year-to-year growth in global import demand in 2017/18. The major countries driving this change are:
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Nigeria: Imports are forecast up 5 percent from the previous year. In urban areas of the country, wheat is generally more affordable and available than locally grown staples such as cassava, millet, and yam. Furthermore, wheat has been used for humanitarian aid to insecure farming communities.
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Sudan: Imports are forecast up 6 percent, offsetting a smaller crop. Consumption is forecast higher as implied by strong imports.
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Kenya: Imports are projected at 2.3 million tons, up 30 percent from last year based on rapid consumption growth and expansion in milling capacity.
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South Africa: Imports are forecast up more than 60 percent from the previous year as the latest crop was damaged by drought.
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Ethiopia: Imports are projected up nearly 70 percent as government tendering has increased to meeting growing demand and to rebuild wheat stocks.
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Angola: Imports are forecast at 1.2 million tons, which is up nearly 200,000 tons from the previous year. The country’s milling capacity has expanded and consumption (as implied by the pace of trade) is growing rapidly.
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Tanzania: Imports are forecast at 1.1 million, up 30 percent from a year before. Rising demand for wheat products is met through imports as domestic production is less than 10 percent of consumption.
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A multitude of smaller markets, including Ghana and Mauritania, are also showing significant consumption growth, as indicated by rapid imports to-date.
World Agricultural Supply and Demand Estimates
Wheat
Projected 2017/18 U.S. wheat ending stocks are raised this month by 30 million bushels to 1,064 million, all on lower feed and residual use. The NASS Grain Stocks report, issued March 29, implied less feed and residual usage for the third quarter (December-February) than previously estimated. This report also showed record U.S. corn stocks on March 1, which are expected to continue displacing wheat for feed use for the remainder of 2017/18. No other supply or use categories are changed this month. Based on NASS prices and marketings reported to date along with price expectations for the rest of 2017/18, the season-average farm price is unchanged at the range of $4.60 to $4.70 per bushel.
World 2017/18 wheat supplies increased this month by nearly 3.0 million tons as production is raised to a new record of 759.8 million, mainly on Morocco’s higher production estimate as it recovered from a severe drought in 2016/17. Global supplies also increased with a multi-year reduction in Iran’s food, seed, and industrial use, which raised carry-in stocks by nearly 2.0 million tons.
Projected global 2017/18 trade is virtually unchanged on increased exports from Russia, Kazakhstan, and Argentina nearly offsetting lower exports from the EU and other exporters. Russia’s exports are raised 1.0 million tons to 38.5 million, which surpasses last year’s record exports by more than 10 million. Russia continues to displace the EU and other exporters in several markets. Imports are lowered for Morocco, Brazil, and Colombia while increased for Algeria, Ethiopia, Japan, Kenya, Turkey, and the Philippines. Projected 2017/18 world consumption is higher, primarily on increases in the EU and Indonesia, which more than offset reductions in Iran, India, and the United States. However, the increase in global supplies still exceeds the additional consumption as 2017/18 global ending stocks are 2.3 million tons higher this month at 271.2 million, a new record.
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Underway, in Windhoek: SACU Council of Ministers meeting
The ministers will discuss, among others, SACU trade negotiations, including the recently launched African Continental Free Trade Area, and provide strategic guidance. Minister Rob Davies will also attend the inaugural meeting of the Ministerial Task Team on Trade and Industry set up by the SACU Summit in Swaziland in June 2017 to review the trade and industry aspects of the 2002 SACU Agreement. “The objective of the review is to identify critical areas of the SACU Agreement to be amended to facilitate the transformation of SACU into a “development integration arrangement,” said Davies. He emphasised that SACU has already identified the critical pillars to advance this objective through the six-point plan. The pillars of the six-point plan include:
SADC-EU Economic Partnership Agreement: a briefing note on Protocol 1 on the rules of origin
EPA rules of origin allow for extended cumulation that can facilitate intra-regional trade and industrialisation. Cumulation allows materials and inputs from certain other countries to be considered as if they were already originating from South Africa when used in the manufacture of another product. These cumulation provisions allow manufacturers to source materials not readily available in the country, while still ensuring that the final product enjoys preferential access to the EU. In addition to allowing cumulation between South Africa, the EU and other parties to the agreement, cumulation is also allowed under certain conditions with all ACP countries, as well as with materials from other countries that may enter the EU duty-free. Examples of sectors that could benefit from the more flexible rules of origin include clothing and textiles, automobile sector and fisheries.
Rwanda: Cabinet gives green light to AfCFTA protocol (New Times)
A cabinet meeting on Wednesday approved the draft law ratifying the African Continental Free Trade Area, which aims at easing intra-Africa trade. The cabinet meeting, chaired by President Paul Kagame, also gave a green light to protocols on trade in goods, trade in services, and one on rules and procedures for settlement of disputes, according to minutes signed by Cabinet Affairs Minister Solange Kayisire. The instruments will now head to parliament for ratification.
David Luke and Lily Sommer: How to ensure Africa’s bold free trade area propels industrialisation (African Arguments)
It is for these reasons that the AfCFTA has been specifically designed to drive industrialisation. It is crucial this remains a priority as the agreement is implemented. How can this be done? To begin with, the ratification and implementation of the agreement must be expedited. Industries on the continent must have time to find and build their competitive edge before African markets are further opened up to the rest of the world. The AfCFTA’s process of reducing tariffs should also prioritise “intermediate goods” – namely semi-finished products used in the production of final goods. This would boost incentives for businesses to source these inputs from within Africa and support the expansion of manufacturing. The removal of non-tariff barriers and harmonisation of standards across borders could also focus initially on products with industrial potential. Mechanisms to monitor non-tariff barriers, simple rules of origin requirements, and common accreditation practices will be crucial in supporting the expansion of industrial supply chains between African countries.
Ken Ukaoha: Lessons for Africa before crucifying Nigeria’s President on AfCFTA (ThisDay)
As the dust around Nigeria and the CFTA gradually begins to settle down, it is perhaps needful to appropriately reflect and contextualise the needless stigmatisation on the country, the President and indeed Nigerians for the well thought out decision on the CFTA. It is noteworthy that prior to the 21 March planned signing of the AfCTFA Framework in Kigali, there was a window created for member states to engage their citizens in consultations with the AfCFTA draft text. The truth is that while the duration of that window was not enough to mobilise and sensitise citizens on such a highly technical subject; essentially and regrettably, many countries in Africa did not effectively undertake such needful journey of sensitisation of their people. To many Governments, they preferred to embark on sensitisation after signing of the Agreement (putting the cart before the horse) thereby condemning the citizens to a secondary and irrelevant status to the Agreement. This action completely negates the concept of good governance especially within the confines of democracy which pre-supposes that persons in Government are trustees to the citizens.
Perhaps most laughable is that most of those who cried foul against Nigeria President’s withholding of his signature had neither seen the copy of the concluded Framework Agreement nor gone through the contents of the 253-page document. Yet, one more bullet for those critics is that the President’s withholding of his signature has even provided them the only opportunity to discuss, perhaps analyse or even organise meetings around the subject of the AfCFTA, and for such Nigerians, yes Africans, they should be most grateful to Nigeria’s Government. [The author is a member of the ECOWAS Task Force on Trade, and President of NANTS]
Related AfCFTA perspectives:
(i) Sensitisation workshop: Zambia will only sign up for AfCFTA after thorough engagements with local stakeholders, private sector
(ii) John Aglionby: Africa free trade pact raises hopes of prosperity
(iii) Dianna Games: African trade is crippled for a reason and fine words will not change that
West Africa: The reach of West Africa’s mobile money sector is 13 times wider than local banks (Quartz)
As the West Africa mobile economy report by GSMA shows, mobile adoption in West Africa has nearly doubled from 28% at the turn of the decade to 47% last year. Indeed, by the end of 2017, there were 176 million unique subscribers across the region’s 15 member states. Just as importantly, by the end of last year, the number of mobile internet subscribers has doubled over the last four years to reach 78 million—nearly half of the total number of mobile subscribers.
Strong trade growth in 2018 rests on policy choices (WTO)
The WTO anticipates merchandise trade volume growth of 4.4% in 2018, as measured by the average of exports and imports, roughly matching the 4.7% increase recorded for 2017. Growth is expected to moderate to 4.0% in 2019, below the average rate of 4.8% since 1990 but still firmly above the post-crisis average of 3.0%. However, there are signs that escalating trade tensions may already be affecting business confidence and investment decisions, which could compromise the current outlook. “The strong trade growth that we are seeing today will be vital for continued economic growth and recovery and to support job creation. However this important progress could be quickly undermined if governments resort to restrictive trade policies, especially in a tit-for-tat process that could lead to an unmanageable escalation. A cycle of retaliation is the last thing the world economy needs. The pressing trade problems confronting WTO Members is best tackled through collective action. I urge governments to show restraint and settle their differences through dialogue and serious engagement,” said WTO Director-General Roberto Azevêdo. [Note: See Appendix Table 1: World merchandise trade by region and selected economies, 2017]
Asian Development Outlook 2018: how technology affects jobs
Growth picked up across most of the economies in developing Asia, supported by continued high demand for exports and rapidly expanding domestic demand, says a new Asian Development Bank report. In its new Asian Development Outlook 2018, ADB forecasts GDP growth in Asia and the Pacific to reach 6.0% in 2018 and 5.9% in 2019, a slight deceleration from the 6.1% registered in 2017. Excluding the high-income newly industrialized economies, growth is expected to reach 6.5% in 2018 and 6.4% in 2019, from 6.6% in 2017. Technological advances have transformed the two billion worker Asian labor market, helping create 30 million jobs annually in industry and services over the last 25 years, drive increases in productivity and wages, and reduce poverty, says a new report by the Asian Development Bank. New research on how technology affects jobs, the subject of the special theme chapter in the ADO 2018 report, points out that while some of the region’s jobs will be eliminated through automation, countervailing forces will more than compensate against job losses.
Christine Lagarde: Belt and Road Initiative – strategies to deliver in the next phase (IMF)
The Belt and Road Initiative can provide much-needed infrastructure financing to partner countries. However, these ventures can also lead to a problematic increase in debt, potentially limiting other spending as debt service rises, and creating balance of payment challenges. In countries where public debt is already high, careful management of financing terms is critical. This will protect both China and partner governments from entering into agreements that will cause financial difficulties in the future. Fortunately, we know that China’s leadership is aware of these potential risks — as well as the proven strategies that can help address the challenges. A good starting point is ensuring transparent decision-making. An overarching framework between the various agencies involved in the Belt and Road Initiative would help provide clarity to all stakeholders. [Speech delivered at the Fifth PBC and IMF Joint Conference: Strengthening financial and exchange rate frameworks – international experience and relevance for China]
Today’s Quick Links: Dar to host African Islamic finance summit Indonesia Africa Forum: PT Pelindo signs agreement with Djibouti port authority Jayant Menon: How should we measure ASEAN’s success? ASEAN finance officials eye greater integration, push for infrastructure investment The digital gamble: new technology transforms fiscal policy |
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The concrete result of IAF 2018: Strengthening Indonesia-Africa Partnership
The Indonesia-Africa Forum (IAF) 2018, a forum organized by Indonesia for the first time, has succeeded in drawing up a series of concrete agreements to further strengthen Indonesia's partnership with African countries.
The forum, which at the opening on 10 April 2018 was started with the signing of a series of business deals worth USD 586.56 million in the presence of the Vice President, the Minister of Foreign Affairs, the Minister of Trade and other Ministers of Kabinet Kerja, was concluded with additional business deals worth USD 499.2 million. The Forum also recorded 11 business announcements with a total potential value of USD 1.3 billion.
“Indonesia and the African countries agreed to further intensify economic and trade diplomacy and to strengthen Indonesia’s presence in Africa,” said Foreign Minister Retno Marsudi in a joint press conference with Trade Minister Enggartiasto Lukita on 11 April. In addition, Foreign Minister Retno also clarified on the various key sectors identified in this forum such as energy, infrastructure, digital economy and innovations, strategic industries, and agriculture.
A number of initiatives will also be strengthened, among others through the holding of various meetings to share experiences and to encourage the interest of businessmen, both at the Government and private levels.
On the sidelines of the IAF meeting, a Task Force on Indonesian Infrastructure to Africa has also been established. The Task Force consists of the Government and the private sectors that will map out and implement infrastructure-related policies.
Furthermore, Indonesia and the African countries also agreed to increase cooperation in the field of financing. Since 2015, Indonesia has implemented a National Interest Account (NIA). Foreign Minister Retno said that the scale and scope of NIA is expected to be increased to further promote the value of trade.
On the occasion of the press conference, the Foreign Minister also conveyed Indonesia’s plan to host Indonesia-Africa Infrastructure Dialogue in 2019.
The Foreign Minister and the Finance Minister have launched a book “Road to Africa”. This book is expected to be a reference for businessmen in establishing business cooperation with businessmen in Africa. In addition, the Foreign Minister also witnessed the signing of the MoU on Economic Diplomacy between the Foreign Ministry and Exim Bank.
A meeting was held to begin the Preferential Trade Agreement (PTA) discussion with Mozambique, Tunisia, Angola, Kenya and South Africa. Currently, the PTA draft between Indonesia and Mozambique is being discussed and targeted for completion next year. In the field of connectivity, there is Ethiopian Airlines plan to open a new flight route from Addis Ababa to Jakarta in the near future.
In the field of development cooperation, Indonesia and Africa also encourage the South-South technical cooperation and development. Indonesia has committed to double the scholarship program and triple the capacity building program with Africa.
On the occasion of the joint press conference, Trade Minister Enggartiasto expressed appreciation for the implementation of the IAF which was able to produce significant achievements in encouraging the concrete cooperation of both parties. “This forum is amazing. This is really a breakthrough, and for us, it is so much easier, in accordance with the President’s order to open up new markets, non-traditional markets, “said the Trade Minister.
IAF 2018 themed “Developing Sustainable Economic and Investment Cooperation” was held at Bali Nusa Dua Convention Center on 10-11 April 2018. The meeting was opened by Vice President Jusuf Kalla and attended by approximately 575 delegates consisting of governments and businessmen from 47 African countries.
The IAF series consisted of a Panel Discussion themed “Policy Makers’ Perspective” and a business forum involving the participation of 39 speakers from Indonesia and Africa. During the forum, to facilitate business to business contacts, an exhibition was held on Indonesian industries and products, which was open to the public. On the sidelines of the IAF, various bilateral meetings had also been held to enhance cooperation between Indonesia and African countries.
Foreign Minister Retno targets strengthening Indonesia-Africa economic cooperation
Foreign Minister Foreign Minister Retno L.P. Marsudi conducted bilateral meetings with government officials and businessmen from five African countries on the sidelines of the IAF 2018 series at Bali Nusa Dua Convention Center to discuss various opportunities to strengthen Indonesia’s cooperation with countries in the African region.
The five meetings were with the Vice Minister for Agriculture of Somalia, Vice Minister for Agriculture and Food of Ghana, Ambassador of Uganda to Indonesia based in Kuala Lumpur, Head of BKPM Nigeria, and the CEO of Ethiopian Airlines.
“The Indonesian government welcomes the development of economic relations between Indonesia and Africa, which is marked by an increase in trade volume with a numbers of countries,” said Foreign Minister Retno.
With Somalia, the Foreign Minister explained that the average bilateral trade volume increases by 30% every year. In fact, it was recorded that the trade value of both countries went up by 80% in 2017 as compared to 2016. The increase in trade volume was also recorded in the bilateral trade between RI-Uganda with an average of 3.42% and increased to 55% in 2017.
Indonesia’s trade volume with African countries still has the potential to increase due to the high economic growth of African countries. “One example of the potential increase in trading volume is with Ghana, because this country has an average economic growth of 7.9%,” said the Foreign Minister.
At various bilateral meetings, Indonesia was also invited to be active in investment and infrastructure in Africa. Somalia, which is pushing for infrastructure development, has also invited Indonesia to invest in infrastructure development in the form of roads and ports, as well as agriculture.
“Indonesia welcomes and plans to send a team of experts to join the international team as designers in the construction of the port in Somalia,” said Foreign Minister Retno.
Meanwhile, the Government of Ghana also invited Indonesian construction companies to take part in the development and financing mechanism of 1 million houses in Ghana.
Foreign Minister Retno also emphasized that the Indonesian Government is seriously pushing for increased Indonesia-Africa connectivity, one of which is through the opening of Jakarta-Addis Ababa direct flights.
This opening of the first Indonesia-Africa direct flight is to be served by Ethiopian Airlines. Ethiopian Airlines will cooperate with Garuda Maintenance Facility (GMF AeroAsia) in aircraft maintenance and ground handling.
“Currently GMF AeroAsia has cooperated with airlines from African countries such as from Nigeria (Max Air and Hax Air), Libya and Djibouti,” explained the Foreign Minister.
Foreign Minister Retno added that currently the Indonesian Government is seriously working to target the African market. Some efforts that have been and are being pursued include the initiation of a Preferential Trade Agreement with Mozambique and East African countries that are incorporated in the East African Community (EAC) and efforts to reduce trade barriers.
To achieve such target, Foreign Minister Retno has instructed the Indonesian Ambassadors in African countries to appoint candidates for Honorary Consul in the countries that do not yet have an Indonesian representation. “With a Honorary Consul at least we have eyes and ears for economic affairs and protection of Indonesian citizens,” said Foreign Minister Retno.
Besides economic cooperation, the bilateral meetings of Foreign Minister Retno also discussed technical cooperation and development through training and scholarship. Many requests came from African countries including Somalia requiring diplomatic and agricultural training, as well as Uganda in the fields of small economics, fisheries, and energy.
Foreign Minister Retno explained that in the field of political cooperation, the meetings discussed efforts of mutual support. Somalia and Uganda expressed support for Indonesia’s nomination as a non-permanent member of the UN Security Council for the period 2019-2020.
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How to ensure Africa’s bold free trade area propels industrialisation
Africa’s industrialisation needs a boost. Implemented correctly, the AfCFTA could provide it. Here’s how.
On 21 March, dozens of African countries agreed to establish what could be a truly transformative trade deal. At a special African Union summit convened in Rwanda, 44 governments signed the African Continental Free Trade Area (AfCFTA) agreement. The majority of the remaining 11 AU member states signed the Kigali Declaration, a promissory note to ratify the AfCFTA. 27 additionally signed a separate AU Protocol on the Free Movement of People.
Africa’s two biggest economies – Nigeria and South Africa – did not sign the AfCFTA agreement. However, it is expected that they – along with the remaining member states – will do so following national consultations or the fulfilment of constitutional requirements for signing international treaties.
The agreement will enter into force once 22 African countries have ratified the deal. Given the current momentum behind the project, this process is expected to be swift and smooth.
Credit: African Union.
The AfCFTA commits members to cut tariffs down to zero on imports covering 90% of tariff lines, as well as address a host of other non-tariff barriers. All this is expected boost trade between African countries by an impressive 52.3%. This could have momentous repercussions for a trade area that would potentially contain 55 countries, 1.2 billion people, and a combined $2.5 trillion in GDP. It would enable significant scale economies and attract external investment.
More intra-African trade would also have crucial knock-on effects. Given that manufactured goods make up a much higher proportion of regional exports than those leaving the continent – 41.9% compared to 14.8% in 2014 – more intra-African trade means much more opportunity for industrialisation.
As noted in a recent report by the UN Economic Commission for Africa (ECA) and the Overseas Development Institute (ODI), Africa is bizarrely less industrialised today than it was three decades ago. In 2014, manufacturing contributed just 9.8% on average to Africa’s GDP, a quarter lower than in 1990. Africa’s exports today still predominantly consist of primary commodities and raw materials, with fuels alone accounting for 53.9% of exports in 2014.
At the same time, however, manufacturing in Africa is on the rise in absolute terms. Between 2009 and 2014, for instance, manufacturing production grew at an average 5.1% per year in real terms, with particularly strong performances in Chad, the Democratic Republic of the Congo, Ethiopia, Nigeria, Niger and Sudan.
Statistics show that from 2004 to 2014, the value of African manufacturing exports more than doubled. Meanwhile, in 2016, UNCTAD calculated that the manufacturing sector now contributes approximately one-fifth of Africa’s inward FDI stock.
Despite a disappointing backdrop, these trends are promising and suggest that with the right impetus, they could be accelerated.
Industrialisation matters
The benefits of industrialisation – and the reasons it’s been central to national development strategies across Africa – are clear to see.
Manufactured goods are much less vulnerable to fluctuating global prices than extractive goods, meaning they can provide a more sustainable tax base. They are more frequently produced by small and medium-sized enterprises (SMEs), which comprise about 80% of all enterprises in Africa, and are therefore key to poverty reduction. And, perhaps most importantly, manufactured goods tend to be labour intensive, meaning they can better create jobs for Africa’s bulging youth population.
Industrialisation is also crucial to transforming the agricultural sector, which accounts for about half of Africa’s workforce. Increasing agricultural productivity through agro-processing would help reduce rural poverty and facilitate the release of more labour. These workers could move onto the more productive activity of manufacturing itself, whose output is six times that of agriculture.
Making the AfCFTA work for industrialisation
It is for these reasons that the AfCFTA has been specifically designed to drive industrialisation. It is crucial this remains a priority as the agreement is implemented. How can this be done?
To begin with, the ratification and implementation of the agreement must be expedited. Industries on the continent must have time to find and build their competitive edge before African markets are further opened up to the rest of the world.
The AfCFTA’s process of reducing tariffs should also prioritise “intermediate goods” – namely semi-finished products used in the production of final goods. This would boost incentives for businesses to source these inputs from within Africa and support the expansion of manufacturing.
The removal of non-tariff barriers and harmonisation of standards across borders could also focus initially on products with industrial potential. Mechanisms to monitor non-tariff barriers, simple rules of origin requirements, and common accreditation practices will be crucial in supporting the expansion of industrial supply chains between African countries.
The AfCFTA’s second phase will see negotiations around investment, intellectual property rights and competition policy. This much-needed legal framework – in particular common investment rules – should facilitate cross-border investments that could alleviate constraints to intra-African trade including in infrastructure and technology. This would further help regional industrialisation.
Finally, if the AfCFTA is to fulfil its potential in boosting African manufacturing, it must come up with a clear digital strategy. Technological innovations such as automation threaten traditionally labour-intensive routes to industrialisation. The continent must be ready to address these challenges, but also recognise the opportunities these trends present.
Expanding the scope of the AfCFTA to include e-commerce, for instance, could provide a platform for connecting African businesses. Meanwhile, it should be recognised that while technology may remove some routes to employment, new jobs are being created in agro-processing as well as trade-related sectors such as branding, marketing, logistics, transportation and distribution. In fact, services now account for over 50% of Africa’s GDP, although there is scope to move from low to higher value services.
With discussions over the AfCFTA’s implementation ongoing at the AU, it is promising that the continent’s leaders appreciate that the landmark agreement could play a game-changing role in Africa’s industrialisation. This is not an opportunity to be missed.
David Luke is Coordinator of the African Trade Policy Centre at the UN Economic Commission for Africa. Lily Sommer is a Trade Policy Fellow at the African Trade Policy Centre.
This article was originally published by African Arguments.
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Southern African Customs Union Council of Ministers’ Meeting underway in Windhoek
First quarterly meeting of the 2018/19 financial year to discuss the Southern African Customs Union (SACU) agenda
South African Minister of Trade and Industry, Dr Rob Davies, on Wednesday left for Windhoek, Namibia to attend the Southern African Customs Union (SACU) Council of Ministers’ meeting scheduled for 12 to 13 April 2018. This is the first quarterly meeting of the financial year 2018/19 to discuss the SACU agenda.
The Ministers will discuss, among others, the SACU trade negotiations, including the recently launched African Continental Free Trade Area and provide strategic guidance.
Minister Davies will also attend the inaugural meeting of the Ministerial Task Team on Trade and Industry set up by the SACU Summit in Swaziland in June 2017 to review the trade and industry aspects of the 2002 SACU Agreement.
“The objective of the review is to identify critical areas of the SACU Agreement to be amended to facilitate the transformation of SACU into a development integration arrangement,” said Davies. He emphasised that SACU has already identified the critical pillars to advance this objective through the six-point plan.
The pillars of the six-point plan include: industrialisation; trade facilitation; a unified approach to trade negotiations with third parties; establishment of institutions; trade in services and the review of the revenue-sharing arrangement to facilitate the implementation of cross-border projects that promote regional integration.
The review of the 2002 SACU agreement aims to facilitate the implementation of the agreed work programme,” said Davies. The implementation of the six-point plan is central in promoting sustainable development of SACU economies.
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Rwandan Cabinet gives green light to AfCFTA protocol
A cabinet meeting on Wednesday approved the draft law ratifying the African Continental Free Trade Area (AfCFTA), which aims at easing intra-Africa trade.
This comes barely weeks after the majority of African Union member countries (44) signed the agreement that will see Africa becoming the biggest free trading bloc in the world.
The protocol was assented to during the just-concluded 10th Extraordinary African Union Summit of Heads of State and Government which was held in Kigali.
The cabinet meeting that was chaired by President Paul Kagame also gave a green light to protocols on trade in goods, trade in services, and one on rules and procedures for settlement of disputes, according to minutes signed by Cabinet Affairs Minister Solange Kayisire.
The instruments will now head to parliament for ratification.
During the Kigali meeting by continental leaders, it was agreed that with 22 ratifications, the Agreement establishing the AfCFTA will enter into force.
Find out more about the AfCFTA here.
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tralac’s Daily News Selection
Taking place tomorrow in Harare, ZEPARU inception workshop: Assessing Zimbabwe’s trade performance within the context of SADC, TFTA and the CFTA
Indonesia-Africa Forum: updates
(i) Indonesia to boost connectivity with Africa through Ethiopia. The Indonesia government seeks to increase connectivity between Indonesia and African countries through Ethiopia, one of them being by agreeing to the procurement of the Jakarta-Addis Ababa flight route. “I think there is still a lack of connectivity between Indonesia and Africa, including air connectivity. Hence, the agreement to operate direct flights from Jakarta to Addis Ababa is a new breakthrough,” Foreign Affairs Minister Retno Marsudi noted after a meeting with the Ethiopian Airlines CEO in the company of representatives from Garuda Indonesia in Bali on Wednesday. “We want to also make Addis Ababa a center for strengthening connectivity between Indonesia and other African regions, especially in the sub-Sahara African area,” she noted. In addition, Minister Marsudi noted that the governments of several African countries had provided information on the possibility of making Addis Ababa a center for visa services for African countries. [First Indonesia-Africa direct flight expected to commence in May]
(ii) Trade value worth $500m recorded during Indonesia-Africa Forum. The Indonesia-Africa Forum managed to record additional trade transactions worth nearly $500m, with the total potential of trade agreements within two days of the meeting reaching $2.3bn. “This is a remarkable (achievement) that has been recorded in a short period of time,” Trade Minister Enggartiasto Lukita noted in a joint statement with Foreign Minister Retno Marsudi on Wednesday. The business agreements were signed by Indonesia Eximbank and African Exim Bank; Indonesia Eximbank and Standard Chartered; Indonesia Eximbank and Commercebank; state aircraft manufacturer PT Dirgantara Indonesia and A.D. Trade Belgium; as well as state-owned shipbuilder PT PAL and A.D. Trade Belgium. The IAF also concluded the announcement of business plans from 11 Indonesian companies, with a potential trade value reaching Rp1.3 billion, such as PT Wika in Algeria, Nigeria, and Mozambique; PT PAL Indonesia in Gabon, Guinea Bissau, and Senegal; state energy company Pertamina in Nigeria; as well as state-owned train manufacturer PT INKA in Zambia.
(iii) Indonesia to hold Indonesia-Africa Infrastructure Dialogue 2019. One form of Indonesia`s efforts to strengthen the cooperation is through the establishment of Indonesian Task Force Infrastructure to Africa. According to Pandjaitan, the government, through the Coordinating Ministry, has initiated the establishment of the task force. “The Indonesian government will form a task force and will visit some potential African countries. I think it will be realized soon. PT INKA will have a railway project in Africa, as well as PT WIKA and other state-owned construction companies,” Pandjaitan noted. The African countries which have the potential for infrastructure projects include Senegal, Nigeria, Mozambique, Zambia, and Algeria.
(iv) Afreximbank signs $100m partnership agreement with Indonesia Eximbank. Under the terms of the agreement, Afreximbank will work with Indonesia Eximbank in supporting import of capital equipment and services from Indonesia by African private sector entities through an overseas financing arrangement, with Indonesia Eximbank providing direct financing to African buyers of Indonesian goods and services on the back of a guarantee provided by Afreximbank. Indonesia Eximbank will also provide financing support to Indonesian buyers of African goods, with Afreximbank acting as the Bank of the African exporters. In addition, Indonesia Eximbank will support short-term trade transactions emanating from African buyers of Indonesian products, including through provision of confirmation lines to the African Banks on the back of a trade confirmation guarantee facility provided by Afreximbank.
EACJ challenged to bring business disputes to end (The Citizen)
The East African Court of Justice has been implored to resolve business disputes because they are counter-productive to regional trade. “Business enterprises want disputes resolved as quickly as possible,” stated the Kenyan Chief Justice, Mr David Maraga in Nairobi last week. He told judges of the court that businesses in the region often suffered from lingering commercial disputes hence impacting on cross border trade. ”As an economic bloc trading with each other, chances to have disputes are there. We have to put in place legal framework to resolve them,” he said when he spoke at court’s validation workshop and bi-annual retreat. He added that alternative resolution mechanisms such as arbitration were equally critical to limit commercial disputes among enterprises doing regional trade.
Morocco’s difficult path to ECOWAS membership (Cairo Review)
The impression is therefore that Morocco is purposefully avoiding giving any firm answer to these questions so it can expand its room to manoeuvre and obtain an ad hoc ECOWAS membership at the expense of the other states. [The author, Riccardo Fabiani, is a Senior North Africa Analyst at Eurasia Group]
Egypt: CEC’s first trade mission to West Africa kicks off Wednesday (Egypt Today)
The Chemicals and Fertilizers Export Council’s first trade mission to Ghana kicked off on Wednesday with the participation of 13 companies from the council’s different industrial sectors. Executive Director of CEC Waleed Azab said in a statement that bilateral meetings with more than 100 Ghanaian companies have been organized, projecting making contracts worth LE 8.8 billion. The mission comes in light of the CEC’s plan to double exports to Africa. The Trade Ministry has identified 10 countries, out of 52, as a first phase for the plan to double exports. The focus will be on five main sectors, namely engineering, building materials, chemical industries and textiles.
Angola: EU, UNCTAD kick-start project to help Angola diversify its trade (UNCTAD)
Speaking at a ceremony held at the Ministry of Commerce, UNCTAD Secretary-General Mukhisa Kituyi said the project EU-UNCTAD Joint Programme for Angola: Train for Trade II marked “an important step for Angola” in its efforts to restructure the economy. “The objective of the EU-UNCTAD Joint Programme for Angola is to improve human and institutional capacities to foster appropriate economic diversification policies in Angola. We aim to help Angola build a more, diverse, inclusive and resilient economy capable of eradicating poverty. Together with our European Union partners, UNCTAD is drawing on its wealth of expertise to provide targeted assistance and address development challenges from multiple angles. Support will focus on 6 strategic components: commercial diplomacy, trade facilitation, trade logistics, small business development, investment, scoping of non-oil sector opportunities. For each component, UNCTAD will conduct studies and develop training courses and workshops for public and private sector actors.
Uganda, DRC sign pact to ease trade (Xinhua)
The agreement was reached during a Wednesday meeting attended by Uganda’s trade minister Amelia Kyambadde and DRC’s external trade minister Jean-Lucien Bussa Tongba in Uganda’s Kasese. Kasese hosts one of the major border trade points between Uganda and DRC called Mpondwe. A joint communique signed by the two ministers said the meeting had reached an agreement to also enhance management and control of standards and quality as well as exchange of information and statistics. “The two ministers considered and approved the list of products for the Simplified Trade Regime,” the communique said.
Successful elections in DRC crucial to wider Great Lakes Region’s peace, stability (UNSC)
Said Djinnit, Special Envoy of the Secretary-General for the Great Lakes Region, reporting on the implementation of the Peace, Security and Cooperation Framework for the DRC and the Region, urged the Council to remain united in its support for the implementation of the 31 December 2016 political agreement among Congolese political leaders under which elections would be held on 23 December 2018 for a successor to President Joseph Kabila. The Great Lakes was among Africa’s most volatile and complex regions, but it was also one that could make a meaningful contribution to the continent’s stability and development, he said. Equatorial Guinea’s delegate said the Great Lakes region had strategic importance for the stability of all Africa. The enormous potential of the region’s natural resources — once peace was achieved — would allow the region to flourish. As things stood now, conflicts were “bleeding its countries dry”. Emphasizing that the situation in the Democratic Republic of the Congo was central to overall regional stability, he said the upcoming elections could help open a new chapter, and that Kinshasa must work closely with its regional and international partners to ensure that voting was carried out smoothly. [Great Lakes Region: Security Council press statement]
African Medicines Regulatory Harmonization Initiative: Annual Report 2017 (pdf, NEPAD)
Following endorsement of the AU Model Law on Medical Products Regulation by the AU Heads of State and Government Summit in January 2016 in Addis Ababa, Ethiopia, 12 out of 55 countries have either reviewed or are in the process of reviewing their national laws, in line with the AU Model Law. These countries are: Ivory Coast, Burkina Faso, Seychelles, Zimbabwe, Lesotho, Namibia, Swaziland, the Gambia, United Republic of Tanzania (Zanzibar), Rwanda, Burundi and Mozambique. Terms of reference for a network of legal experts have been developed for discussion with relevant stakeholders in the spirit of domestication of the AU Model Law. NEPAD shared a framework for domestication of the AU Model Law for benchmarking exercise and national multi-stakeholder consultation on review, updating and harmonization of national medicines laws undertaken by the EAC Partner States NMRAs in June 2017.
COMESA Committee of Governors of Central Banks: summary of outcomes
Djibouti’s Minister of Trade and Industry, Honourable Hassan Houmed Kamil, emphasized the importance of sustaining a conducive environment for stability, investment and growth. He called on Member States to ensure predictability, transparency and accountability to achieve sustainable economic growth. He also called for speedy implementation of the Regional Payment and Settlement System in order to achieve significant increases in intra-COMESA trade.
United Cities and Local Governments of Africa: schedule of regional strategic meetings
The East Africa regional strategy meeting (9-10 April, Nairobi) will be followed by the regional strategic meeting for the Central Africa Region (16-17 April, Libreville); for the Southern Africa Region (7-8 May, Walvis Bay); for the West Africa Region (28-29 May, Accra); for the North Africa Region (18-19 June, Rabat). The 8th edition of the Africities Summit will be hosted in Marrakesh (20-24 November).
UNCTAD Survey of Infrastructure Regulators, 2017
The services sector has emerged as the largest segment in and driving force of the economy, contributing a growing share to GDP, trade and employment. Opportunities for structural transformation created by the rising services economy are huge, notably derived from rapid technological developments and the digital economy. This is the third survey by UNCTAD to take stock of the regulatory environment in key infrastructure services, with the goal of ascertaining regulatory and institutional best practices, and challenges faced by regulators in developed, developing and least developed countries.
Today’s Quick Links: The SADC Energy Thematic Group met today in Gaborone: this was the first meeting co-chaired by USAID since it assumed the role of Lead ICP for the SADC energy sector. 6th Annual Africa Power Roundtable: speech by Mr Thabane Zulu (South Africa) Regional Centre for Mapping of Resource for Development: call for abstracts (15-17 August, Nairobi) Seychelles citizens exempted from visa requirements in Angola |
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EU and UNCTAD kick-start project to help Angola diversify its trade
The four-year, €5.5 million ($6.9m) project will give strategic support to the oil-dependent African nation’s efforts to reignite growth and trade its way out of least developed country status.
The European Union and UNCTAD launched on Wednesday in Luanda a four-year, €5.5 million ($6.9m) project aimed at helping Angola diversify its economy and reduce its dependence on oil, which accounts for a whopping 93% of total merchandise exports.
After decades of civil war ended in 2002, Angola’s economy took off thanks to abundant oil reserves, which fueled a decade of double-digit growth. The steady flow of petrodollars financed new roads and fancy skyscrapers in Luanda, the nation’s capital and now one of the world’s most expensive cities.
But when the price of oil crashed in 2014, the economy ground to a halt and growth flatlined, dropping below 1% in 2016. With fuel exports providing less revenue for the government, public debt has more than doubled since 2013 and sits above 60% according to the finance ministry.
Speaking at a ceremony held at the Ministry of Commerce, UNCTAD Secretary-General Mukhisa Kituyi said the project, titled EU-UNCTAD Joint Programme for Angola: Train for Trade II, marked “an important step for Angola” in its efforts to restructure the economy.
“The objective of the EU-UNCTAD Joint Programme for Angola is to improve human and institutional capacities to foster appropriate economic diversification policies in Angola,” Dr. Kituyi said.
“We aim to help Angola build a more, diverse, inclusive and resilient economy capable of eradicating poverty.”
“Together with our European Union partners, UNCTAD is drawing on its wealth of expertise to provide targeted assistance and address development challenges from multiple angles,” he added.
Angola’s Minister of Commerce Jofre Van-Dúnem Júnior said: “This programme aims to strengthen human and institutional capacities to develop strategies, policies and regulations related to international trade.”
“The process of diversifying the national expert basket includes the opening of new clusters identified in emerging global trends,” he added, hailing UNCTAD’s work on the creative economy and saying that Angola had great potential in the arts and handicraft sectors.
European Union Head of Delegation Tomás Ulicný underscored that the programme was part of a long-term relationship with Angola.
“The cooperation between the European Union and Angola over the past 20 years has essentially been based on capacity building both institutional and human resources,” Mr. Ulicný said.
“In the framework of Train for Trade, the strategic partnership with UNCTAD will provide personalized support, tailored to the needs of the country and corresponding to the priorities of the Government,” he added.
The project’s ceremonial start will help raise political awareness among key government institutions about the project’s components and implementation strategy and enhance coordination between the ministries and agencies involved.
Following the 11 April launch, Dr. Kituyi and UNCTAD experts were due to hold meetings with public and private sector actors in the country to discuss in greater detail the content and action plan for each component.
Commercial diplomacy to small business development
UNCTAD's role in the EU-funded project is to address the problems that the Angolan government has identified as major hurdles to economic diversification and to growth that is more inclusive and sustainable.
Support will focus on 6 strategic components:
- Commercial diplomacy
- Trade facilitation
- Trade logistics
- Small business development
- Investment
- Scoping of non-oil sector opportunities
For each component, UNCTAD will conduct studies and develop training courses and workshops for public and private sector actors.
For example, project managers have already identified with the government the need for a National Green Export Review – an in-depth assessment of less environmentally-harmful sectors for which Africa’s second biggest oil producer could have a competitive advantage. Such a study will be crucial to identify the right non-oil industries that the government should support and for which it should focus efforts to attract investment.
Graduation with momentum
Angola’s gross domestic product (GDP) topped $117 billion in current prices in 2016, for a population of just under 29 million. From 2000 to 2016, the country saw its GDP per capita increase from $420 to $4,078.
This is relatively high compared to other sub-Saharan African countries and remarkable for a least developed country (LDC), and Angola aims to become an upper-middle income country by 2020 and graduate from LDC status by 2021.
In 2015, the country was tipped for graduation based on the “income-only” criteria, which allows a country to leave the UN special category if its gross national income per capita is double the threshold level, which was $1,242 at the time.
But graduation based on income only would not necessarily mean that Angola’s economy – and population – is any less vulnerable to the whims of global oil markets, as the UNCTAD Least Developed Country Report 2016 pointed out.
“Graduation is not the winning post of a race to escape from the LDC category. It is the first milestone in the marathon of sustainable long-term development,” Dr. Kituyi has said previously. “So how a country graduates is just as important as when it graduates.”
That’s why UNCTAD promotes what it calls “graduation with momentum” – laying the economic foundations necessary for long-term development, the kind that lifts large segments of a population out of poverty.
Paul Akiwumi, director of UNCTAD’s division for Africa and LDCs, said: “Despite Angola’s exceptional improvement in per capita earnings, mainly due to the country’s successful oil sector, progress in economic diversification and advancement in social and human-capital indicators has been limited.”
“The country needs reformulated policies and reinforced institutions to help diversify its economy and maximize regional and global trade opportunities,” he said.
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Monetary integration is achievable – COMESA Central Bank chiefs
Governors of Central Banks and representatives from eleven COMESA countries have reiterated that achieving monetary integration is possible and it will be enabled if Member countries have larger and deeper financial markets. Other factors such as having more competitive banking sectors, stronger institutional and regulatory environment and more transparent central banks also need to be in place.
The Bank chiefs have also agreed that for deeper regional integration to take effect, Central Banks have a huge role to play in bringing about the required transformation in the respective COMESA economies.
This was said during the 23rd meeting of the COMESA Committee of Governors of Central Banks held on 29th March 2018 in Djibouti. The meeting was preceded by a symposium on the ‘Roles of Central Banks in promoting Sustainable Growth.’
Speaking during the event, Governor of the Central Bank of Djibouti Mr Ahmed Osman urged central banks in the region to put deliberate effort towards greater development of efficient, stable and healthy financial markets further calling for greater monetary integration.
While appreciating the success that has been achieved so far under the COMESA Integration Agenda in general and monetary integration programme in particular, Mr Osman added, “We as Central Banks have a critical role to play in the implementation of the COMESA Monetary Integration programme to make the region a zone of macroeconomic and financial stability.”
Both the meeting and the symposium underscored that success of the COMESA Free Trade Area, Customs Union, Common Investment Area, the drive towards industrialization and the plan to establish the Common Market and economic community which he said require greater monetary integration.
Speaking when he officially opened the meeting, Djibouti’s Minister of Trade and Industry Honourable Hassan Houmed Kamil emphasized the importance of sustaining a conducive environment for stability, investment and growth. He called on Member States to ensure predictability, transparency and accountability to achieve sustainable economic growth. He also called for speedy implementation of the Regional Payment and Settlement System (REPSS) in order to achieve significant increases in intra-COMESA trade.
Secretary General Sindiso Ngwenya, who was at the meeting, stated that the focus of COMESA is to contribute to structural transformation of the economies of the Member States so as to foster the overall economic development through trade facilitation and investment promotion.
This will help create an enabling environment for trade facilitation, market integration, infrastructure development, industrialization, small and medium enterprise development, regional industrial clusters, modernising institutional and regulatory policies, capacity development as well as resource mobilization.
He added that the COMESA Monetary Institute and the COMESA Clearing House are important instruments for developing policy and institutional frameworks to enhance monetary integration in the region.
Central Bank Governors and experts from Burundi, Djibouti, DR Congo, Egypt, Kenya, Malawi, Mauritius, Sudan, Uganda, Zambia and Zimbabwe attended the meeting. The Chief Executive Officers of the COMESA Monetary Institute, the COMESA Clearing House, the Association of African Central Banks and a Representative of the Trade and Development Bank also attended the annual meeting.
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Indonesia and Africa synergize cooperation at Indonesia-Africa Forum 2018
Unleashing potentials: Developing Sustainable Economic and Investment Cooperation
“[The] Indonesia-Africa Forum is the embodiment of the commitment of Indonesia and African countries to advance and prosper together and become the first forum, where Africa and Indonesia can meet and discuss concrete cooperation involving various stakeholders,” said Indonesian Minister for Foreign Affairs H.E. Retno Marsudi in her report during the opening of the Indonesia-Africa Forum (IAF) 2018 at Bali Nusa Dua Convention Center, Denpasar.
The Minister for Foreign Affairs hoped that the IAF event can be maximally utilized to explore more potential cooperation that will benefit Indonesia-Africa in order to achieve mutual prosperity. “This time for Africa,” she affirmed.
The first-ever IAF event on the theme “Developing Sustainable Economic and Investment Cooperation” was officially opened by Vice President Jusuf Kalla. “Let’s [walk] hand in hand in strengthening the relations between Indonesia and Africa and to build a just and prosperous world together,” he said in his keynote speech at the opening session of the IAF 2018.
The event was attended by over 500 participants including 240 delegates from 46 African countries, International Organizations and Development Partners while from Indonesia, about 200 people were present from the government, private sector, and business players. Indonesian Coordinating Minister for Home Affairs, Minister for Trade, and Minister for Foreign Affairs were also present at the opening.
The series of the IAF 2018 meeting programs will include discussion forums, industry fairs, and business deals. On the sidelines of the meeting there will also be a number of bilateral meetings between Indonesia and African countries.
In his opening speech, the Vice President expressed his hope that the forum will be able to establish real economic cooperation, in various fields and continue to map cooperation in infrastructure, strategic industries, and financing facilities.
Currently, Indonesia needs oil, cotton, and cocoa beans from Africa, while Africa requires palm oil, motor vehicles, and instant noodles from Indonesia. In the field of investment, more than 30 companies in the fields of pharmaceuticals, textiles, energy and others, operating in Africa.
IAF 2018 is a showcase of concrete economic cooperation between Indonesia and African countries to translate the political and historical closeness of Indonesia-Africa into a close and tangible economic cooperation.
During the IAF 2018 event, business deals worth USD 586.56 million will be signed, and Indonesia also expressed its commitment to strengthen cooperation with Africa, among others, through the enhancement of technical cooperation and capacity building to Africa region; improvement of scholarship cooperation, development of competitive export credit facilities, increased connectivity cooperation, and exploring trade agreements through the establishment of Preferential Trade Agreement.
In addition, in the next year as an effort to follow up the IAF 2018 meeting, there is a plan to hold Indonesia-Africa Infrastructure Dialogue in August/September 2019.
The meeting will also discuss the potential and opportunities of cooperation between the two countries, such as the cooperation in food security, creative and digital economy, energy, and construction, and action steps to realize the possibility of cooperation programs that have not been explored so far.
Vice President Jusuf Kalla opens IAF 2018 and affirms “Indonesia-Africa forever!”
Vice President Jusuf Kalla officially opened the first Indonesia-Africa Forum (IAF 2018) in Bali Nusa Dua Convention Center on 10 April 2018.
The Vice President conveyed that Indonesia and Africa have a long history beginning with the organizing of the Asian-African Conference (KAA) in Bandung in 1955 and subsequently with the Non-Alignment Movement in 1965. The spirit of cooperation between Indonesia and Africa has been continuous, marked by the 50-year and 60-year anniversaries of the Asia-Africa Conference in the years 2005 and 2015, respectively.
Indonesia and Africa thereafter keep working together in promoting the economic cooperation. Indonesia also considered Africa as a strategic partner in foreign policy. African countries, likened to Wakanda in the Black Panther film have uncharted potential and resources that are not widely known by the international community.
Like Africa, Indonesia – as a growing economy in Asia, the largest in Southeast Asia, as well as a member of the G20 – is developing infrastructure to boost economic growth. In addition, the Vice President also encouraged the continuation of Kerja Sama Selatan-selatan dan Triangular (KSST) (South-South and Triangular Cooperation) program of Indonesia-Africa that may explore the potential of economic cooperation in the future.
The value of Indonesia-Africa trade, according to the Vice President, continues to increase. According to the latest statistics in 2017, the value of Indonesia-Africa trade was USD 4.86 billion in export value and USD 3.97 billion in import value, with a surplus trade balance for Indonesia of USD 887.28 million and an upward trend of 15.25% from 2016.
The main export commodities of RI to Africa, among others, are palm oil, processed food and beverages, soaps, paper, garments, motor vehicles and spare parts. Meanwhile, Indonesia’s main import commodities from Africa are petroleum, cotton, cocoa beans, pulp, and chemicals for fertilizers and industries.
The trade value still has great potential to grow continuously in considering the African countries still need Indonesian export goods such as palm oil, motor vehicles, and mass transportation vehicles, in addition to existing ones such as Indomie.
“Such effort needs to be supported by cooperation of export policy, connectivity, trade agreements, and infrastructure improvement,” said the Vice President in front of the invitees.
Before officially opening IAF 2018, Vice President Jusuf Kalla advised that in order for the hard work to be continued, cooperation agreements that have been made together should be followed up for the sake of common welfare of Indonesia and Africa.
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tralac’s Daily News Selection
Profiled submissions to the STC on Finance, Monetary Affairs, Economic Planning and Integration (12-15 April, Addis Ababa)
(i) Draft report of the experts group on the refinement of the convergence criteria of the African Monetary Cooperation Programme (pdf, Association of African Central Banks). The report of the experts group, including the comments of central banks, was examined by the Bureau of the AACB during its meeting, 8 March 2017, Dakar. In this regard, the Bureau instructed the experts group to: (i) include justifications for the selected criteria and thresholds identified; (ii) present time-lines for the creation of the African Central Bank, provided for in the Strategy of the AUC-AACB Joint Committee for the establishment of this institution; (iii) submit the report to the member central banks and to the RECs for comments; (iv) present the report to the 40th session of the Assembly of Governors scheduled for August 2017 in South Africa. To enable the Experts Group to fulfill the requested tasks, the AACB Chairman convened a meeting of the Group on 29th-30th June 2017 at the Central Bank of Nigeria in Abuja.
(ii) AU Committee of Directors Generals of the National Statistics Offices: report of the 11th Annual Session (pdf, 9-11 December 2017, Nouakchott). Extract: In some countries, the main actors participating in process of data collection, processing and dissemination trade data belong to two or more government agencies, there is need to associate all these actors when any technical support is provided to countries in order to strengthen their capabilities to record and avoid discrepancies on statistics for the same indicators at national level. The meeting considered and made the following recommendations: F - Trade Statistics:
(a) Adopt technical documents on trade statistics: (i) STG-ES Action Plan 2018-2022 on Trade Statistics in Africa, (ii) Harmonized template/framework for country data and Trade transmission channel and protocol; (iii) Metadata on trade statistics; (b) Request AUC to provide training to AU Member States and RECs on the Eurotrace software; (c) Request AU Member States to submit country trade data to AUC on regular basis. (d) Request AUC to follow up AU Member States that have not responded on the data for intra extra African Trade Publication before it uses estimates. (e) Call upon to eventually develop an alternative software to EUROTRACE, with the aim of improving knowledge of Intra-African trade statistics. The tool should include a module for estimating data from non-responding countries.
(iii) Progress report on the African Institute for Remittances (pdf)
South Africa Economic Update: jobs and inequality (World Bank)
This report reviews South Africa’s recent economic and social developments. It underlines that South Africa’s current economic rebound may not be sustained if the fundamental factors undermining its growth potential are not boldly addressed. This includes in particular income inequality, which fuels resource contestation, policy uncertainty and scare private investors of seeing their investments overly taxed and expropriated. Nevertheless, inequalities are increasingly driven by labour markets developments, as opposed to race or location of origin. Policy actions could accelerate a projected decline in inequalities resulting from greater access to education. Using a dynamic computable general equilibrium, the report simulates a number of policy scenarios until 2030.
Extract (pdf): While global growth accelerates, the South African economy has been gathering steam slowly. In 2017, primary sectors were the main drivers of growth, particularly in the agricultural and mining sectors. Momentum in other sectors has been weak. This means that South Africa is diverging from global growth. This is largely because the country’s main exports continue to be commodities – but they are raw materials that are not highly sought-after internationally. Except for parts of the services sector, South Africa is only weakly integrated into global and regional value chains, meaning that it has limited opportunities to benefit from global growth. The business cycle has been gaining momentum since late 2017 and business and consumer sentiment improved in early 2018. This may herald the return of investment that the country needs to make its firms more competitive, transfer technology, join global supply networks, and continue overcoming its historical isolation from the world economy (World Bank 2018b). This issue is further discussed in Chapter 2. [Marek Hanusch: The South African economy is growing faster – but how fast?]
Kenya Economic Update: policy options to advance the Big 4 (World Bank)
Though ambitious, the Big 4 can be achieved. However, significant policy reforms will be needed. This report proposes macroeconomic and sectoral policy options that could help advance delivery on the Big 4 over the medium term. Underpinning the proposed policy options is the recognition that success will require support from both the public and especially the private sector. Hence the need to provide appropriate incentive structures, through policy reforms, to allow resources to flow to the Big 4 areas.
Extract (pdf): The contribution of net exports will be moderate. Historically, the contribution of net exports to GDP growth has been negative, subtracting about 1.1 percentage points from GDP growth. Lower oil prices in recent years has however reduced the extent of the drag from net exports. However, since oil prices are expected to continue their steady ascent in 2018 and beyond, we expect the drag from net export over the forecast horizon to rise. This is expected to be mitigated somewhat by the lift from Kenya’s merchandise (horticulture and tea) and services (mainly tourism) exports as the projected broad-based recovery in the global economy takes root. Further, with fiscal consolidation underway and with it a projected slowdown in development spending, this should moderate the pace of import expansion and reduce the extent of the drag from the net exports contribution to growth.
Nigeria: Economy is on track to post improved growth in Q1 of 2018 (GTI Rsearch)
The biggest winner of all the positive activities that took place both in the domestic and external economic fronts within the period is the foreign reserves account. The reserves account closed at $46.04bn, representing a growth of 18.75% from $38.77bn it opened the year. The account was significantly boosted by increased receipt from crude oil sales (oil revenues makes about 95% of the reserves account). With the improved state of the reserves account, the CBN’s ability to support the Naira in an adverse situation now stands at a healthy six months’ period. This development can be traced to significant increase in oil output as a result of relative peace in the Niger-Delta region.
Mauritius: IOX submarine cable to drive the new digital economy of Mauritius (GoM)
The first phase of the IOX (Indian Ocean Exchange) Submarine Cable system project, which will position Mauritius as a technology hub and significantly enhance the country’s broadband infrastructure to support the new digital economy, was launched yesterday afternoon in Port Louis. The arrival of the marine survey vessel in Mauritius marks a key milestone in the deployment for the new 8 890 km cable system being built by Alcatel Submarine Networks for IOX across the Indian Ocean. The ultra-high speed IOX Cable System will be the first open access system connecting Mauritius and Rodrigues to East London in South Africa and Pondicherry in India. The IOX cable system will deliver an ultimate design capacity of over 54 terabits per second. The IOX cable system is scheduled to go live in 2019.
Can China realize Africa’s dream of an East-West transport link? (Jamestown Foundation)
Achieving the dream of unifying the continent is going to demand complex choices. Any East-West connection across the width of Africa would function as a de facto extension of the Belt and Road Initiative to the Atlantic Ocean. Such a connection would significantly increase Chinese presence on the continent, especially if Djibouti is its eastern anchor, because also houses China’s first overseas military base. While this might worry Western powers, Africa would arguably see it as a small price for a long-cherished dream. [The author, Cobus van Staden, is attached to SAIIA)
Indonesia-Africa Forum 2018: Indonesia targets Rp 6.75t in business deals (Jakarta Post)
Vice President Jusuf Kalla says the government is eyeing Rp 6.75 trillion ($472.5m) in business deals with partners from Africa at the Indonesia-Africa Forum 2018 in Bali, from 8-11 April. He also stressed the importance of boosting trade between Indonesia and African countries, which was recorded at $8bn in 2017, which was a 15% percent increase over 2016. Although the value was relatively small, Kalla said there had been a significant increase in trade between Indonesia and several Asian countries – 284% with Liberia, 268% with Comoros, 215% with Gabon, 105% with Togo, 105% with Burundi and 100% with Cabo Verde. According to Kalla, about 30 Indonesian companies, including those running in textile and pharmacological manufacturing businesses as well as in energy supply, operated in African countries.
On Tuesday, the forum will feature discussions on policymakers’ perspectives to talk about strategic topics such as economic diplomacy, infrastructure and digital transformations. On Wednesday, the Indonesia–Africa Business Forum will discuss various topics such as connectivity, the digital economy and South-South and Triangular Cooperation.
ECOWAS initiates regional offensive to reach rice self-sufficiency by 2025 (Daily Trust)
Mr Ernest Aubee, Principal Programme Officer and ECOWAS Head of Agriculture Division, made the disclosure in an interview with News Agency of Nigeria in Abuja on Monday. He said rice has become a highly strategic commodity in West Africa and is the largest source of food calories on the African continent. “ECOWAS countries imported around 9 million tonnes of milled rice in 2014, representing a cost of 4 billion Euros. To avoid risks of civil unrest and the scenarios of increased global food prices, there is an urgent need to increase rice production, processing, value-addition, and marketing in West Africa to achieve self-sufficiency. Currently, the region depends on imports from Asia to fulfil about half of its consumption needs.”
Today’s Quick Links: Tomorrow in Nairobi: workshop on operationalization of currency convertibility for EAC Partner States EAC-US trade, COMESA-EAC-SADC Tripartite FTA negotiations: national sensitization workshops conclude 12 April AUC launches online knowledge management platform Single African Air Transport Market: AfDB, stakeholders chart new course for aviation Afreximbank, Russian Export Centre roadshows seek to boost Africa’s aviation infrastructure Sudan, Kenya keen to enhance economic, trade ties Agro-processing sector could save Rwanda $118m annually EAC Gazette: No. 5 of 29 March 2018 |