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Featured infographic, @justchad_cga: Over half of oranges traded globally are sourced from Africa – who would have thought!! Extract from latest USDA Foreign Agriculture Services reports: South Africa Citrus Annual, Egypt: Citrus Annual, Citrus: World Markets and Trade
TFTA update: The 13th COMESA-EAC-SADC Tripartite FTA session of Principal Secretaries took place yesterday in Addis. @Kiptoock, while chairing the session of the PSs, urged Partner States to fast track the negotiations of outstanding issues so as to pave way for the implementation of the TFTA agreement to allow countries to enjoy benefit of greater market access, wider investment area etc.
CFTA set to unleash Africa’s full potential, says ECA’s Songwe (UNECA)
Africa’s signature policy reform of 2018, the Continental Free Trade Area (CFTA), is set to unleash the continent’s full potential with more African countries trading with each other in a wider integrated market, says Economic Commission for Africa’s (ECA) Executive Secretary, Vera Songwe. In opening remarks to the 5th Annual Ministerial Symposium at the 2018 Mining Indaba that kicked off Monday in Cape Town, Ms. Songwe said the mining sector on the continent was set to benefit the most from the CFTA and could help with the transformation of Africa’s economies.
African trade policy events starting today:
In Addis: CFTA negotiation meetings (until 17 February)
In Pretoria: Law Society of South Africa application on the 2014 SADC Protocol as it relates to the SADC Tribunal
In Harare: Establishing a trade facilitation roadmap in Zimbabwe (Module 3)
In Kampala: Sectoral meeting on TBR Implementation Harmonized EAC Standards to facilitate trade (textile and products)
In Geneva: Trade and Development Board executive session (Least Developed Countries). Advance documentation includes the Selected Sustainable Development Trends in the Least Developed Countries 2018. Extract (pdf): The above interpretation of the evidence is vindicated by the evolution of terms of trade and exports/imports volume indices across LDC groupings (Figure 9). Despite the impact of the 2009 global financial and economic crisis, LDC merchandise exports have increased significantly in volume terms, to the extent that the corresponding index for the whole LDC group rose from 100 in the year 2000 to 285 in 2011, and 376 in 2016 (Figure 9, panel A). Across African LDCs and Haiti (Figure 9, panel B), however, the expansion of merchandise imports, in volume terms, has largely outpaced that of merchandise exports. Hence, as long as high commodity prices (especially for fuels) sustained the terms of trade, the group actually posted a trade surplus; but as the positive terms of trade shock waned out, import compression became inevitable. This situation contrasts sharply with the prevailing developments among Asian LDCs (panel C), where merchandise exports and imports grew at a similar pace (at least in volume terms), as well as among island LDCs, where export volumes clearly outpaced import ones. Both Asian and island LDCs, however, have posted broadly stable or slightly declining terms of trade since the early 2000s, which explains why the sustained boost in export volumes translated only marginally into improved trade balances.
Africa’s currency manipulators haven’t finished reforms yet (Bloomberg)
Angola and Morocco last month became the latest African nations to loosen long-held currency pegs, following the lead of Nigeria and Egypt as they sought to revive struggling economies. The question is whether they’ve done enough. The four nations – among Africa’s six biggest economies – have relieved some of the pressure that was causing dire dollar shortages or hindering businesses, but they may all have to make further moves and reforms to benefit from the currency shifts and fully satisfy investors. They changed stance for different reasons.
Uganda overtakes South Africa in Kenya exports (Daily Nation)
Uganda overtook South Africa for the first time in November as the largest source of goods ordered by Kenyans, underlining the impact of drought which saw electricity and food imports shoot up. Kenya’s monthly import bill from Uganda jumped more than two-fold to Sh7.59 billion compared with Sh2.93 billion in October, marking the highest ever recorded monthly imports value from the land-locked country. Goods from South Africa stood at Sh4.60 billion, a 5.66% drop compared with October’s value. Imports from Uganda in the January-November period doubled to Sh35.08 billion from Sh17.75 billion in the same period in 2016, leapfrogging Egypt to become the second importer of goods to Kenya in Africa. South Africa, however, remained the biggest seller of goods to Kenya in the continent in the period at Sh57.70 billion, a growth of 28.31% year-on-year.
South African coal loses Europe, but gains South Asia (Reuters)
A decade ago South Africa sent the bulk of its coal exports to Europe, a market now disappearing right before its eyes. But far from being worried, South Africa’s coal exporters are confident that they can increase shipments in coming years by becoming the supplier of choice to new markets in Asia, particularly Pakistan and India. The common theme among speakers at last week’s South African Coal Export Conference, hosted by IHS Markit, was that South Africa is in pole position to take advantage of growth in South Asia. While India is currently the world’s second-largest coal importer behind China, the outlook for imports is far from certain, with the government officially targeting a goal of zero foreign purchases, a position in conflict with the views of several utilities that rely on imports to fuel coastal power plants.
Rwanda: How tax evaders smuggle goods into the country (New Times)
Rwanda Revenue Authority recently announced that they were battling rising cases of smuggling among other malpractices with used clothes and alcoholic products being among the most smuggled goods. The move to increase levies on imported used clothes saw an increase in attempts to smuggle these clothes as a section of traders seek to retain their profit margins. This is because though the supply has reduced significantly as some business people are abandoning this line of business, the demand remains the same. For instance, RRA has intercepted about 230 tonnes of used clothes being smuggled into the country. People with knowledge on logistics and importation of products say that among the major ways smugglers use is import goods and send them to a neighbouring country (mostly DRC and Uganda) then find a way to smuggle back into the country, through porous borders.
Kenya: Safaricom-backed logistics firm eyes Africa expansion (Business Daily)
Sendy’s chief executive Meshack Alloys says the company now has sufficient financial muscle to foray into East African countries. “We shall expand into East Africa by this year,” he said in interview, but declined to disclose the specific countries the firm is eyeing. Sendy has about 50,000 customers and serves over 4,000 businesses in Thika, Mombasa, Kisumu and Nairobi. The company last year said it expected to move to new towns in Kenya “in the next few months.” The on-demand logistics firm allows customers to order courier services over their mobile phones.
Trade facilitation and its contribution to food security in East and Southern Africa (EA Trade Hub)
The presentation (available for download) highlights the food crisis in East and southern Africa, but also stresses that the region has the ability to feed itself if food were allowed to move freely from surplus to deficit regions. It also provides information on The Hub and the Eastern Africa Grain Council trade facilitation forums that have been successful in promoting food security. In 2017, the USAID Hub and EAGC facilitated contracts for 1.2 million MT of staple grains for cross-border trade, supporting the food security of an estimated 14.4 million people. [Rwanda: Horticulture sector players tipped on how to reduce post-harvest losses]
Is the United States prepared for China to be Africa’s main business partner? (CSIS)
The question has changed from “what Africa needs from the United States?” to “how can the United States create win-win opportunities with Africa?” The concern is: can the United States change its approach to Africa and compete for business opportunities there? If not, then China will end up as Africa’s partner of choice and will continue to be the “go to” commercial partner for the future unless we make some drastic changes in our approach. Strong partnerships between African countries and China have major geostrategic and national security implications for the United States and the Trump administration. We need to leverage and expand on our current assets, including our traditional foreign assistance as well innovations such as Power Africa, and leverage our trade and financial institutions like the Overseas Private Investment Corporation, Export-Import Bank, and the US Trade and Development Agency to help level the playing field for American businesses in Africa. (i) Recommendations for the White House and Congress: (ii) Recommendations for business leaders and US agencies: [The authors: Daniel Runde, Christopher Metzger, MacKenzie Hammond]
Georgetown Africa Business Conference: keynote address by Dr Bukola Saraki (Proshare)
Another interesting dimension to the Africa Rising narrative is that much of what is celebrated as economic growth on the continent was in fact serendipitous. Because much of Africa still relies on commodity exports, we are able to make a connection between its economic growth and the rise in global commodity exports, rather than any new thinking or deliberate planning. I tend to align with those who reject this notion of Africa as a piggy-backer on the global economy as rather simplistic – especially given the remarkable political and social transformation that the continent had undergone by the end of the last century. Democratization and the more accountable governance system that comes with it, promote a way of thinking and doing things, which in turn create more conducive environments for business and investments. It was hardly a coincidence, therefore, that the Africa Rising mantra emerged about the time that almost all the countries of Africa had embraced constitutional democracy as the only legitimate form of government. I believe, however, that this kind of skepticism is healthy. It forces us to continue to interrogate the markers of our growth, what it means, what policy options it places before us and what choices we must make if economic development is to yield real dividends for the people, and address the social and economic challenges that we face. [The author is President of Nigeria’s Senate]
Informal sector heterogeneity and income inequality: evidence from the DRC (World Bank)
This paper uses 1-2-3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector. The first group of entrepreneurs – top performers – is growth oriented and enjoys greater access to capital. The second group – constrained gazelles – includes entrepreneurs who share many characteristics, especially management skills, with the top performers, but operate with less capital. The third group – survivalists – comprises firms struggling to grow.
BRICS-plus: Alternative globalization in the making? (WEF)
Indeed, despite the creation of the New Development Bank and some of the initiatives to boost economic ties between BRICS members, there is a sense that the BRICS is starting to encounter limitations to further integration. One of the ways to overcome this may be to shift the focus from trade liberalization or large-scale integration towards building a wider framework of integration and cooperation in the developing world that opens new gateways for cooperation among BRICS and their partners across continents. This kind of framework may be realized through China’s initiative to create a BRICS+ circle that according to China’s foreign minister Wang Yi will represent a new platform for the South-South cooperation via holding dialogues with other major developing countries or groups of developing countries to establish a more extensive partnership. Thus, rather than expanding the core set of BRICS members, the BRICS+ initiative seeks to create a new platform for forging regional and bilateral alliances across continents and aims at bringing together the regional integration blocks, in which BRICS economies play a leading role. Accordingly, the main regional integration blocks that could form the BRICS+ platform include Mercosur, SACU, EEU, SAARC, as well as the China-ASEAN FTA. Altogether, in such a setting, 35 countries form the BRICS+ circle. [The author: Yaroslav Lisovolik]
ICC Court and Miami Law International Arbitration Institute team up on major cost study (ICC)
The ICC International Court of Arbitration and the International Arbitration Institute of the University of Miami School of Law and have announced their collaboration on an unprecedented research project aiming to bring greater transparency to international arbitration. The state-of-the-art platform will allow those involved in international arbitration – scholars, arbitrators, counsel, and users – to organise data across different variables to test various hypotheses. They can assess if there is any correlation between, for instance, the governing law and the number of legal experts; the value of the dispute and the presence of dissent; the bifurcation of specific issues; and the length of the arbitration.
Europe’s new data protection rules export privacy standards worldwide (Politico)
When the region’s regulators roll out the changes – known as the General Data Protection Regulation, or GDPR – on 25 May, it will represent the biggest overhaul of the world’s privacy rules in more than 20 years. The new regulations offer EU citizens sweeping new powers over how their data can be collected, used and stored, presenting global leaders outside the 28-country block with a stark choice: bring their domestic laws in line with the EU’s new rules, or risk being shut out of a market of 500 million well-heeled consumers.
Today’s Quick Links: FAO Food Price Index: January 2018 TMEA: Consultant required to review Zanzibar’s Trade Policy Carrefour now sets sights on outlets across Kenyan borders Zimbabwe’s NRZ eyes 4m tonnes freight in 2018 Turkey’s trade deficit balloons 64% in December 2018 SADC Renewable Energy and Energy Efficiency Status Report: update Roman Grynberg: Buying investment – lessons from America Guinea-Bissau: (i) ECOWAS statement, (ii) AU, UN voice concern over protracted political crisis Kuwait’s UNSC Presidency: briefings and/or adopt resolutions pertaining to Sudan sanctions (8 February), Guinea-Bissau (14 and 27 Feb), CAR (22 Feb), South Sudan (27 Feb), Burundi (26 Feb). |
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CFTA set to unleash Africa’s full potential, says ECA’s Songwe
Africa’s signature policy reform of 2018, the Continental Free Trade Area (CFTA), is set to unleash the continent’s full potential with more African countries trading with each other in a wider integrated market, says Economic Commission for Africa’s (ECA) Executive Secretary, Vera Songwe.
In opening remarks to the 5th Annual Ministerial Symposium at the 2018 Mining Indaba that kicked off Monday in Cape Town, Ms. Songwe said the mining sector on the continent was set to benefit the most from the CFTA and could help with the transformation of Africa’s economies.
“The CFTA is a singular policy move that will actually help your business, help the continent create more jobs and ensure that we create enough value on the continent and increase intra-African trade,” she told mining executives and others attending the Mining Indaba.
“When African countries trade with African countries more value is created and therefore we believe we can do more than that with the CFTA,” said Ms. Songwe, adding intra-African trade had increased from five percent in 2012 to 17 percent currently.
“If you became part of that process of transformation, of creating value chains on the continent, we would do a lot more and create a lot more jobs on the continent. This is really the purpose of the CFTA, to see if we can create a wider integrated market – which will have 1,5 billion people by 2030 with a potential GDP of $2,2 trillion dollars,” she said.
The symposium and its roundtable discussions focused on six main areas: Lack of Trust; Lack of Engagement; Capacity Deficit; Governance and Regulations Gaps; Inter-sectoral linkages; and the Need of greater engagement of the Financial Sector.
The ECA Chief emphasized the need for the mining sector on the continent to help African countries in their bid to increase domestic resource mobilization, a topic that was discussed by African leaders at their just-ended African Union Summit in Addis Ababa, Ethiopia.
“One of the big discussions was how we raise domestic resource mobilization and ensure that there are resources on the continent, from the continent to ensure development,” she said, emphasizing the need to stem base erosion and profit shifting and illicit financial flows (IFFs) that she said were hindering Africa’s desire to up domestic resource mobilization.
“There’s a sense that many of us in this room here today are part of the problem and I think that the onus is on us to ensure that we can demonstrate in a credible way that that is not the case,” Ms. Songwe said, adding there was also a sense that the mining sector on the continent was “not contributing its share towards domestic resource mobilization and the question is how can we, as a collective, ensure that this perception, however, faulty it may be, can be put to rest”.
She said the ECA was ready to work with the mining sector and other stakeholders to ensure the perception was changed and that there’s a win-win situation between the mining firms and African governments in domestic resource mobilization.
“We know that in a typical mining project, government revenues from taxation only accounts for about 17 percent of total revenues over the lifetime of the project. Meanwhile, over 60 percent of capital expenditure in a typical mining project relates to procurement of inputs,” Ms. Songwe said.
She emphasized the need for transparency and good governance in the mining sector that can help transform the African continent as governments on the other hand play their part in creating environments that makes it easier for mining conglomerates and other investors to do business on the continent.
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Promises to world’s poorest need to be kept to stop massive inequalities, new trends show
UNCTAD analysis shows that development indicators for the 47 least developed countries are trending downward, raising the alarm for the international community
Economic development in the world’s most-disadvantaged countries – mostly in sub-Saharan Africa – is stalling against the background of a lukewarm global recovery, risking widening inequality, new analysis from UNCTAD reveals.
Data suggests that the 47 least developed countries (LDCs), a long-established category of nations requiring special attention from the international community, will fall short of goals set out in the 2030 Agenda for Sustainable Development unless urgent action is taken.
“The international community should strengthen its support to LDCs in line with the commitment to leave no one behind,” Paul Akiwumi, Director of UNCTAD’s Division for Africa, Least Developed Countries and Special Programmes, said.
“With the global economic recovery remaining tepid, development partners face constraints in extending support to LDCs to help them meet the Sustainable Development Goals.”
GDP growth rates will likely continue to fall short not only of their 2002-2008 average, but also of their 2010-2014 levels, Mr. Akiwumi said. “Inequalities between the LDCs and other developing countries risk widening.”
The analysis highlights that LDC growth averaged just 5% in 2017 and will reach 5.4% in 2018 – below the target of 7% growth envisaged by target 1 of Sustainable Development Goal 8 on promoting sustained, inclusive and sustainable economic growth.
Relying on commodities
In 2017, only five countries (of the 45 LDCs for which data is available) achieved economic growth at 7% or higher: Bangladesh (+7.1%), Djibouti (+7%), Ethiopia (+8.5%), Myanmar (+7.2%), and Nepal (+7.5%).
The analysis contends that too many LDCs remain dependent on primary commodity exports.
While international prices for most primary commodity categories have trended upwards since late 2016, this modest recovery barely made a dent to the significant drop experienced since 2011, particularly in the cases of crude petroleum and minerals, ores and metals.
In 2017, LDCs as a group were projected to register a current account deficit of $50 billion, the second-highest deficit posted so far, at least in nominal terms.
This stands in contrast to figures for other developing countries (not LDCs), all developing countries taken together and developed countries, all of which, as groups, registered current account surpluses.
Projections for 2018 suggest that the current account deficits of the LDCs are expected to grow further, making worse possible balance-of-payments weaknesses.
Only a handful of LDCs, according to estimates by the International Monetary Fund, recorded current account surpluses in 2017, including two recipients of relatively large amounts of aid – Afghanistan and South Sudan – as well as Eritrea and Guinea Bissau.
All other LDCs recorded current account deficits of varying sizes, ranging from less than one percentage point of GDP – Bangladesh and Nepal – to more than 25% in the cases of Bhutan, Guinea, Liberia, Mozambique, and Tuvalu.
Aid levels
Special foreign aid commitments for LDCs amounted to $43.2 billion, representing only an estimated 27% of net aid to all developing countries. This suggests a 0.5% increase in aid in real terms year-on-year.
This trend supports fears of a levelling-off of aid to LDCs in the wake of the global recession.
“This analysis signals a clarion call for action,” said Mr. Akiwumi. “The international community needs to pay increased attention to their commitments toward LDCs.”
The analysis was presented to UNCTAD member States at a meeting of its governing body in Geneva, Switzerland, on 5 February.
LDC trends
Among other trends highlighted in the analysis are:
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LDCs will not achieve the Sustainable Development Goals unless they speed up wholesale restructuring of their economies.
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The pace of LDCs structural transformation remains sluggish, with many of them falling short of the inclusive and sustainable industrialization envisaged in target 2 of SDG 9 on building resilient infrastructure, promoting inclusive and sustainable industrialization and fostering innovation.
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Between 2006 and 2016 real manufacturing value added increased in nearly all LDCs although in most countries this was accompanied by a relative decline in the manufacturing share of total value added, pointing to a widespread risk of premature de-industrialization among LDCs.
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In 2016 LDCs accounted for barely 0.92% of global exports; roughly the same level as in 2007.
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LDCs’ combined trade deficit has been widening significantly in the wake of the financial crisis, rising from $45 billion in 2009 to $98 billion in 2016, pointing to the association between the weak development of domestic productive capacities and structural deficits in the trade balance.
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Aid to LDCs remains far below the target of 0.15–0.20 per cent of donor countries gross national income agreed in 1981.
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In 2016, only a handful of donor countries appear to have met the commitments under target 2 of SDG 17.
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Denmark, Luxembourg, Norway, Sweden, and the United Kingdom provided more than 0.20 per cent of their own gross national income to LDCs, while the Netherlands met the 0.15 per cent threshold.
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Aid tends to be skewed towards a relatively small pool of LDCs, with the top-ten recipients – which often include countries affected by humanitarian emergencies and conflict – accounting for roughly half of total disbursements to the group.
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Recent data suggests that levels of external indebtedness have been surging across LDCs, both in terms of stocks (relative to gross national income), and – even more so – in terms of burden of debt services.
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Resources sent by individuals to LDCs as a group (remittances) totalled $36.9 billion in 2017, down by 2.6% compared to the peak of $37.9 billion in 2016.
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In absolute terms, the largest recipients of remittances among LDCs included Bangladesh ($13.6 billion in 2016), Nepal ($6.6 billion), Yemen ($3.4 billion), Haiti ($2.4 billion), Senegal ($2 billion) and Uganda ($1 billion).
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In 2016, remittances accounted for as much as 31% of GDP in Nepal, 29% in Haiti, 26% in Liberia, 22% in the Gambia, 21% in the Comoros, 15% in Lesotho, and they exceeded 10% of GDP in Senegal, Yemen, and Tuvalu.
Trade and Development Board, 66th executive session (Least Developed Countries)
The sixty-sixth executive session of the Trade and Development Board will be held from 5 to 7 February 2018 in Geneva. The key issue on the agenda is the presentation of the The Least Developed Countries Report 2017: Transformational Energy Access.
The report argues that the economic dimension of modern energy access in the least developed countries has so far received too little attention in the discourse on achieving universal access to modern energy, foreseen in Sustainable Development Goal 7.
In order for these countries to achieve structural transformation and fully harness the economic potential of energy access, they need to adopt a different strategy for energy. They require an approach that goes beyond meeting basic domestic needs to encompass what the report calls transformational energy access. In particular, the approach required is one that meets the needs of firms and farms for adequate, reliable, affordable and sustainable supplies of energy for productive uses.
Additionally, the following reports will be considered:
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Investment, Enterprise and Development Commission, ninth session
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Trade and Development Commission, ninth session
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Intergovernmental Group of Experts on E-commerce and the Digital Economy, first session
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Intergovernmental Group of Experts on Financing for Development, first session
In the follow-up to the fourteenth session of the Conference, the Trade and Development Board will also take stock of the progress made in phase II of the implementation of the Nairobi Maafikiano, namely the revitalization of the intergovernmental machinery.
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Non-tariff measures: Lifting CFTA and ACP trade to the next level
The African, Caribbean and Pacific (ACP) Group of States are exploring the opportunities of a free trade agreement. Most ACP members are African countries, which are currently negotiating the Continental Free Trade Area (CFTA).
With the exception of North Africa, an ACP agreement would extend an African CFTA to include the Caribbean and Pacific members of the ACP group of countries. In this analysis we show that while trade can be significantly improved by removing all remaining tariffs, this can be undermined if five to ten per cent of tariff lines are chosen to be exempt. Furthermore, the gains from addressing non-tariff measures offer greater scope to increase trade.
Both an African free trade agreement and extending it to include the Caribbean and Pacific countries will generate positive gains. Negotiators should focus on reducing non-tariff barriers and harmonizing regulatory measures that outweigh the impact of tariffs.
Introduction
The African, Caribbean and Pacific Group of States (ACP) are exploring the opportunities of a free trade agreement. The group of 79 developing countries was established to negotiate and implement cooperation treaties with the European Union but formed its own political identity in 1975. The EU has been negotiating Economic Partnership Agreements (EPAs) with five regions in Africa, the Caribbean and the Pacific to replace the existing preferential rules to make the ACP-EU relations compatible with WTO rules. Many ACP countries also have free trade agreements with other ACP countries as well as with third parties such as PACER in the case of Pacific countries.
The 54 member States of the African Union have agreed to establish the Continental Free Trade Area (CFTA) with the aim of substantially reducing the barriers to trade between the member countries. The 48 African ACP members account for 85 per cent of ACP trade. Negotiations have focused on the speed at which tariffs are removed and the extent to which various products may be regarded as sensitive and exempt from reductions.
Ten to fifteen per cent of tariff lines have been suggested as an appropriate proportion of sensitive products, depending on the development status of the country. However, negotiators are unlikely to agree to this because for some countries ten per cent of tariff lines cover all imports. At the other extreme, exemption of one per cent of tariff lines would seem to be overly ambitious, and is also unlikely to be the basis for agreement.
The authors use a well-known computable general equilibrium (CGE) model to quantify the impacts on trade and welfare for liberalization scenarios in Africa (CFTA) and the entire ACP group. They begin with full tariff eliminations for all products in the CTFA and then compare the outcome to a CFTA with exemptions for five per cent of products. These exemptions reduce the increase in trade by more than 60 per cent.
They then show that the potential benefits of tariffs reductions are by far outweighed by eliminating non-tariff barriers and promoting the convergence of regulatory measures, an area also considered in the CFTA negotiations. This suggests that negotiators should focus on non-tariff measures rather than exemptions for sensitive products. Extending the CFTA to include Caribbean and Pacific countries would lead to relatively small additional gains, although addressing non-tariff measures provides greater scope for increases in trade.
Six scenarios are run. Three involve the CFTA alone. The first is complete removal of tariffs (scenario CFTA). The second allows for exemptions for five per cent of sensitive products (scenario CFTAx). The third quantifies the impact of reducing non-tariff barriers without tariff reduction (scenario CFTAn). The remaining three scenarios replicate the first three but extend the analysis to the whole of the ACP region, that is, including the Caribbean and Pacific countries (scenarios ACP, ACPx and ACPn).
African countries as a group gain $3.6 billion per annum from the complete elimination of applied tariffs but even a modest exemption of five per cent of products reduces these gains to $1.5 billion. Reducing the trade distorting effect of NTMs leads to gains of $20 billion. For the Caribbean and Pacific countries, they gain $620 million from entering a free trade agreement with Africa, but once again the gains are reduced by two thirds if exemptions are permitted.
Removing tariffs and addressing non-tariff measures within Africa makes good sense. Extending the agreement to across the Pacific or Caribbean increases the gains by a modest amount.
Existing barriers to trade
Tariffs
Average MFN tariffs in ACP countries vary a great deal, from zero to 33 per cent. North and Southern African tariffs are rather low while West, Central and Eastern Africa tend to have higher tariffs. A customs union exists in West Africa but external tariffs are high. Average tariffs of Caribbean and Pacific countries vary as well. Many have simple average tariffs of around 10 per cent with slightly lower trade weighted tariffs. Agriculture tariffs tend to be twice as high as industrial tariffs.
Trade is also fragmented, with many countries having little or no trade with several other African countries, or only importing 200-300 items. This is important for the selection of sensitive products. Negotiators have expressed an interest in exempting from tariff reduction ten per cent of the tariff lines. For some countries, such as Zambia, this could cover all intra-African imports.
Non-tariff measures
UNCTAD has made a determined effort to list non-tariff measures in various countries and to estimate ad valorem equivalents from those listings. However, as yet, it does not have ad valorem equivalents (AVEs) of non-tariff measures for individual ACP countries or regions. Instead, we use estimates for Africa as a whole estimated by Cadot et al. (2015). We assume the NTMs estimated for Africa are applicable to each country. The absence of country specific data means each country has the same value for a given product or sector.
For the Caribbean we use NTM estimates taken from South America and for Pacific countries we use Asia estimates. Data for Latin America and Asia are somewhat similar. The SPS and TBT AVEs are modelled as productivity shocks. The others are treated as tariffs.
Regulatory NTMs have benefits, for example in limiting the spread of infectious diseases and pests, and therefore it is unrealistic to remove them completely. Some measures may be too entrenched to be negotiated away. That leads to a challenging decision about what proportion of NTM-related trade costs may be removed. Knebel and Peters (forthcoming) estimate that about a quarter of the trade distorting effect of technical NTMs can be removed through regulatory cooperation. In our simulation, we therefore assume that a quarter of the existing cost effects of SPS measures and TBT can be reduced. Outright non-tariff barriers, such as quotas and price controls, are fully eliminated.
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Africa’s currency manipulators haven’t finished reforms yet
Angola and Morocco last month became the latest African nations to loosen long-held currency pegs, following the lead of Nigeria and Egypt as they sought to revive struggling economies. The question is whether they’ve done enough.
The four nations – among Africa’s six biggest economies – have relieved some of the pressure that was causing dire dollar shortages or hindering businesses, but they may all have to make further moves and reforms to fully satisfy investors.
They changed stance for different reasons. For Angola and Nigeria, the continent’s biggest oil producers, the crash in crude prices almost four years ago meant it was a case of when, not if, their hands would be forced. Egypt, a net commodity importer, was hammered by falling tourism and foreign investment amid political upheaval. Morocco was the least vulnerable, but came under more pressure after Egypt’s move.
‘New Paradigm’
One thing they had in common was their increased propensity – much like emerging-market nations as a whole – to tap international capital markets in recent years. That meant they had to take more heed of portfolio investors’ calls for freer currencies, according to Standard Charted Plc.
“This, more than anything else, has brought about a new paradigm,” said Razia Khan, chief Africa economist at Standard Chartered. “There’s a greater imperative to do things in a way that seems more market-friendly. It’s no longer an option to ignore those calls for reform. It took a very long time, but now we’re seeing it.”
None of them have fully-floated their currencies in the style of South Africa, home of the continent’s biggest financial markets. Here’s an explanation of their foreign-exchange regimes and what’s in store for the rest of the year:
Angola
The OPEC member weakened the kwanza about 20 percent against the dollar in January via a series of devaluations, thus ending a peg held since April 2016. That’s gone down well with the International Monetary Fund and should help the country get a bailout from the Washington-based lender as well as tap the Eurobond market. Still, it may have to weaken the currency – which remains difficult to trade for foreigners given tight capital controls – even further to end a scarcity of foreign-exchange.
On the streets of Luanda, the capital, kwanzas trade at 460 for each dollar, making them 55 percent weaker than on the official market, where the rate is 205.5. JPMorgan Chase & Co. analysts think the central bank is targeting a gradual adjustment to 218.
Egypt
The most populous Arab nation has come the closest of the four to a full float following its devaluation of the pound in November 2016, though it retains several controls. The currency’s lost half its value against the dollar since then, which has helped attract foreign flows of $18 billion into T-bills.
The consensus among analysts surveyed by Bloomberg is for the pound to strengthen 1.6 percent to 17.4 against the greenback this year. But Societe Generale SA warned last week those flows are a “double-edged sword” and could reverse if the government slows down its macroeconomic reforms.
Morocco
Morocco was unusual in that its currency strengthened, not weakened, when it loosened its grip by widening a trading band on Jan. 15, allowing the dirham to rise or fall 2.5 percent either side of an official peg, compared with 0.3 percent previously. That was a sign the country, which has benefited from lower commodity prices as it imports grain and oil, had few dollar shortages.
Central bank Governor Abdellatif Jouahri told Bloomberg in an interview last week that a free float may still be five to 15 years away. No matter, IMF Managing Director Christine Lagarde has described the currency and other economic reforms – designed to turn Morocco into North Africa’s main business hub – as “very promising.”
Nigeria
Africa’s biggest oil producer took the plunge last year when it opened a currency-trading window for foreign investors, effectively devaluing the naira by 12 percent versus the dollar and bringing its total fall since mid-2014 to 55 percent. It also introduced multiple exchange rates, with the official one used for government transactions almost 20 percent stronger than the market one of 360.
Analysts at Bank of America Corp. and Standard Chartered reckon Nigeria can sustain the system for now, thanks to oil prices having risen to around $70 a barrel and strong demand for emerging-market assets. Others, including HSBC, have warned that the complicated currency regime is “keeping long-term investors on the sidelines.”
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Uganda overtakes South Africa in Kenya exports
Uganda overtook South Africa for the first time in November as the largest source of goods ordered by Kenyans, underlining the impact of drought which saw electricity and food imports shoot up.
Kenya’s monthly import bill from Uganda jumped more than two-fold to Sh7.59 billion compared with Sh2.93 billion in October, marking the highest ever recorded monthly imports value from the land-locked country.
Goods from South Africa stood at Sh4.60 billion, a 5.66 per cent drop compared with October’s value.
However, the Central Bank of Kenya data did not give reasons for the spike in the value of imports from Uganda.
Kenya largely buys foodstuffs, especially cereals, and electricity from the west-neighbouring country, its biggest trading partner.
Biting drought
A biting drought, which started toward the end of 2016 through the first half of 2017, left at least 1.3 million people in need of food aid and drove down water levels in dams, ultimately hitting hydro power generation.
Uganda has been exporting electricity to Kenya in bulk under an agreement signed during colonial times, but renegotiated at Uganda’s insistence in 1997, through a direct electricity transmission line connecting from Tororo.
Poor weather also forced Kenya to buy food such as maize, rice, sugar and milk powder to meet local demand and ease rising prices.
During the first 11 months of last year, food imports more than doubled to Sh223.86 billion, representing a spike of 124.15 per cent.
That helped drive up Kenya’s trade deficit – the gap between imports and exports – to more than a Sh1 trillion mark for the first time.
Imports from Uganda in the January-November period doubled to Sh35.08 billion from Sh17.75 billion in the same period in 2016, leapfrogging Egypt to become the second importer of goods to Kenya in Africa.
Biggest seller
South Africa, however, remained the biggest seller of goods to Kenya in the continent in the period at Sh57.70 billion, a growth of 28.31 per cent year-on-year.
South Africa sells to Nairobi goods such as wines and other alcoholic drinks, cars as well as spare parts, oil lubricants and machinery.
The value of goods shipped in from Egypt in the 11-month period also rose by a fifth to Sh32.50 billion, while Tanzanian traders trucked in goods valued at Sh15.18 billion which is 29.22 per cent more than the year before.
Overall, Kenya imported goods worth Sh180.24 billion from Africa in the 11-month period, Sh53.96 billion more than a year earlier, the CBK data shows.
Global imports into Kenya grew by Sh274.02 billion, or 20.93 per cent, to Sh1.58 trillion in the period, while exports rose a measly 3.37 per cent to Sh549.18 billion.
Nearly half of the growth in imports (45.31 per cent) was food.
Machinery, nonetheless, accounted for the largest share of the imports at Sh449.48 billion, an 11.71 per cent growth from 402.35 billion in first 11 months of 2016.
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How tax evaders smuggle goods into the country
Rwanda Revenue Authority (RRA) recently announced that they were battling rising cases of smuggling among other malpractices with used clothes and alcoholic products being among the most smuggled goods.
The smuggling practices are usually with an aim to avoid giving the taxman his dues but have far reaching consequences including entry of sub standard goods into the local market.
The move to increase levies on imported used clothes saw an increase in attempts to smuggle these clothes as a section of traders seek to retain their profit margins.
This is because though the supply has reduced significantly as some business people are abandoning this line of business, the demand remain the same.
For instance, RRA has intercepted about 230 tonnes of used clothes being smuggled into the country.
People with knowledge on logistics and importation of products say that among the major ways smugglers use is import goods and send them to a neighbouring country (mostly DRC and Uganda) then find a way to smuggle back into the country, through porous borders.
A local importer (who did not want to be named) explained that once the goods cross the border into DRC, the RRA officials remove the electronic seal thus enabling them to smuggle back the goods into the country.
To get across the borders easily, the goods are often ‘broken’ down to smaller packages and disguised as personal effects (without declaring them) in attempts to smuggle them across the border.
The smuggling process also often involves enlisting the help of paid people to smuggle the goods across the border, disguising as ordinary travelers.
The importer said that another increasingly popular tactic is undervaluation of imports in the paper work with the help of clearing agents
“If you have a rapport with a clearing agent, they often help you to reduce the prices by giving a value that is lower than that of your imports. This is often common with people importing machinery or electronics,” he explained.
Authorities however say that they are aware of the tactics and have put in place measures to curb them.
Robert Mugabe the deputy Commissioner for Revenue Investigation and Enforcement Department at RRA told The New Times that they have mechanisms to curb the fraudulent practices.
“Some disguise their goods as being in transit to neighbouring countries and try to use various avenues and borders into the country including water,” Mugabe said of the commonly used tactics.
He said that among the mechanisms they have put in place include setting up frameworks to access real time information through the single customs territory.
“Now we have real time information through the single customs territory, that makes it possible to know the original values of goods coming in,” he said.
The agency also now has staff in the port of Mombasa and Dar es Salaam who have access to cargo manifests further reducing chances of fraud.
“Now that we have staff in Mombasa and Dar es Salaam, which we did not have previously puts us in a better place. The original cargo manifests which come in with the ship, we can now access it before the clearing agents and reduce malpractices,” he said.
Mugabe said that on instances of smuggling through borders, they have increased vigilance as well as established relations with local leaders as well as close partnership with security agencies.
He added that increased popularity of new clothes as opposed to used clothes could also serve to reduce demand for the products and consequently the smuggling.
The police also works closely with Rwanda Revenue Authority in the enforcement of tax laws.
Police Spokesperson Commissioner of Police Theo Badege said that the police has a unit which supports RRA in fighting tax evasion in its various ways.
The unit serves in operations and investigations in aspects around tax evasion and other fraudulent practices.
In the last fiscal year(2016/2017), RRA registered fraud involving a value of about Rwf 1.2 billion, while this fiscal year (2017/2018), it stands between Rwf400 million-Rwf500million as of December last year.
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tralac’s Daily News Selection
tralac’s Weekly e-Newsletter is posted: feature articles by Prof Gerhard Erasmus and Talkmore Chidede
Lighthizer’s African dream (Politico)
United States Trade Representative Robert Lighthizer sparked a new conversation in trade circles on Wednesday when he floated the idea of the Trump administration launching bilateral trade negotiations with an African country “before very long.” “Personally, I think that before very long we’re going to have to pick out an African country - properly selected - and enter into a free trade agreement with that country,” he said in an interview on Sirius XM radio channel “Patriot 125.” “And then that will, if done properly, become a model for these other countries.” [AGOA loss cost Swaziland 600 mn emalangeni: FSE&CC]
Blockchain to track Congo’s cobalt from mine to mobile (Reuters)
Blockchain is to be used for the first time to try to track cobalt’s journey from artisanal mines in Democratic Republic of Congo through to products used in smartphones and electric cars. Sources close to a pilot scheme expected to be launched this year say the aim is eventually to give manufacturers a way of ensuring the cobalt in lithium-ion batteries for products such as iPhones and Teslas has not been mined by children. Tracking cobalt presents many challenges as scores of informal mine sites would have to be monitored, all players in the supply chain would need to buy into the scheme, and accurate, electronic data would need to be transmitted from remote areas - all in a vast country plagued by lawlessness. But companies are under growing pressure from consumers and investors to show the cobalt they use has come through supply chains free of rights abuses, just as they have for minerals used in electronics such as tantalum, tin, tungsten and gold.
Zambia: December 2017 trade surplus rises (pdf, Central Statistical Office)
Zambia’s trade surplus increased by 11.4% from K421.7m in November 2017 to K469.9m in December. The increase can be mainly explained by a decline in imports which outweighed that of exports. Imports declined by 4.7%, from K8,270.2m in November to K7,878.5m in December, while exports declined by 4.0%, from K8,691.9m to K8,348.5m in December. Metal export earnings marginally increased by 0.3%: the overall contribution of metals and their products to the total export earnings between December and November 2017 averaged 80.4%. Non-traditional exports decreased by 19.7%. Switzerland was the largest market for Zambia’s total exports in December 2017, accounting for 43.9%. Asia was the second largest market for Zambia’s total exports, accounting for 26.1% in December 2017. Within Asia, China was the dominant export market, accounting for 59.5%.
Ghana seeks national dialogue over cocoa pricing quandary (Xinhua)
There is the gradual convergence of opinions on the need for a national dialogue over the producer price of cocoa Ghana pays its farmers in the face of dipping global prices. Edward Kareweh, General Secretary of the General Agricultural Workers Union of Ghana Trades Union Congress, said such a national conversation should not only determine the pricing of the commodity in-country but also to redefine the role of cocoa in the country’s economy in general. Kareweh described as “great at the time” the decision by government to maintain prevailing prices when other cocoa producing countries had slashed their producer prices in line with the drop in world market price for the commodity. “It showed our willingness to ensure that the farmers are not directly affected by the vagaries of the global arena,” the trade unionist said in a telephone interview with Xinhua. Cocoa prices on the world market have dropped from a high of $2,287 per metric ton around December 2016 to as low as the current price of $1,800 per metric ton with Ghana still paying 7,600 Ghana cedis, or $1,687 per metric ton, as producer price to farmers.
Single unified market: Nigeria’s FG assures on the economy (The News)
The federal government has said that the proposed launching of African single trade market would not affect Nigerian economy as adequate measures were being put in place to protect the economy. The News Agency of Nigeria reports that Chief Negotiator for Continent Free Trade Area, Amb. Chiedu Osakwe, stated this in Abuja on Thursday night at a joint news conference on the outcome of the just concluded AU Summit in Addis Ababa. Osakwe said that as the scheme is set to be launched in 4 March, Nigeria is bracing up to ensure that it does not become a dumping ground for counterfeit and substandard products. “We will embark on sensitisation programme, we have been to the Nigeria trade negotiation agency, we have developed a time table as advised by the presidency to meet with industry group and private sector. We are putting in place measures to safeguard our unprotected economic environment from dumping, counterfeiting and unfair trading practices by some of the trading partners.” [Nigeria’s Aviation Safety Round Table Initiative: ‘Imperatives of cooperation, strong carriers for open sky’]
Nigeria: Customs launches strike force to intensify crack down on smugglers (Daily Trust)
Attah said the new strike force is headed by the National Coordinator, Deputy Comptroller, Abubakar A.U., along with four Assistant Comptrollers of Customs who will oversee its operations at the four zones comprising Lagos, Kaduna, Bauchi and Port Harcourt. To promote the Ease-of-Doing-Business, the new team which will be at the zones and training colleges will not erect checkpoints on the highways and will only be seen patrolling when they have credible information of smugglers’ activities as furnished by the Surveillance operatives who do covert operations. The spokesman said Col. Ali initiated this to ensure that there are no impediments to the free flow of doing business on the Nigerian highway. “On trade facilitation, there should be no unnecessary hindrance to trade on our highways,” Attah added.
Nigeria: Envoy raises the alarm over upsurge in smuggling, human trafficking, piracy at Seme border (ThisDay)
For the purpose of security, the ambassador also observed the need for scanner machines to be installed in all the land borders and the immediate opening of the abandoned Seme/Krake ECOWAS joint border post. He expressed the mission’s effort in repositioning the border agencies for improved performance, especially on making frantic efforts with the relevant agencies including the Nigeria government, the EU, ECOWAS and the Beninese authorities to ensure the joint border post is commissioned without further delay. The ambassador assured that the mission is working assiduously to ensure the promotion, facilitation and enforcement of ECOWAS trade liberalisation Scheme as this will increase the smooth movement of goods and products produced within the two countries into Nigeria and Benin Republic respectively. He charged the Nigeria border control agencies to continue to protect the Nigeria territorial integrity and National interest through effective and efficient border control and management.
Tanzania wants Kenya to pay Sh2.3 billion Uchumi Supermarket debt (The Standard)
The meeting had been called to discuss the waning relations between Nairobi and Dar es Salaam but saw the issue of Uchumi and Nakumatt supermarkets sneaked into the agenda. Uchumi shut its stores in Tanzania and Uganda in 2015 as it sought to stem further losses. But the NSE-listed retailer left behind a huge trail of debt owed to suppliers. At the Mombasa meeting, Kenya through International Trade Principal Secretary Chris Kiptoo, however, outrightly rejected the demand by the Tanzanian delegation. Dr Kiptoo said while the Government has about 14% stake in Uchumi, it has no control over the supermarket. “Uchumi is listed at the Nairobi Securities Exchange and regulated by Capital Markets Authority,” said the PS. The Government in December last year gave Uchumi Sh700 million which the retail chain used for restocking.
Egypt: AUC research papers suggest progressive tax scale, other reforms to reduce income inequality (Ahram)
Working on policies that aim at striking a balance between economic growth and equitable development, Alternative Policy Solutions, a one-year-old American University in Cairo research project, has issued two papers on how to reform the tax regime in a way that increases revenues while adopting fairer taxation for different income brackets. “The sharp and rapid concentration of wealth in the higher-income brackets has the negative consequences of hindering economic growth, increasing speculation, and prompting imbalances in the balance of payments, in addition to the social consequences of the widening gap among social classes,” states a paper entitled “Towards a Wealth Tax in Egypt”. [Egypt’s new industrial strategy offers promises of new growth]
Informal WTO Ministerial on sidelines of WEF: the need for political discussion on development (dti)
It offered an opportunity for an assessment of the 11th Ministerial Conference held in Buenos Aires and to reflect how to ensure the WTO’s relevance to all Members. The meeting was attended by 29 countries from across all regions. Speaking on behalf of the Africa Group, Minister Davies re-iterated concerns with lack of outcomes on development issues of interest to Africa. He agreed with the need for a deeper reflection in the WTO that takes into account the backlash against globalisation and trade due to growing inequality and uncertainty amongst citizens, as well as a political discussion on development.
Classification decisions taken at the 60th Session of the Harmonized System Committee have been released (WCO)
The Harmonized System Committee held its 60th Session at WCO Headquarters in Brussels from 27 September to 6 October 2017. The decisions taken by the HSC during this session have now been published. These include, in particular, 21 new Classification Opinions and 18 sets of amendments to the HS Explanatory Notes, as well as 45 Classification Rulings dealing.
AU’s Peace and Security Council: new members
Amb. Dr. Namira Negm, the Legal Counsel of African Union Commission is pleased to announce the election of Equatorial Guinea and Gabon (Central), Djibouti and Rwanda (East), Morocco (North), Angola and Zimbabwe (South) and Liberia, Sierra Leone and Togo (West) as Members of the Peace and Security Council for a term of two years. The member states were elected as members of the Council during the 32nd Ordinary Session of the Executive Council held 25-26 January 2018, Addis Ababa Ethiopia.
Today’s Quick Links: Angola-based pan-African conglomerate Aenergy joins Afreximbank shareholding Angola’s Sonangol plans to build refineries, end fuel imports Namibia bans foreign travel for government officials Egypt’s agriculture ministry hopes new export controls will encourage repeal of Saudi ban on Egyptian produce 5 things we can learn from China’s e-commerce explosion RCEP as a catalyst for deepening Asean’s partnership with India India-Asean partnership: closer connect IDSA commentary on ASEAN-India: challenges in economic partnership |
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Single unified market: FG assures on the economy
The Federal Government has said that the proposed launching of African single trade market would not affect Nigerian economy as adequate measures were being put in place to protect the economy.
The News Agency of Nigeria, NAN, reports that Chief Negotiator for the Continental Free Trade Area (CFTA), Amb. Chiedu Osakwe, stated this in Abuja on Thursday night at a joint news conference on the outcome of the just concluded African Union Summit in Addis Ababa, Ethiopia.
The news conference had in attendance Foreign Affairs Minister Geoffrey Onyeama, his Aviation counterpart, Sen Hadi Sirika, and Acting Chairman Economic and Financial Crimes Commission (EFCC), Ibrahim Magu
President Muhammadu Buhari had at the just concluded 30th AU Head of States and Government Summit pushed for the establishment of the market which was adopted by the summit.
Osakwe said that as the scheme is set to be launched in March 4, Nigeria is bracing up to ensure that it does not become a dumping ground for counterfeit and substandard products.
He stressed that the measures would ensure that the initiative instead of adversely affecting the economy would rather increase trade within the continent, create more jobs and reduce poverty.
He said that consultation had already begun with all the stakeholders including the organised private sectors made up of manufacturers and other relevant bodies.
“We will embark on sensitisation programme, we have been to the Nigeria trade negotiation agency, we have developed a time table as advised by the presidency to meet with industry group and private sector.
We are putting in place measures to safeguard our unprotected economic environment from dumping, counterfeiting and unfair trading practices by some of the trading partners.
“One of our key mandate is to put in place anti-dumping measures, to safeguard the Nigeria economy from becoming a dumping ground, we are pulling all the stuff, this is one of the principles to ensure this is achieved,” he said.
Minister of Aviation, Mr Had Sirika also said that the adoption of Single Africa Air Transport Market (SSATM) by the AU was a laudable achievement.
A one time Senator, said that Nigeria as a country would benefit from the project which aims to create a unified air transport market and complete liberation of intra-africa travel a s a key component of its regional economy.
More than 500 million Africans will benefit from the launch of SAATM the flagship project under the AU Agenda 2063.
“AU believes that the initiative will pave way for a further easing of visa restrictions and will eventually lead to a common African Passport to promote free movement and trade among African nations,” he said.
Acting Chairman Economic and Financial Crime Commission (EFCC), Ibrahim Magu said that Nigeria had become a factor to reckon with in the fight against corruption as being championed by President Muhammadu Buhari at the summit.
Magu said that there was the need for the AU to build a strong regional national institute to effectively fight corruption by adequately empowering national anti corruption institutions and insulating them from undue political interference
“Africa must also enhance institutional collaboration between law enforcement and anti corruption agencies as well as strengthening the existing criminal system through exchange of information to enhance best practices
“Nigeria has made a significant progress in the fight against corruption by laying the legal framework, strengthening institutions, introducing transparency within the system and making government more accountable,” he said.
Foreign Affairs Minister Geoffrey Onyeama described the just concluded Summit as historic with a lot of key and landmark achievements by the AU leaders.
Onyeama pointed out that the push by President Buhari for single African market was not an easy task.
According to him, negotiating with about 55 countries, who have different ideologies and agenda of their own to agree over an issue was not an easy task for the president.
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Informal WTO Ministerial gathering on the sidelines of the WEF emphasises the need for political discussion on development
The Informal World Trade Organisation (WTO) Ministerial Gathering on the side-lines of World Economic Forum (WEF) was convened by Switzerland on 26 January 2018 as an opportunity for an open and frank exchange among invited Ministers on the World Trade Organisation (WTO).
It offered an opportunity for an assessment of the 11th Ministerial Conference (MC11) held in Buenos Aires, Argentina and to reflect how to ensure the WTO’s relevance to all Members. The meeting was attended by 29 countries from across all regions.
The meeting noted that global trade grew by 3.2% in 2017 and emphasised the need for collective action to ensure sustained global trade growth that supports economic growth and job creation.
However, the participants noted with concern that MC11 yielded limited outcomes and resulted in Ministerial Decisions on just five issues and with limited scope. This includes decisions to secure a deal on elimination of fisheries subsidies by MC12 in December 2019; a rollover of the moratoria on taxation of electronic transactions, with continuation of the e-commerce work programme, and non-violation complaints under the TRIPS Agreement; continuation of the work program on Small Economies; and the establishment of a working party for South Sudan’s accession. On Agriculture, NAMA, Services and Development, there were no outcomes or agreed work programmes. Furthermore, there was no agreed Ministerial Declaration.
Many participants in the meeting emphasised the centrality of the WTO in promoting a rules based trading system, and acknowledged that the WTO is facing challenges which include among others the lack of progress and divergent views on the Doha Development Agenda, as illustrated by statements at MC11 and the approach to dealing with the new issues such as e-commerce in a way that supports inclusive development and promotes a digital industrial policy.
Concerns were also raised with the current impasse in the filling of the open positions of members of the WTO Appellate Body and the risk this poses to a functional dispute settlement mechanism.
There was a shared sentiment in the meeting that a political dialogue is needed to ensure the WTO remains relevant and serves the interests of all its Members. Most Members emphasised the need to continue work on fisheries subsidies with a view to have an outcome in the next Ministerial Conference towards meeting the Sustainable Development Goal 14.6.
Speaking on behalf of the Africa Group, Minister Davies re-iterated concerns with lack of outcomes on development issues of interest to Africa. He agreed with the need for a deeper reflection in the WTO that takes into account the backlash against globalisation and trade due to growing inequality and uncertainty amongst citizens, as well as a political discussion on development.
“To regain support and legitimacy, we should promote an inclusive developmental multilateralism. The test of any and all rules is whether they promote inclusivity and development or its opposite: marginalisation and inequality. For Africa: ‘Agenda 2063’ is the overarching framework for integration, industrialisation and structural transformation and the WTO should support these objectives and provide policy space for developing countries to industrialise,” said Minister Davies.
On the remaining Doha issues, Minister Davies re-iterated the need to continue to explore possibilities for outcomes on agriculture, especially disciplines in trade distorting domestic support, a core issue of interests; cotton; food security; and industrialisation. He also stressed the need to respect past ministerial decisions.
The meeting thanked Argentina for the excellent hosting of MC11.
DG Azevêdo calls on members to match words of support for the WTO with deeds
In his comments at the meeting, the Director-General reflected on the outlook after MC11. He said:
“Despite the energy and activity we saw on various issues at MC11, clearly the overall outcome was disappointing. We need to face up to the problems before us. Everyone seems ready to pledge their support for the system. But while political support is essential, it is not sufficient. Words need to be matched by deeds. If we believe in multilateralism, we have to be ready to take the steps needed to make it work.
“After MC11 it can’t just be business as usual. We need to find ways to avoid repeating unsuccessful approaches, and reaching the same unsatisfactory result. We need to reflect – but to do so in an active way. Development, and particularly the prospects of the LDCs, must remain at the heart of our work.”
On a positive note, the Director-General also touched on new developments from the Buenos Aires meeting:
“I also want to acknowledge the positive progress made in Buenos Aires by groups of members on e-commerce, investment facilitation, micro, small and medium-sized enterprises, and women’s economic empowerment. It’s encouraging that proponents are clear that these initiatives will be as open, inclusive and transparent as possible.”
Commenting on the broader trade debate, he continued:
“Trade has been high on the agenda in Davos this week. There are growing fears that tensions will continue to rise, with damaging consequences. These risks were what everyone was talking about in Davos last year as well. But they didn't actually materialize. Leaders showed some restraint and the trading system did its job once again.
“While the risks still remain very real, global trade is actually performing well. Growth in 2017 was stronger, and forecasts for 2018 are also quite encouraging. We need trade to keep playing its role in supporting economic growth and job creation in all our economies. Therefore I hope we will see similar restraint from governments this year – and I call on all WTO members to play their part in that effort.”
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Ghana seeks national dialogue over cocoa pricing quandary
There is the gradual convergence of opinions on the need for a national dialogue over the producer price of cocoa Ghana pays its farmers in the face of dipping global prices.
Edward Kareweh, General Secretary of the General Agricultural Workers Union (GAWU) of Ghana Trades Union Congress (TUC), said such a national conversation should not only determine the pricing of the commodity in-country but also to redefine the role of cocoa in the country’s economy in general.
Kareweh described as “great at the time” the decision by government to maintain prevailing prices when other cocoa producing countries had slashed their producer prices in line with the drop in world market price for the commodity.
“It showed our willingness to ensure that the farmers are not directly affected by the vagaries of the global arena,” the trade unionist said in a telephone interview with Xinhua.
He was however of the belief that this was not going to be sustainable since if the prices continued to fall, then government would also have to change its stance
In spite of the fall in global prices, Kareweh admonished government not “to touch the current prices so as to inspire confidence in the cocoa farmers.”
“However if government sees the dire need to review prices it should revert to the Producer Price Setting Committee which is made up of representatives of all major stakeholders to justify why this must be done,” he urged.
Cocoa prices on the world market have dropped from a high of 2,287 US Dollars per metric ton around December 2016 to as low as the current price of 1,800 dollars per metric ton with Ghana still paying 7,600 Ghana cedis or 1,687 dollars per metric ton as producer price to farmers.
“The current world market prices are not going to stay the same forever and so all the investments government has been making into the industry should be considered on long-term basis since they are bound to yield the positive dividends once the prices begin to increase,” Kareweh argued.
He urged for a diversified agricultural sector so that the impact price shocks from the world cocoa buyers on the economy can be minimized.
Cocoa pricing has over the years played a part in the political rhetorics in election years in Ghana as the two major parties New Patriotic Party (NPP) and National Democratic Congress (NDC) challenge each other as to which of them served best the interest of cocoa farmers.
“It is really a quandary: if you have cocoa prices from 2,900 dollars a ton and it is now down to 1,800 dollars per ton and you have pegged your producer price at 7,600 cedis, you have a problem. Can the country continue to subsidize that? “ Minister for Finance Kenneth Ofori-Atta said.
Cocoa is Ghana’s largest foreign exchange earner with the annual syndicated loan from foreign banks helping to cushion the local cedi currency against the major international currencies.
Since Cocoa pricing is such a fundamental question, the minister said there was the need for a national conversation where some real sober minds would have to think through how to liberalize the pricing regime.
Ofori-Atta could not confirm whether government intended to slush the producer prices any time soon.
Ghana and its western neighbor Cote d’Ivoire have established joint cooperation on cocoa with the aim of seeking to influence the direction of decisions of global stakeholders on the commodity, especially those which affect pricing of the commodity as the two countries account for more than 60 percent of total global output annually.
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tralac’s Daily News Selection
Published in Addis: African Union Handbook 2018
The book has at its heart information about the principal organs established by the AU Constitutive Act and subsequent protocols: the Assembly; Executive Council; Permanent Representatives Committee; Specialised Technical Committees; Peace and Security Council; AUC; Pan-African Parliament; Economic, Social and Cultural Council; and judicial, human rights, legal and financial institutions. It also contains information about the specialised agencies and structures, as well as regional and other arrangements, including the RECs, which are the pillars of the AU and work closely with its institutions. Non-governmental organisations, inter-governmental organisations and political groups are not included, except where they have a formal agreement with the AU. The Handbook focuses on the AU’s current structures and organs, including those in the process of becoming operational. [Note: The handbook is available in English and French]
Coalition for Dialogue on Africa officially launches its office at the AUC (UNECA)
The Chair of the Coalition for Dialogue on Africa Executive Board, Olusegun Obasanjo, on Tuesday officially launched CoDA office at the AU headquarters. Mr Obasanjo thanked the AUC for providing office space to CoDA noting that hosting this platform in Addis allows for the continuation of relevant debate and dialogue on matters of relevance to Africa’s situation, while also giving it the benefit of being in the most engaging location to achieve this. The launch of the CoDA office also highlighted the platform’s renewed efforts towards the reduction of illicit financial flows from Africa. In this regard, Chair of the High Level Panel on Illicit Financial Flows, Mr Mbeki challenged CoDA saying that ‘given the severity of issues which face the continent, the platform must take into account the context of the rapidly changing world when seeking to advance Africa’s transformation and future’. Founded in 2009, the Coalition for Dialogue on Africa exists as a special initiative of its three convening organizations - AUC, ECA and African Development Bank.
Air freight demand up 9% in 2017, strongest growth since 2010 (IATA)
The International Air Transport Association released full-year 2017 data for global air freight markets showing that demand, measured in freight tonne kilometers grew by 9.0%. This was more than double the 3.6% annual growth recorded in 2016. Freight capacity, measured in available freight tonne kilometers, rose by 3.0% in 2017. This was the slowest annual capacity growth seen since 2012. Demand growth outpaced capacity growth by a factor of three. Africa region: African carriers’ posted the fastest growth in year-on-year freight volumes, up 15.6% in December 2017 and a capacity increase of 7.9%. This contributed to an annual growth in freight demand of 24.8% in 2017 – the fastest growth rate of all regions. This is only the second time African airlines have topped the global demand growth chart since 1990. Capacity in 2017 increased 9.9%. Demand has been boosted by very strong growth in Africa-Asia trade which increased by more than 64% in the first eleven months of 2017. Related: Global passenger traffic results for 2017. African airlines saw 2017 traffic rise 7.5% compared to 2016. Capacity rose at less than half the rate of demand (3.6%), and load factor jumped 2.5 percentage points to 70.3%. While indicators in South Africa are consistent with falling economic output, Nigeria has returned to growth, helped by the recent rise in oil prices.
Digital usage on services such as SWIFT gpi sets the stage for improved RMB growth (SWIFT)
SWIFT’s latest RMB Tracker reveals a mixed year for the Chinese currency’s growth in 2017 and identifies some of the critical factors for success in 2018. Despite the growing importance of China in the global economy and the various strategic measures put in place to support its currency, Swift’s report shows that RMB usage accounted for 1.61% of domestic and cross-border payments in December 2017. Hong Kong remains the largest RMB clearing centre with 76% activity share, while London remains the largest clearing centre outside of Greater China. However, its share of global RMB clearing activity decreased from 6.51% in 2016 to 5.59% in 2017. The currency is, nevertheless, showing promising signs as it gains pace on digital platforms. Mobile services that expanded usage of the RMB, such as Alipay and WeChat Pay, as well as international initiatives such as SWIFT gpi, continued to grow rapidly throughout the year. Twenty-two Chinese banks have now adopted gpi, helping make RMB payments faster, more transparent and fully traceable. In addition, the prominent role of the CNY/USD pair remained unchanged: 97.08% of RMB trading by value is against the USD and there is no substantial liquidity in any other RMB pair.
Kenya and Tanzania agree to resolve trade barriers (Daily Nation)
Kenya and Tanzania have agreed to resolve their differences and address barriers hindering trade between the two countries. In a joint communique issued in Mombasa, the two countries are to release a report Thursday on agreements to eliminate non-tariff barriers to enhance inter-regional trade. International Trade Principal Secretary Chris Kiptoo and his Tanzanian Industry, Trade and Investment counterpart Elisante ole Gabriel chaired a meeting at Sarova Whitesands Hotel to iron out the trade rows that had threatened to worsen relationships between the two neighbouring states. They said the two countries have agreed to allow importation and exportation of commodities between them.
How Indian firms are tasting success in East Africa (Business Line)
“We are looking at mid-sized companies which have less of a natural inclination to look abroad. Through the SITA initiative we are building bridges between India and East Africa by taking Indian companies to these countries to see with their own eyes what the opportunities are,” said ITC Executive Director Arancha Gonzalez, in a telephonic interview with BusinessLine. Investment flows worth $71m and additional trade flows of $26.5m have so far been generated between India and East Africa (with an additional $10m in the pipeline) as part of the six-year project (2014-2020) funded by the UK’s Department of International Development. Gonzalez will be in India later this week and visit Jaipur, Chennai and Bengaluru to take stock of the progress made so far and prepare the ground for more partnerships.
Mozambique backs regional currency repatriation
The Mozambican central Bank, Banco de Mocambique, is negotiating with its counterparts in neighbouring countries, such as Zambia and Malawi, which have common borders with Mozambique, to repatriate each other’s currencies circulating on either sides of the border, APA can report on Wednesday. Central Bank spokesperson Waldemar de Sousa said because of cross-border trade, people need to have and use the currencies of neighbouring states.
New UNRISD papers on Zimbabwean extractive industry policy issues:
(i) High-value minerals and resource bargaining in a time of crisis: a case study on the diamond fields of Marange. The paper charts Marange diamonds’ evolution as a national resource through three phases of exploitation, marked by successive state management strategies, production schemes, regulatory mechanisms and development outcomes. For each phase of mining, the paper identifies and traces the key dynamics shaping the management of diamond production and trading, and assesses their impact on development outcomes and the governance relations among leading stakeholders. Particular focus falls on the main factors affecting the mobilization and deployment of domestic resources from diamonds, namely: state capacity, coherence and bureaucratic autonomy in the context of state capture and elite interventions in the extractive sector; the power of leading mining industry actors to resist unwelcome regulatory measures by the state; donor influence on resource governance outcomes in a period of continuing economic crisis and state vulnerability to donor pressure; and civil society effectiveness in holding government and business to account through international organizations overseeing the diamond trade, and local platforms for engagement involving legal and political structures. [The author: Richard Saunders]
(ii) Contestation and resource bargaining in Zimbabwe: the minerals sector. Policy making has been disproportionately focused on the accommodation of “market imperatives” and industrial viability, and has been resistant to meaningful, transparent and sustained forms of social inclusion and redistribution. Recurrent macroeconomic vulnerabilities have resulted in strong donor influence, and have strengthened the capacity of foreign capital to obstruct policy implementation. The consequence has been a persistent and evolving weakness in the mobilization of fiscal resources from the minerals sector, representing a lost opportunity for mining’s contribution to social development.
Developing mining supply chains: making strategic use of local content policies (IGF)
The IGF is developing guidance for governments seeking to design effective local content policies. A draft will be presented at the Mining Indaba conference in Cape Town, on 6 February. The guidance document will provide a thorough scan of the various dimensions of local content policies as well as a framework and step-by-step decision tree to help policy makers identify the type of instruments that best suit their objectives. The guidance fills a major gap in the implementation of local content policies: reconciling objectives and instruments. So what does it take to make mining supply chains work? [The authors: Kojo Busia, Isabelle Ramdoo; African Minerals Development Centre]
Egypt’s Sisi inaugurates giant Zohr gas field (Ahram)
Egypt’s President Abdel-Fattah El-Sisi inaugurated on Wednesday the first stage of production at the super-giant Zohr gas field, which the country predicts will help achieve its goal of self-sufficiency in the supply of liquefied natural gas. El-Sisi praised the collaborative effort between several Egyptian companies, including Belayim Petroleum Company, a joint venture between the Italian-Egyptian Oil Company and the Egyptian General Petroleum Corporation, for achieving the project’s development goals. Located 180km off the coast of Port Said and 1,500m deep, the gigantic gas field is the largest in the Mediterranean Sea. Field production would rise to 2.7 billion cubic feet per day by the end of 2019, transforming Egypt into a regional power hub.
Directors General of Customs of MENA region meet to discuss regional priority issues (WCO)
Secretary General Kunio Mikuriya presented the current key priorities of the WCO, concentrating on trade facilitation; e-commerce; security; illicit financial flows; customs-tax cooperation; and performance measurement. He said that he would welcome input from the region regarding prioritization of the WCO’s activities. Delegates supported these areas of priority work, referring in particular to the challenges posed by ever-increasing volumes of e-commerce and the need for sound performance measurement tools.
The changing wealth of nations 2018: building a sustainable future (World Bank)
The Changing Wealth of Nations 2018 tracks the wealth of 141 countries between 1995 and 2014. This new book improves estimates for natural capital and for the first time provides estimates of human capital. FAQ: What happened to natural capital over the past 20 years? The value of natural capital assets doubled between 1995 and 2014. However, it is a mixed picture when you look at the breakdown of assets. Most of the growth in natural capital was in non-renewables (308%), largely because of changes in both the volume and prices of minerals and fossil fuels. The renewables—forests, protected areas, and agricultural land— did not decline in value overall, but increased far more slowly than total wealth (44% compared to 66%). In Latin America and Sub-Saharan Africa, about 7-9% of forest area gave way to agricultural land. The value of total forest assets (timber, non-timber forest products, recreation and watershed protection services) fell by 3% with timber assets falling 9% globally. In Latin America, total forest assets fell by 2% while in Sub Saharan Africa, they fell by 1%.
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Coalition for Dialogue on Africa officially launches its office at the African Union Commission
The Chair of the Coalition for Dialogue on Africa (CoDA) Executive Board, Olusegun Obasanjo, also former President of the Federal Republic of Nigeria, on Tuesday officially launched CoDA office at the African Union Headquarters.
Also present during the launch were former South African President, Thabo Mbeki, the Chair of the High Level Panel on Illicit Financial Flows from Africa; the Deputy Chairperson of the African Union Commission, Ambassador Kwesi Quartey; the Deputy Executive Secretary of the United Nations Economic Commission for Africa, Mr. Abdalla Hamdok and Abdoulie Janneh, former Under-Secretary-General of the United Nations and Alternate Chair of the CoDA Executive Board, among numerous other notable dignitaries.
Mr. Obasanjo thanked the AUC for providing office space to CoDA noting that hosting this platform here allows for the continuation of relevant debate and dialogue on matters of relevance to Africa’s situation, while also giving it the benefit of being in the most engaging location to achieve this.
The launch of the CoDA office also highlighted the platform’s renewed efforts towards the reduction of Illicit Financial Flows from Africa. In this regard, Chair of the High Level Panel on Illicit Financial Flows, Mr. Mbeki challenged CoDA saying that ‘given the severity of issues which face the continent, the platform must take into account the context of the rapidly changing world when seeking to advance Africa’s transformation and future’.
In his welcoming remarks, Mr. Janneh, the alternate Chair of the CoDA Executive Board, expressed appreciation to both former Heads of States for their unwavering commitment and efforts towards Africa’s development.
He further recognized the continuous support of the African Union Commission to CoDA, indicating that the new office represents Africa’s stronger stamp of ownership of the platform.
Mr. Janneh emphasized the challenge of Africa’s financing, particularly within the margins of the Illicit Financial Flows from the continent which continue to impact negatively on development.
In this regard, he indicated that CoDA will be focusing on the implementation of the recommendations of the Report of the High Level Panel on Illicit Financial Flows also known as the Mbeki Report, as part of its mandate and dedication to the agenda of stemming these outflows from the continent.
Background
Founded in 2009, the Coalition for Dialogue on Africa (CoDA) exists as a special initiative of its three convening organizations – AUC, ECA and African Development Bank (AfDB). It has successfully worked as a platform for the ongoing engagement in rigorous and candid dialogue on crucial questions of vital interest to the future of the continent.
It is policy-oriented, working in collaboration with other African and international organizations to address the issues of Africa’s security, peace, governance and development through inclusive dialogue between diverse and influential groups of stakeholders drawn from government leaders, policy makers, civil society, the private sector and the media. It also advocates their recommendations effectively to influence policy.
In addition, the institution aims to build strong partnerships and synergies with leading African research institutions with the objective of grounding its work on solid scientific findings. It aims to place particular attention on bridging the gap between the research and policy making communities in Africa.
CoDA, which has been a key member of the anti-IFF Working Group (IWG), will be directly tackling the issue of IFFs.
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Kenya and Tanzania agree to resolve trade barriers
Kenya and Tanzania have agreed to resolve their differences and address barriers hindering trade between the two countries.
In a joint communique issued in Mombasa, the two countries are to release a report Thursday on agreements to eliminate non-tariff barriers to enhance inter-regional trade.
International Trade Principal Secretary Chris Kiptoo and his Tanzanian Industry, Trade and Investment counterpart Elisante ole Gabriel chaired a meeting at Sarova Whitesands Hotel to iron out the trade rows that had threatened to worsen relationships between the two neighbouring states.
They said the two countries have agreed to allow importation and exportation of commodities between them.
“Already we have been able to resolve movement of wheat, milk and LPG products. All those are now moving across the borders without any problem. To make sure that we improve our inter-regional trade we have decided that we are going to do away with the barriers,” Dr Kiptoo said.
Timelines
There will be a verification mission within specific timelines to make the agreements a success.
Dr Kiptoo said bilateral talks held between the representatives of the two countries agreed to have exchange programmes to improve movement of goods.
“We have also agreed that we shall be visiting our borders to meet the wananchi there and deal with some of the problems that they have so that we can enhance the environment for trade between our two countries,” he added.
Prof Gabriel said the two nations will do away with “unnecessary taxation” of goods.
He added that Kenya and Tanzania will have an elaborate programme of dealing with challenges they face in regard to trade.
Disagreements
“In every government there must be disagreements but we do not want the unnecessary differences which can be dealt with. We are on a mission to upgrade our industries and agreed to make our citizens develop interest in ethnocentrism,” said Prof Gabriel.
The two downplayed recent differences following the auctioning of more than 10,000 cattle and incinerating of 6,400 Kenyan-sourced chicks by the Tanzanian authorities.
Small things
Dr Kiptoo termed the decision by the Tanzanian government as “small things that should not be given a lot of prominence” adding that “the two countries are handling them well”.
“We have seen trade improve over time between the two countries. The relationship between Tanzania and Kenya is excellent and we are doing well,” he said.
However, he acknowledged that in the last three years, trade between the two countries has declined.
Due to that, he said, they are working towards seeing more investments in each country through promotion of agricultural products and trade.
“We have asked ourselves why trade is declining between our two countries and who is taking the share of that trade and we are working on the best and amicable ways to address all that,” said Dr Kiptoo.
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World Bank report finds rise in global wealth, but inequality persists
Report goes beyond GDP to assess the economic progress of nations
Global wealth grew significantly over the past two decades but per capita wealth declined or stagnated in more than two dozen countries in various income brackets, says a new World Bank report. Going beyond traditional measures such as GDP, the report uses wealth to monitor countries’ economic progress and sustainability.
The Changing Wealth of Nations 2018 tracks the wealth of 141 countries between 1995 and 2014 by aggregating natural capital (such as forests and minerals), human capital (earnings over a person’s lifetime); produced capital (buildings, infrastructure, etc.) and net foreign assets. Human capital was the largest component of wealth overall while natural capital made up nearly half of wealth in low-income countries, the report found.
“By building and fostering human and natural capital, countries around the world can bolster wealth and grow stronger. The World Bank Group is accelerating its effort to help countries invest more – and more effectively – in their people,” said World Bank Group President Jim Yong Kim. “There cannot be sustained and reliable development if we don’t consider human capital as the largest component of the wealth of nations.”
The report found that global wealth grew an estimated 66 percent (from $690 trillion to $1,143 trillion in constant 2014 U.S. dollars at market prices). But inequality was substantial, as wealth per capita in high-income OECD countries was 52 times greater than in low-income countries.
A decline in per capita wealth was recorded in several large low-income countries, some carbon-rich countries in the Middle East, and a few high-income OECD countries affected by the 2009 financial crisis. Declining per capita wealth implies that assets critical for generating future income may be depleted, a fact not often reflected in national GDP growth figures.
The report found that more than two dozen low-income countries, where natural capital dominated overall wealth in 1995, moved to middle-income status over the last two decades, in part by investing earnings from natural capital into sectors such as infrastructure, as well as education and health which increase human capital.
While investments in human as well as produced capital are essential, getting rich is not about liquidating natural capital to build other assets, the report notes. Natural capital per person in OECD countries is three times higher than in low-income countries, even though the share of natural capital in total wealth is just 3 percent in OECD countries.
“Growth will be short-term if it is based on depleting natural capital such as forests and fisheries. What our research has shown is that the value of natural capital per person tends to rise with income. This contradicts traditional wisdom that development necessarily entails depletion of natural resources,” said Karin Kemper, Senior Director, Environment and Natural Resources Global Practice at The World Bank.
The report estimated that the value of natural capital assets doubled globally between 1995 and 2014. This is due, among other reasons, to increased commodity prices along with a rise in economically-proven reserves. In contrast, productive forest value declined by 9 percent while agricultural land expanded at the cost of forests in many areas.
The latest report, which follows similar World Bank assessments in 2006 and 2011, includes estimates of human capital for the first time. Human capital is measured as the value of earnings over a person’s remaining work life, thereby incorporating the roles of health and education. Women account for less than 40 percent of global human capital because of lower lifetime earnings. Achieving gender equity could increase human capital wealth by 18 percent.
Human capital accounts globally for two thirds of global wealth; produced capital accounts for a quarter of wealth. Natural capital accounts for one tenth of global wealth, but it remains the largest component of wealth in low-income countries (47 percent in 2014) and accounts for more than one-quarter of wealth in lower-middle income countries.
Wealth accounts for countries are compiled from publicly available data drawn from globally recognized data sources and with a methodology that is consistent across all countries. Some wealth components from natural capital were not tracked in the report, including water, fisheries and renewable energy sources.
The report was funded in part by the WAVES (Wealth Accounting and the Valuation of Ecosystem Services) partnership and by the Global Partnership for Education.
Top three findings from the report
Despite rising global wealth, inequality persists
The world is still unequal when seen through the lens of wealth. High-income OECD countries hold 52 times more wealth per capita, measured at market exchange rates, than low-income countries.
More than two dozen countries saw their per capita wealth decline or stagnate. Declining per capita wealth implies that assets critical for generating future income may be depleted, a fact not often reflected in national GDP growth figures. This included several large low-income countries, some carbon-rich countries in the Middle East, and a few high-income OECD countries affected by the 2009 financial crisis.
In low-income countries, wealth almost doubled, a larger increase than the global average of a 66% rise. But higher population growth in many low-income countries means that, in those countries, per capita wealth often grew at a slower pace than the global average. This is particularly true for Sub-Saharan Africa, where the needle on wealth per capita did not move much since 1995.
Importance of investing in people
Human capital accounts for two thirds of global wealth, the largest chunk of wealth. The report shows that human capital is about 70% of the wealth in high-income countries and only 40% in low-income countries. Human capital is computed as the present value of future earnings for the labor force, factoring in education and skills as well as experience and the likelihood of labor force participation at various ages. This report makes a clear economic case for investing in human capital to boost wealth and future economic growth.
Leveraging Natural capital but not liquidating it
Natural capital remains the largest share of wealth for low-income countries. In 10 of the 24 low-income countries, natural capital accounts for more than 50% of their wealth, mostly because of agricultural land and forests. The fact that the share of natural capital in total wealth decreases in higher-income groups means that countries do not have to liquidate natural assets to grow. Instead, it points to the need to manage natural capital so that it increases in value for future generations. This is reflected in the wealth composition of high-income countries, where the value of natural capital is three times that of low-income countries.
Low-income countries have the opportunity to grow by building their renewable resources like forests and sustainable management of land, which often make up a larger share of their assets. Rents from non-renewables like minerals and fossil fuels can be used to build other assets like infrastructure and human capital, that can continue to generate income even after minerals are exhausted.
Way forward
While this book pushes the boundaries on wealth accounts, there is widespread recognition that the scope and the scale of this research can be further expanded. The next frontier on natural capital includes looking at resources currently missing due to lack of data: water, fish stocks, renewable energy sources, and several critical ecosystem services. The World Bank is also working on two follow-up studies building on the estimates of human capital. The first will look at the cost of gender inequality globally, and the second will use the human capital data to look at the benefits, among others, of reducing stunting, investing in education, or ending child marriage.
The hope is that thinking about wealth will become more mainstream and help countries to better balance their portfolio of assets for long-term sustainable growth and prosperity.
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tralac’s Daily News Selection
Africa Business and Investment Forum:
(i) African leaders call for “partnership not support”: Their message was loud and clear: Africa requires partnership, not support. African Heads of State insisted they have a clear mandate to work with both public and private enterprises, to ensure the business environment is favourable and attractive to the international business community. The UNECA, in partnership with Corporate Council on Africa, hosted Heads of State from five African countries at the inaugural Africa Business and Investment Forum, held yesterday in Addis Ababa. Vera Songwe, UNECA Executive Secretary, said: “Today’s Africa Business and Investment Forum demonstrated a real commitment by our African leaders that they are focussed on paving the way for private investors in the U.S. and the rest of the international community, to invest in Africa.”
(ii) Opening remarks by President Paul Kagame: Let me say by the way, I remind Ali Mufuruki that he may wish to visit the Commission Headquarters for a different thing, and other business leaders here, I wish to remind you that you can go to the Commission for the African passport.I hope I am not putting the African Union Commission Chair on the spot when they are not ready to provide them, but I know they have stockpiles of passports to give. Among those they want to give the passports to are country leaders, as well as business leaders, which will facilitate people to move across the continent without having to go through the hassles of visas. These are very important measures for the competitiveness of African firms and their ability to expand to new markets and hire more employees, especially young people. And there are many other urgent frameworks for economic integration waiting to be finalised and applied. I think it will happen more quickly if Africa’s business leaders keep advocating for Pan-African economic cooperation with policy-makers and the public, especially through the media.
(iii) Remarks by Millennium Challenge Corporation Acting CEO Jonathan Nash
Obinwanne Okeke: Tear down Africa’s wall (Forbes Africa)
As an entrepreneur that operates a real estate business in Nigeria and South Africa, I have never found a more important moment to reflect on my own experience, and to highlight how a transnational collaborative platform can offer entrepreneurs from these two African economic powerhouses an opportunity for substantive engagement. The time to create a transnational collaborative platform for African entrepreneurs, one that provides a guided approach for sustained collaboration, is now. This transnational collaboration would guarantee a broadening and enriching of the imagination of the African entrepreneur. It would free the African entrepreneur from the shackles of borders, time and space. It would redefine business for the African entrepreneur.
The slow journey to reaping benefits of Africa’s open skies (Business Daily)
Despite the celebratory mood, however, the launch of the Single African Air Transport Market does not mean travellers will automatically crisscross the continent. On the runway to take-off are a number of significant steps that signatories have to take in realising this dream. “We are not ready to start today. It will take a bit more time to achieve the vision,” said the Kenya Civil Aviation Authority director-general Gilbert Kibe. Under the umbrella of the Single Market, cross-border flights will be treated as domestic flights for taxation and regulatory purposes. Airlines will also be granted fifth freedom rights, meaning a flight from Johannesburg can stop by Nairobi and pick up passengers on its way to Cairo. This will all serve to drive ticket prices down and increase connectivity on the continent.
Botswana signs the COMESA-EAC-SADC Tripartite Free Trade Area agreement (SADC)
Botswana becomes the 22nd country to append its signature to the agreement which was launched by the Heads of States of the COMESA-EAC-SADC FTA Member States on 10th June, 2015 at Sharm el-Shaik. Speaking during the signing ceremony, Botswana’s Minister of Investment, Trade and Industry, Vincent T. Seretse outlined veterinary vaccines; pharmaceutical products; electrical and machinery products; plastics products; salt and salt products; carpets and other textiles floor covering as among Botswana’s local products identified as having export potential under the agreement. [Downloads: speeches by Botswana’s Minister of Investment, Trade and Industry; COMESA’s Secretary General; SADC’s Deputy Executive Secretary for Regional Integration]
South Africa: December 2017 trade surplus rises to R15.72bn (SARS)
The South African Revenue Service has released trade statistics for December 2017 recording a trade balance surplus of R15.72bn. The year-to-date (01 January to 31 December 2017) trade balance surplus of R80.55bn is an improvement on the surplus for the comparable period in 2016 of R1.05bn. Exports for the year-to-date grew by 7.9% whilst imports for the same period showed an increase of 0.7%. The R15.72bn trade balance surplus for December 2017 is attributable to exports of R104.32bn and imports of R88.60bn. Exports decreased from November 2017 to December 2017 by R11.87bn (10.2%) and imports decreased from November 2017 to December 2017 by R14.54bn (14.1%).
2nd South Africa-Uganda Joint Trade Committee: facilitating trade and investment flows (dti)
The Deputy Minister of Trade and Industry, Mr Bulelani Magwanishe together with the Ugandan Minister of Trade, Industry and Cooperatives, Ms Amelia Kyambadde have committed to facilitating trade and investment flows between their respective countries as contained in the Trade Agreement signed in 2002 and in keeping with the principles of the Tripartite Free Trade Area negotiations. Magwanishe reiterated the need for the South African Bureau of Standards and the Uganda National Bureau of Standards to strengthen collaboration on the harmonisation of standards to facilitate the smooth flow of trade between the two countries. Collaboration between the Industrial Development Corporation of South Africa and the newly formed Uganda Development Corporation was encouraged. Furthermore, a new work stream under the JTC was created to focus on the development of small businesses.
Nigeria: NEPC mulls Malaysian model to support exports (This Day)
As the federal government intensifies effort to diversify the economy, the Nigerian Export Promotion Council has advocated the possibility of adapting the Malaysian model as part of strategic collaboration to promote Nigeria’s export trade. The Acting Executive Director/CEO of NEPC, Mr Sidi-Aliyu Abdullahi, disclosed this yesterday while receiving in his office a delegation from Performance Monitoring and Delivery Unit, a trade promotion organ under the Prime Minister of Malaysia. Mr Sidi-Aliyu, while noting that the nation’s food import bill was high, stated that the key objective of the Zero Oil Plan initiative of NEPC was to reduce imports by scaling-up production in key sectors of the non-oil export as well as stimulate value addition, job and wealth creation along export value chains.
Extraordinary ECOWAS Summit (27 January, Addis Ababa): communiqué (pdf)
The Heads of State and Government notes the considerable difficulty in allocating statutory positions to Member States, in particular with respect to a 9-member Commission. In this regard, in the name of solidarity and cohesion, and in order to allow all Member States occupy a Commissioner position without increasing the running costs, they decide to return to a 15-member Commission. They direct the outgoing Commission President to work together with the incoming President on the allocation of positions to enable the new statutory officers assume duty.The Authority also takes note of the Memorandum on the enhancement of criteria for the allocation of statutory positions presented by the Chairman of the Authority for consideration and invites Member States to submit their observations within 15 days.
Conference on Promoting Growth, Jobs, and Inclusiveness in the Arab World: statement by IMF, AFESD, AMF
The Marrakesh Call for Action will guide the IMF, AFESD, and AMF as we engage with policymakers and other stakeholders in the region. They will form the basis for a set of recommended policy actions for governments together with the private sector, civil society and international financial institutions, to raise growth and living standards in the region and generate a more prosperous future. More external financing, preferably as grants, will also be needed to support the region, particularly to help post-conflict countries and those displaced by war. [Christine Lagarde: Scaling-up the inclusive growth agenda in the Arab Region]
How much does BDS threaten Israel’s economy? (Brookings)
Another measure that suggests the low substitutability of Israeli exports is the quality of its goods. Using data on export quality, Figure 2 shows that over the past 30 years Israel has become increasingly an exporter of high quality goods (relative to other countries’ exports). In the early 1980s over 90% of the value of Israeli exports were below the median world quality, with barely 5% of its exports being above median world quality. Yet, as of 2015, almost 40% of Israeli exports are above median world quality with less than 10% in the bottom quartile. If high quality goods are harder to replace, this would again suggest that Israeli exports are, today, less prone to boycotts and import bans. By contrast, more than 70% of South African exports in 1990 were below median world quality, with more than half of such figure being below the 25th percentile. [The authors: Dany Bahar, Natan Sachs]
ARC, UNECA partner to increase insurance coverage in Africa (Rwanda News Agency)
The African Risk Capacity (an agency of the AU) and the UNECA have announced a new partnership which will see the two organisations work together to increase insurance coverage against climate risks for African states. The multilateral deal, announced at the AU’s summit, commits ARC and UNECA to build the capacity of their 33 common Member States by embedding risk management investments into government planning through policy development. ARC and ECA also will share expertise and commit financial resources to joint analytical work in areas of economic and climate risk research in order to promote risk transfer instruments. The UN estimates that Africa will see the adaptation costs of climate change rise to $50bn per year by 2050.
Senegal: Impact on tobacco use and tax revenues (World Bank)
This study has three main objectives. First, it aims to assess the impact of tobacco excise tax increases over 2012-14 on prices, consumption levels, and tax revenues in Senegal, as well as the response by tobacco companies to such increases. Second, the report models the potential impact of two scenarios involving future excise tax increases on tobacco products in Senegal, and considers alterations in the structure of tobacco excise taxation. Finally, it offers policy options to government authorities.
Rwanda, Tanzania finance ministers meet over joint railway financing (New Times)
Rwanda and Tanzania finance ministers on Monday met in Dar es Salaam to consider the finance matters regarding accomplishment of the two countries’ joint 521 kilometre Isaka-Kigali Standard Gauge Railway project, which is estimated to cost $2.5bn. Sources say the latest meeting, among others, agreed that some critical issues including feasibility studies impacting on cost be re-examined so that both countries have a clearer picture on the financial implications before charting the way forward as regards mobilising funds. The project’s estimated total cost of $2.5bn was made in 2015 and it is possible that there could be changes that need to be well factored in considering inflation and other economic factors.
Kenya ranked 112 globally on key economic metrics (Business Daily)
Kenya has been ranked 112 globally on macroeconomic stability, institutional strength, openness and human capital and remains behind 11 other African countries. Mauritius, Botswana and Rwanda are the top-most in Africa in terms of future growth promise on account of the measured indicators, according to a newly released report by audit and financial advisory firm KPMG titled Growth Promise 2018. By macroeconomic issues the report refers to government deficit and public debt while openness refers to the stock of foreign direct investment and total trade. Other metrics used are infrastructure which refers to availability of financial services, the quality of transport and technology readiness.
Today’s Quick Links: Tanzania launches e-passport as Magufuli calls for tighter control of illegal immigrants Tanzania adopts facial recognition technology to improve border control Pakistan’s business community urged to venture into Africa via Mauritius Wilson Center Africa Program: Africa - Year in Review 2017 Why are more sovereigns issuing in Euros? Choosing between USD and EUR-denominated bonds |
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Botswana signs the COMESA-EAC-SADC Tripartite Free Trade Area Agreement
Botswana has signed the Tripartite Free Trade Area (TFTA) Agreement which consists of 26 countries of the three Regional Economic Communities of Common Market for Eastern and Southern Africa (COMESA), East African Commission (EAC), and the Southern African Development Community (SADC).
The TFTA Agreement was signed by Botswana’s Minister of Investment, Trade and Industry, Hon. Vincent Seretse on 30th January 2018, at a ceremony in Gaborone, Botswana, which was witnessed by the Secretary General of COMESA, Mr Sindiso Ngwenya, the Deputy Executive Secretary for Regional Integration at the SADC Secretariat, Dr Thembinkosi Mhlongo, and Senior Government Officials and Chief Executives from Business Botswana.
The Secretary General of COMESA and Chair of the Tripartite Task Force, Mr Ngwenya commended the government of Botswana for signing the agreement which he said will not only see the dismantling of trade barriers among the 26 tripartite Member/Partner States, but will pave way to integrating the African continent.
Speaking during the signing ceremony, Hon. Seretse outlined veterinary vaccines; pharmaceutical products; electrical and machinery products; plastics products; salt and salt products; carpets and other textiles floor covering as among Botswana’s local products identified as having export potential under the agreement.
Speaking on behalf of the SADC Secretariat, Dr Mhlongo commended the government of Botswana for taking the step to join the Tripartite family which he said has a lot of potential to increase trade in the African continent and accelerate development by creating a huge single market.
“The Tripartite FTA agreement has the potential to boost trade in Africa and accelerate development by creating a huge single market of about 700 million people with an estimated gross domestic product of well over US$1.4 trillion,” Dr Mhlongo said.
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African leaders call for “Partnership not Support” at Africa Business and Investment Forum
Their message was loud and clear: Africa requires partnership, not support.
African Heads of State insisted they have a clear mandate to work with both public and private enterprises, to ensure the business environment is favourable and attractive to the international business community.
The U.N. Economic Commission for Africa (ECA) in partnership with Corporate Council on Africa (CCA), hosted Heads of State from five African countries, at the inaugural Africa Business and Investment Forum, held on January 30, 2018 in Addis Ababa, Ethiopia.
The event was opened by H.E. Paul Kagame, President of Rwanda, the ascending Chairman of the African Union, and was joined by fellow Heads of State including H.E. Hailemariam Desalegn, Prime Minister of Ethiopia, H.E. Yoweri Museveni, President of Uganda, H.E. Mahamadou Issoufou, President of Niger, H.E. Macky Sall, President of Senegal, H.E. Uhuru Kenyatta, President of Kenya, and H.E. Filipe Nyusi, President of Mozambique, who discussed diverse areas including Trade and Diversification, Energy, Agribusiness, and Health, in a series of roundtable discussions.
Vera Songwe, Executive Secretary of the U.N. Economic Commission on Africa, said: “Today’s Africa Business and Investment Forum demonstrated a real commitment by our African leaders that they are focussed on paving the way for private investors in the U.S. and the rest of the international community, to invest in Africa.”
The Forum brought together over 240 African and U.S. public and private sector leaders on the margins of the African Union (AU) Summit to discuss specific benchmarks and measures that can be implemented to support public-private-sector-led growth in Africa.
Over 150 CEOs and senior executives of key U.S and African companies, both multinationals and SMEs, also participated in the Forum, contributing to the ongoing dialogue around Africa to increase opportunities for business partnerships, secure commitments to as well as track the adoption of business-friendly policies, and showcase countries and policies that are contributing to an enabling environment for enhanced African regional and global trade and investment.
Africa ‘working tirelessly’ to create conducive environment for foreign investments
Africa is working tirelessly to get policy and legislative conditions right to ease the business environment and attract more foreign direct investment, Ethiopian Prime Minister Hailemariam Desalegn said. As a result, foreign direct investment flows to the continent were growing with a number of African economies now showing resilience to various internal and external shocks.
“Africa has been on the investment radar of many multinationals for decades now as witnessed by increased investment in infrastructure, agriculture, mining, manufacturing and tourism, to mention but a few. Still Africa’s market and resource potential remains untapped,” he said, adding the business environment in Ethiopia had improved remarkably in recent years.
He said his government is seeking to employ policies and strategies for positioning the country as an attractive investment destination for productive investors.
The Prime Minister applauded the ECA and the CCA for organizing the Forum, which he said will contribute to the enrichment of policy issues regarding transforming Africa through public-private partnerships in various sectors.
President Paul Kagame of Rwanda also commended the CCA and ECA for, “This effort to draw business leaders into this conversation about public-private sector investment in Africa”.
“This is long overdue and I trust that it will become a regular event during our Summits,” he added. Mr. Kagame called for closer collaboration between the private sector and African governments to increase economic opportunity and entrepreneurship on the continent.
For his part, Kenyan President Uhuru Kenyatta said there was need for more private sector investment in power projects on the continent. He was speaking during a round table discussion on the need to increase power supply in Africa through cross border networks.
“Africa has huge potential for renewable power generation that the private sector should invest in,” he said, adding the continent was full of opportunities, not just challenges.
The leaders attended different roundtables which focused on African trade and diversification; increasing power supply; the business of agriculture, creating successful agribusiness; and advancing public private partnerships on non-communicable diseases.
Senegal’s Macky Sall urged African governments to work together with the private sector to ensure the continent can deliver low cost renewable energy that can be accessed by all.
Market
Uganda’s Yoweri Museveni urged American companies to invest in Africa. He said the continent was ripe for investment, adding African governments have and continue to address investors’ concerns to make it easier for them to bring their money to the continent.
Africa, he said, is a ready market, especially with the growing purchasing power of its people.
President of Niger, Mahamadou Issoufou, said he was positive about the Continental Free Trade Area’s success.
“African Heads of State are fully committed and engaged in the CFTA process,” said Mr. Issoufou, adding Africa was the future. It is the continent on which you can count, he said.
Mr. Issoufou said the business forum was a great opportunity for Africa to inform investors about the benefits of the CFTA and progress made thus far.
Mozambican President Filipe Nyusi, who attended the roundtable on the business of agriculture, said bold and coordinated efforts were needed as Africa moves from the old way of doing agriculture to new ways of farming.
He said the continent should invest in new technologies, research and education to ensure agriculture becomes cool for the youth and in the process ensure food security.
Mr. Nyusi said political will and vision was crucial if Africa is to scale up agribusiness on the continent through enabling policies that can link agriculture and trade thereby achieving sustainable equitable growth on the continent.
African Union Commission Chairperson Moussa Faki hailed the ECA and the CCA for organizing the business forum, adding the continent was doing all it can to improve the ease of doing business for the benefit of its people.
U.S. Relationship
Millennium Challenge Corporation Acting Chief Executive Officer, Jonathan Nash, said the U.S. is committed to working with African nations “to realize the promise of a more peaceful, more productive, more prosperous world”.
“From promoting trade and economic progress to countering violent extremism, U.S. and Africa share a number of common interests,” he said, adding strategic investments in critical sectors can help the poorest people rise out of poverty – advancing security, stability and prosperity across Africa.
“As we all know, the continent is home to some of the world’s fastest-growing economies and will be home to one quarter of the world’s consumers by 2030. U.S. companies and investors are increasingly aware of the continent’s economic potential,” said Mr. Nash.
“We value our partnership with countries across Africa, and we respect the people of Africa,” he said.
Florie Liser, President and CEO Corporate Council on Africa [CCA], said, “Today was a great opportunity for UN and AU leadership to hear the voice of international private enterprises and investors who want to do business with Africa, and ensure that business relations between the U.S. and the continent continue to grow. Our CCA members, and guests at the Forum, were hugely encouraged to hear from our continent’s leaders that Africa is an attractive destination for investment.”
Opening remarks by President Paul Kagame at the Africa Business and Investment Forum
Addis Ababa, 30 January 2018
Good morning. I want to thank all of you for being here with us this morning and for the insights you will be providing going forward in our discussions.
Despite the diverse backgrounds, I hear consistent messages that the success of business in Africa is critically important to our future.
I therefore commend this effort led by the Economic Commission for Africa, and the partners UNECA brought into this, to draw business leaders into this conversation at the African Union, and beyond.
This is long overdue, and I trust that it will be a regular feature of our Summits and of continental initiatives more generally going forward because I also have heard from many country leaders wishing to have this kind of interaction. So our job will be simple: Encouraging those who are already willing to move forward.
You should be aware that the ongoing institutional reform of the African Union includes provisions for increased engagement with the private sector.
But the primary objective of the reform is an African Union that is financed sustainably from our own resources. Governments can meet that commitment if the business sector is flourishing and paying taxes. We need active support from the private sector in fact. Without your voice, something essential is missing.
Several of the African Union’s most ambitious initiatives are designed to unshackle commercial activity and entrepreneurship, which is about providing a better quality of life to our citizens.
I am thinking about the Continental Free Trade Area, which we hope to conclude this year, as well as the free movement of people, adopted during this Summit, and the Single African Air Transport Market, which we inaugurated yesterday.
Let me say by the way, I remind Ali Mufuruki that he may wish to visit the Commission Headquarters for a different thing, and other business leaders here, I wish to remind you that you can go to the Commission for the African passport.
I hope I am not putting the African Union Commission Chair on the spot when they are not ready to provide them, but I know they have stockpiles of passports to give. Among those they want to give the passports to are country leaders, as well as business leaders, which will facilitate people to move across the continent without having to go through the hassles of visas.
These are very important measures for the competitiveness of African firms and their ability to expand to new markets and hire more employees, especially young people. And there are many other urgent frameworks for economic integration waiting to be finalised and applied.
I think it will happen more quickly if Africa’s business leaders keep advocating for Pan-African economic cooperation with policy-makers and the public, especially through the media.
I am happy to see that today’s roundtables, the way I have seen they are arranged, will be specific and full of practical detail. This makes it more likely that new public-private partnerships can be forged.
We need the private sector’s help in that regard.
Let me give the example of health. Inadequate medical care costs companies and the public sector a lot of money and lost productivity through illness and disability.
But the private sector is also part of the solution. A report from the International Finance Corporation a few years ago found that the majority of health services consumed in Africa are already supplied privately.
This doesn’t necessarily mean we should privatise our healthcare systems, but rather find ways to improve quality and access to healthcare.
In Rwanda, for example, we have entered into a public-private arrangement with a Spanish-Angolan firm to manage our largest hospital. What is being done there is already showing good success.
We are also partnering with an American company, Zipline, to pioneer the use of drone aircraft to deliver blood and other medical supplies to rural areas.
There is much more we can do when we cooperate, and this conference may generate innovative ideas which we can take forward.
We can work through the African Union, and also work with external partners, some of whom we also see here with us today, and we thank you for being here.
But more collaboration is also needed between government and business. I hope you can help make government behave more like business in the sense of focusing on accountability and results.
At the end of the day, we share the same goal of raising the well-being and prosperity of our citizens. That is what we must keep working towards.
I thank you once again for arranging this meeting, UNECA and the partners you brought in, especially helping to bring African business to work together with other partners, especially today with American businesses.
I want you to know that you can count on our support to make gatherings like this a tradition, and also keep realising the results that we want from them.
I wish you a very productive conference and I thank you very much.
Related News
South Africa Merchandise Trade Statistics for December 2017
South Africa’s trade surplus widens in December
South Africa’s trade surplus increased to R15.72 billion in December of 2017 from an upwardly revised R13.05 billion in the previous month, and above market expectations of a R10.05 billion surplus. It is the highest trade surplus since May of 2016.
Exports decreased 10.2 percent month-over-month to R104.3 billion in December of 2017, namely vehicles and transport equipment (-23 percent); machinery and electronics (-21 percent); base metals (-14 percent) and mineral products (-12 percent). In contrast, sales of vegetables jumped 31 percent. Main export partners were: China (11.6 percent of total exports); the US (7.1 percent); Germany (6.0 percent); India (5.4 percent) and the UK (4.3 percent).
Imports declined 14.1 percent month-over-month to R88.6 billion, mainly original equipment components (-58% of total imports); base metals (-30 percent); chemicals (-18 percent) and machinery and electronics (-15 percent). On the other hand, purchases of mineral products went up 23 percent. The most important import partners were: China (18.9 percent of total imports); Germany (7.9 percent); the US (6.4 percent); Oman (5.5 percent) and India (5.0 percent).
Considering the January to December period, exports went up 7.9 percent and imports rose a meager 0.7 percent, widening the country’s trade surplus to R80.55 billion surplus from a R1.05 billion in 2016.
The South African Revenue Service (SARS) today released trade statistics for December 2017 recording a trade balance surplus of R15.72 billion. These statistics include trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS).
The year-to-date (01 January to 31 December 2017) trade balance surplus of R80.55 billion is an improvement on the surplus for the comparable period in 2016 of R1.05 billion. Exports for the year-to-date grew by 7.9% whilst imports for the same period showed an increase of 0.7%.
Including trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The R15.72 billion trade balance surplus for December 2017 is attributable to exports of R104.32 billion and imports of R88.60 billion. Exports decreased from November 2017 to December 2017 by R11.87 billion (10.2%) and imports decreased from November 2017 to December 2017 by R14.54 billion (14.1%).
Exports for the year-to-date (01 January to 31 December 2017) grew by 7.9% from R1 100.32 billion in 2016 to R1 187.45 billion in 2017. Imports for the year-to-date of R1 106.90 billion are 0.7% more than the imports recorded in January to December 2016 of R1 099.27 billion, leaving a cumulative trade balance surplus of R80.55 billion for 2017.
On a year-on-year basis, the R15.72 billion trade balance surplus for December 2017 is an improvement from the surplus recorded in December 2016 of R12.27 billion. Exports of R104.32 billion are 11.5% more than the exports recorded in December 2016 of R93.52 billion. Imports of R88.60 billion are 9.0% more than the imports recorded in December 2016 of R81.25 billion.
November 2017’s trade balance surplus was revised upwards by R0.03 billion from the previous month’s preliminary surplus of R13.02 billion to a revised surplus of R13.05 billion as a result of ongoing Vouchers of Correction (VOC’s).
Trade highlights by category
The main month-on-month export movements: R’ million |
||
Section:
|
Including BLNS:
|
|
Mineral Products
|
-R3 655
|
-12%
|
Vehicles & Transport Equipment
|
-R3 272
|
-23%
|
Machinery & Electronics
|
-R2 083
|
-21%
|
Base Metals
|
-R1 953
|
-14%
|
Prepared Foodstuff
|
-R 854
|
-16%
|
Vegetable Products
|
+R 988
|
+31%
|
Total
|
-R10 829
|
91%
|
Total Movement |
-R11 866 |
100% |
The main month-on-month import movements: R’ million |
||
Section: |
Including BLNS: |
|
Original Equipment Components
|
-R4 682
|
-58%
|
Machinery & Electronics
|
-R3 819
|
-15%
|
Chemical Products
|
-R2 172
|
-18%
|
Base Metals
|
-R1 535
|
-30%
|
Textiles
|
-R1 300
|
-33%
|
Plastics & Rubber
|
-R 665
|
-14%
|
Vehicles & Transport Equipment
|
-R 643
|
- 7%
|
Precious Metals & Stones
|
-R 598
|
-40%
|
Animal & Vegetable Fats
|
-R 596
|
-49%
|
Mineral Products
|
+R3 162
|
+23%
|
Total
|
-R12 848
|
88%
|
Total Movement |
-R14 537 |
100% |
Trade highlights by world zone
The world zone results from November 2017 (revised) to December 2017 are given below.
Africa:
Trade Balance surplus: R17 630 million – this is a deterioration of R3 072 million in comparison to the R20 702 million surplus recorded in November 2017.
America:
Trade Balance deficit: R 188 million – this is a deterioration of R3 280 million in comparison to the R3 092 million surplus recorded in November 2017.
Asia:
Trade Balance deficit: R4 718 million – this is an improvement of R2 758 million in comparison to the R7 476 million deficit recorded in November 2017.
Europe:
Trade Balance deficit: R4 380 million – this is an improvement of R6 813 million in comparison to the R11 193 million deficit recorded in November 2017.
Oceania:
Trade Balance deficit: R 792 million – this is a deterioration of R 178 million in comparison to the R 614 million deficit recorded in November 2017.
Excluding trade data with Botswana, Lesotho, Namibia and Swaziland (BLNS)
The trade data excluding BLNS for December 2017 recorded a trade balance surplus of R7.51 billion. This was a result of exports of R93.40 billion and imports of R85.89 billion.
Exports decreased from November 2017 to December 2017 by R9.40 billion (9.1%) and imports decreased from November 2017 to December 2017 by R13.00 billion (13.1%).
The cumulative deficit for 2017 is R14.28 billion compared to R105.76 billion deficit in 2016.
Trade highlights by category
The main month-on-month export movements: R’ million |
||
Section: |
Excluding BLNS: |
|
Mineral Products
|
-R3 520
|
-12%
|
Vehicles & Transport Equipment
|
-R3 008
|
-23%
|
Base Metals
|
-R1 686
|
-13%
|
Machinery & Electronics
|
-R1 563
|
-20%
|
Vegetable Products
|
+R1 018
|
+40%
|
Total
|
-R8 759
|
93%
|
Total Movement |
-R9 402 |
100% |
The main month-on-month import movements: R’ million |
||
Section: |
Excluding BLNS: |
|
Original Equipment Components
|
-R4 682
|
-58%
|
Machinery & Electronics
|
-R3 613
|
-14%
|
Chemical Products
|
-R2 076
|
-19%
|
Base Metals
|
-R1 489
|
-30%
|
Textiles
|
-R 910
|
-29%
|
Vehicles & Transport Equipment
|
-R 655
|
- 7%
|
Plastics & Rubber
|
-R 639
|
-14%
|
Animal & Vegetable Fats
|
-R 595
|
-49%
|
Mineral Products
|
+R3 189
|
+23%
|
Total
|
-R11 470
|
88%
|
Total Movement |
-R13 003 |
100% |
Trade highlights by world zone
The world zone results for Africa excluding BLNS from November 2017 (Revised) to December 2017 are given below.
Africa:
Trade Balance surplus: R9 415 million – this is a deterioration of R2 142 million in comparison to the R11 557 million surplus recorded in November 2017.
Botswana, Lesotho, Namibia and Swaziland (Only)
Trade statistics with the BLNS for December 2017 recorded a trade balance surplus of R8.22 billion. This was a result of exports of R10.92 billion and imports of R2.70 billion.
Exports decreased from November 2017 to December 2017 by R2.46 billion (18.4%) and imports decreased from November 2017 to December 2017 by R1.53 billion (36.2%).
The cumulative surplus for 2017 is R94.83 billion compared to R106.80 billion in 2016.
Trade Highlights by Category
The main month-on-month export movements: R’ million |
||
Section: |
BLNS: |
|
Machinery & Electronics
|
-R 520
|
- 26%
|
Chemical Products
|
-R 293
|
- 23%
|
Base Metals
|
-R 267
|
- 29%
|
Vehicles & Transport Equipment
|
-R 263
|
- 22%
|
Prepared Foodstuff
|
-R 215
|
- 14%
|
Textiles
|
-R 212
|
- 30%
|
Plastics & Rubber
|
-R 145
|
- 24%
|
Mineral Products
|
-R 136
|
- 7%
|
Miscellaneous Manufactured Articles
|
-R 125
|
- 29%
|
Precious Metals & Stones
|
+R 47
|
+ 8%
|
Total
|
-R 2 129
|
86%
|
Total Movement |
-R 2 464 |
100% |
The main month-on-month import movements: R’ million |
||
Section: |
BLNS: |
|
Precious Metals & Stones
|
-R 584
|
- 66%
|
Textiles
|
-R 389
|
- 54%
|
Machinery & Electronics
|
-R 206
|
- 57%
|
Chemical Products
|
-R 96
|
- 11%
|
Prepared Foodstuff
|
-R 59
|
- 11%
|
Vehicles & Transport Equipment
|
+R 13
|
+ 25%
|
Total
|
-R1 321
|
86%
|
Total Movement |
-R1 534 |
100% |
Related News
Kenya ranked 112 globally on key economic metrics
Kenya has been ranked 112 globally on macroeconomic stability, institutional strength, openness and human capital and remains behind 11 other African countries.
Mauritius, Botswana and Rwanda are the top-most in Africa in terms of future growth promise on account of the measured indicators, according to a newly released report by audit and financial advisory firm KPMG titled Growth Promise 2018.
By macroeconomic issues the report refers to government deficit and public debt while openness refers to the stock of foreign direct investment and total trade.
Other metrics used are infrastructure which refers to availability of financial services, the quality of transport and technology readiness.
Institutional strength
Rwanda is put ahead of most other African countries mainly because of its institutional strength that refers to the quality of regulation, judicial independence, transparency of government policymaking, control of corruption and business and property rights.
“Unpicking trends in the sub-indicators suggests that the real strides have been made via improvements in infrastructure, and in particular in tech-readiness,” said the report that uses Growth Promise Index (GPI) to rank countries with sub-indicators that also include human resources aspects such as education and life expectancy.
But it says that, across the globe, GPI scoring in macroeconomic stability has fallen due to the Great Recession (2008-to date) resulting from the financial meltdown in the US and its turbulent aftermath as well as the decline in commodity prices.
“Most regions fared poorly in this category, cancelling out possible gains in areas such as human development and infrastructure,” said KPMG.
Macroeconomic stability
Although the report does not reveal the details about Kenya, it shows that the country’s macroeconomic stability is still not as good as that of Egypt, Morocco, Cabo Verde, Ghana, Algeria and Tunisia.
Although Rwanda, Mauritius and Botswana have a higher overall GPI ranking than Kenya, they are behind on macroeconomic stability ranking.
Kenya’s budget deficit, for example, has hit a high of above eight per cent but is expected to fall to just above six per cent under the 2018/19 Budget Strategy Paper.
Public debt is currently at above 50 per cent of the gross domestic product, thanks to borrowing related to the standard gauge railway in the past few years. However, the debt is projected to fall below 50 per cent in the coming fiscal years.
The KPMG report adds that many countries still have a chance to improve on their finances.