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MC11: Draft Ministerial Decision on Electronic Commerce submitted by the African Group
Communication from the African Group on the Work Programme on Electronic Commerce, submitted to the WTO General Council ahead of the upcoming 11th Ministerial Conference in Buenos Aires, Argentina.
Draft Ministerial Decision on Electronic Commerce
Ministers,
Recognizing that global electronic commerce is growing rapidly and creating an alternative means for trade;
Committed to addressing the uneven spread of global electronic commerce and risk of disruptive impacts;
Committed to overcoming the digital and technological divide underlying digital trade and electronic commerce;
Recognizing that diverse national measures are necessary to build national capabilities, with a view to promote inclusive, equitable and sustainable growth;
Recognizing the need to clarify the treatment of electronic commerce in relevant WTO Agreements, and the broad interest of Members to continue examining all trade-related issues relating to global electronic commerce;
Resolved to ensuring access to the Internet to more than half of the world’s population who remain offline;
Taking particular account of the economic, financial, and development needs of developing countries;
Recognizing the valuable work being undertaken in other multilateral and international fora;
Decide:
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To continue the work under the Work Programme on Electronic Commerce since our last session, based on the existing mandate and guidelines, in the relevant WTO bodies as set out in paragraphs 2 to 5 of the Work Programme.
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To address all open issues in the relevant bodies, as provided for in paragraphs 2 to 5 of the Work Programme on Electronic Commerce, including but not limited to definition, classification and technological neutrality.
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To discuss, in the relevant bodies, the manner in which Members can preserve their right to regulate electronic commerce and consideration of all measures to promote national digital industrial development with a view to promoting inclusive, equitable and sustainable growth.
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To undertake, in the relevant bodies, a thorough examination of the opportunities and risks associated with digital transformation and electronic commerce.
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To discuss, in the relevant bodies, measures Members have taken and may take to develop their national institutional regulatory capacity that ensure: the protection of information of all Members and their citizens, including but not limited to mandatory disclosure of data; the disclosure of source codes; access to, and transfer of technology.
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To continue, in the relevant bodies, the practice of national experience sharing of inter alia: the historical development of the digital industry; the challenges and measures adopted to promote digital economy and electronic commerce.
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To instruct the General Council to hold periodic reviews in its sessions of July and December 2018 and July 2019 based on the reports that may be submitted by the WTO bodies entrusted with the implementation of the Work Programme and report to the next session of the Ministerial Conference.
On the moratorium, the African Group is still discussing it in view of the revenue implications of the current moratorium on customs duties, particularly in the context of increasing digitization of goods and services. For these reasons, the renewal of the moratorium should not be seen as automatic.
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U.S. & Nigeria agree to Commercial and Investment Dialogue
Yesterday, the U.S. Department of Commerce and Nigeria’s Ministry of Industry Trade and Investment (MITI) finalized the Memorandum of Understanding to formally establish a new bilateral policy instrument focused on trade and investment between Nigeria and the United States.
The U.S.-Nigeria Commercial and Investment Dialogue (CID) is a U.S. Department of Commerce and Nigeria’s Ministry of Industry Trade and Investment-led mechanism designed to promote increased, diverse, and sustained trade and investment between the United States and Nigeria.
The CID, the newest instrument of U.S. engagement with Nigeria, is different in that it leverages the voice of the private sector in the effort to enhance the bilateral commercial and investment relationship.
Nigeria’s Minister of Industry Trade and Investment, Dr. Okechukwu Enelemah, signed the Memorandum of Understanding, witnessed by U.S. Deputy Assistant Secretary Seward L. Jones, Jr. The document had been previously signed in Washington by Secretary of Commerce Wilbur L. Ross, Jr. on behalf of the United States Government.
The United States and Nigeria have worked together for several months on the requisite details to establish the CID. The CID will initially focus on infrastructure, agriculture, digital economy, investment, and regulatory reform.
At the 2016 U.S.-Africa Business Summit in New York, President Muhammadu Buhari announced his support for the CID and Dr. Enelemah has worked tirelessly with many senior officials of the U.S. Department of Commerce to bring about yesterday’s signing.
The CID is expected to launch in early 2018 at a meeting co-chaired by Secretary Ross and Minister Enelamah.
United States-Nigeria Bi-National Commission Joint Communiqué
The United States-Nigeria Bi-National Commission (BNC) met on November 20, 2017, in Abuja, Nigeria. The BNC was co-chaired by Geoffrey Onyeama, Honorable Minister of Foreign Affairs, Federal Republic of Nigeria and John J. Sullivan, Deputy Secretary, U.S. Department of State, United States of America.
This year’s BNC focused on advancing U.S.-Nigerian shared prosperity, including discussion on three areas of focus:
- Security Cooperation,
- Economic Growth and Development, and
- Governance and Democracy.
Prior to this year’s BNC, in their February 13, 2017 call and their September 20, 2017 lunch event at the opening of the United Nations General Assembly, President Donald J. Trump and President Muhammadu Buhari recalled the enduring bonds between the peoples of the United States and Nigeria. They reaffirmed their commitment to further strengthen the U.S.-Nigeria partnership in a manner that promotes a future of shared prosperity for both nations.
In their February 17, 2017 call, President Buhari and U.S. Secretary of State Rex W. Tillerson decided to utilize the BNC as the high-level strategic platform through which to advance the nations’ shared goals.
Joint Goals
Recognizing Nigeria’s strengthening democracy, its large population and dynamic economy, and its importance as a peacebuilder and peacekeeper, both nations seek to capitalize on areas of shared interest. The United States is expected to benefit from Nigeria’s leadership in promoting security, stability, and democracy on a continent brimming with emerging opportunities for U.S. trade and investment; Nigeria is expected to benefit from U.S. political support, security cooperation, technology, financial resources, and humanitarian and development assistance. The two countries developed a detailed agenda to guide discussions on a proposed goals paper, which would identify bilateral efforts for the next year. The November 20 BNC directed existing working groups for each of the three focus areas to finalize individual goal papers within one month.
Security Cooperation
The BNC’s discussion on security cooperation was co-chaired by Minister of Defense General Mansur Mohammed Dan Ali Leads, Federal Republic of Nigeria; Acting Deputy Assistant Secretary Michelle Lenihan, U.S. Department of Defense and Brigadier General Frank Stokes, U.S. Africa Command.
The BNC noted the continued threat to peace and security posed by Boko Haram and ISIS-West Africa. The United States reaffirmed its support for Nigeria and its Lake Chad neighbors in countering these threats.
The BNC noted that U.S.-Nigeria bilateral security cooperation focuses both on immediate threats and medium- and long-term security and stabilization objectives. The BNC discussed progress toward the sale to Nigeria of A-29 light attack aircraft and associated training, and other areas of enhanced security cooperation.
The BNC jointly determined to take further actions to advance U.S.-Nigeria security cooperation to promote peace and security in Nigeria, especially in Northeast Nigeria and the broader Lake Chad region. Both sides recognized that this cooperation includes, but is not limited to, military cooperation.
The BNC discussed the coordinated, comprehensive response that is needed to bring sustainable peace to Nigeria’s Northeast region, including the humanitarian response; restoring civilian security, establishing effective governance to deliver essential services, and reviving moribund economies in areas liberated from terrorists; encouraging defections from Boko Haram and ISIS-West Africa; transferring military detainees to civilian correction facilities; eliminating terrorist financing; expanding intelligence sharing; conducting integrated planning for the restoration of full civilian authority, resettlement, and reconstruction; protecting civilians, safeguarding human rights, ensuring credible investigations, and prioritizing accountability for instances of security force abuses; ending the use of child soldiers and implementing a United Nations-backed action plan on this matter in a timely manner; and addressing the long-standing concerns of citizens in the Northeast, including with respect to economic opportunity.
The BNC discussed the unsustainable situation of internally displaced persons in Nigeria and refugees in the region, and the Governments committed to work together to create conditions for their safe, dignified, and voluntary returns. The BNC acknowledged the significant contributions of the United States in supporting humanitarian assistance. The BNC discussed Nigerian efforts to help those affected by the violence begin to rebuild their lives, and the announcement of $45.5 million in additional U.S. assistance to support stabilization and early recovery work in Nigeria’s Northeast region. This effort is expected to include the creation and launch of a specialized stabilization police unit trained and equipped to be capable of accomplishing higher-risk policing tasks for civilian security in former terrorist-controlled territories.
The BNC discussed longer-term security cooperation goals, including Nigeria’s efforts to modernize its security institutions and U.S.-Nigerian partnership on improving maritime security. The BNC discussed peacekeeping as well, and Nigeria underlined its intention to maintain its significant contributions to international peacekeeping in Sudan, Somalia, Mali, The Gambia, and Guinea-Bissau.
The BNC directed the Working Group on Security Cooperation to meet within six months to review progress on joint goals.
Economic Growth and Development
The BNC’s discussion on economic growth and development was co-chaired by Minister of Industry, Trade and Investment Dr. Okechukwu Elenamah, Federal Republic of Nigeria; Acting Deputy Assistant Secretary of State Peter Haas and Acting Deputy Assistant Administrator Christopher Runyan, U.S. Agency for International Development.
Both sides decided to hold the next U.S. Trade and Investment Framework Agreement talks in the first part of 2018 and to work to finalize an agenda for that meeting, to include a decision on a joint work plan on intellectual property protection. The two sides finalized a Memorandum of Understanding establishing a Commercial and Investment Dialogue signed by Commerce Secretary Wilbur Ross and Minister of Industry, Trade and Investment Okechukwu Enelamah as a way to strategically engage the private sectors of each country in strengthening commercial ties.
Both sides acknowledged the importance of and potential for increased bilateral trade and investment through enhancing the business climate, policy predictability, and transparency. The two sides discussed the importance of implementing World Trade Organization-consistent trade measures, as well as the Trade Facilitation Agreement.
The BNC noted the Governments’ decision to take further actions to promote inclusive prosperity and growth, economic diversification, and job creation through policies that are expected to improve the environment for doing business together. In this respect, the BNC recognized that sound fiscal and monetary policies, complemented by structural reforms and clear and transparent regulations, are important to managing the challenges of volatile global oil prices. The BNC also noted the importance of further diversifying the sources of government revenue.
The BNC noted the Governments’ pledge to work together to ensure maximum utilization of available tools to promote mutually beneficial trade and investment, including the African Growth and Opportunity Act.
The BNC recognized the importance of infrastructure development for Nigerian economic growth, noting particularly the importance of ensuring open and transparent bidding procedures for infrastructure projects. The BNC also noted the importance of increasing access to electricity, including through the continued modernization of the power sector, and noted continued U.S. assistance in this area. With respect to economic diversification, the BNC noted the potential for expanded agricultural investment and production, in particular through strengthening agro-business value chains. The extractive industries, including solid minerals, petroleum, and natural gas, also continue to play a role in economic diversification.
The BNC directed the Working Group on Economic Growth and Development to meet within six months to review progress on joint goals.
Governance and Democracy
The BNC’s discussion on governance and democracy was co-chaired by Attorney General and Minister of Justice Mr. Abubakar Malami Leads, Federal Republic of Nigeria, and Acting Principal Deputy Assistant Secretary of State Stephanie Sullivan.
The BNC noted the historical importance of Nigeria’s 2015 elections and the peaceful transition that ensued. The United States noted its intention to support Nigerian efforts to improve the quality and transparency of elections, particularly in the lead-up to the 2019 elections, and looks to Nigeria to continue to support democracy and peaceful transitions of power across Africa.
The BNC decided to strengthen U.S.-Nigerian joint efforts in support of good governance, respect for human rights, accountability, anti-corruption, and the effective use and delivery of public services, including efforts to reinforce peace building and conflict management in Nigeria.
The BNC concurred that the Government of the United States should continue its support for the Economic and Financial Crimes Commission and other anti-corruption agencies, as appropriate. The BNC discussed Nigeria’s participation in the Open Government Partnership (OGP) and its potential to complement Nigeria’s anti-corruption efforts. Nigeria expressed its dedication to robustly implement its 2017-2019 OGP commitments and respond to an outstanding invitation to join the Partnership on Illicit Finance in due course.
The BNC noted the Governments’ decision to intensify their work together to help Nigeria trace funds and assets stolen through corruption and other illicit activities and seek to recover the assets.
The BNC decided to expand people-to-people contacts between the two countries, including continuing efforts such as the Young African Leaders Initiative.
The BNC discussed multilateral cooperation, through ECOWAS, the United Nations, and other international organizations, and Nigeria’s role as a leader on the continent and a critical partner to the United States on a range of global issues.
The BNC directed the Working Group on Governance and Democracy to meet within six months to review progress on joint goals.
Vote of Thanks and Next Meeting
The Government of the United States thanked the Government of Nigeria for hosting the meeting of the BNC. It was determined that the next meeting of the full BNC should be held in the United States within one year, at a date to be mutually decided through diplomatic channels.
SIGNED at ABUJA, on November 20, 2017
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‘Over 50% trucks in Apapa have no business in port’
A new report released by a leading maritime consulting firm has said that more than half of the container trucks visiting Apapa, Lagos, daily have no immediate business to transact at the port.
The report, which stems from an independent study conducted by Ships & Ports and a don of the Lagos Business School, Dr. Frank Ojadi, also stated that truckers that genuinely had business to do in the Apapa Port spent an average turnaround time of two days.
“The report was prepared with the purpose of giving insight into the number of container trucks coming into Apapa Port in relation to the total number of trucks sighted in the Apapa environs.
“Two points were selected – the start of Creek Road at the tip of Liverpool Bridge and the start of Wharf Road near Area B-to collect information on trucks coming into Apapa.
“It was observed that 44 per cent of the containers coming into the Apapa community through these access points were intended for transactions in Apapa Port, while 56 per cent do not involve any form of transaction in the port.
“The data gathered was analysed to show the time and frequency taken from sighting to entry into the port,” the report stated.
A total of 5,515 trucks were surveyed at both observation points over a period of two weeks.
The report stated that the prolonged closure of the Ijora Bridge, which is the main exit point from Apapa, for repairs, is a major contributor to the perennial traffic congestion in the area.
“The Ijora Bridge is the main exit point from Apapa, but it was closed to repairs. 20 days were communicated for the repairs, but it is stll closed more than 30 days after.
“The Federal Operations Unit of the Nigeria Customs Service also set up a checkpoint for container-laden trucks along the same road stretch during the day,” the report said.
The report also found that there is no presence of a traffic management system to coordinate the affairs of the multiple government agencies responsible for traffic control in Apapa.
“The collapse of the Apapa-Oshodi Expressway, which is the major entry and exit point for trucks accessing the Tin Can Island Port, the Apapa Port and several tank farms in the area, has led to an increased number of trucks accessing these facilities through the narrow Apapa-Wharf Road, thereby compounding the congestion on this stretch of the road,” the report further stated.
Various stakeholders interviewed in the course of the study believe that the solution to the Apapa gridlock is to compel shipping lines to receive all empties at their empty depots.
The report, however, disagrees stating that “While the popular notion on the return of empty containers has no direct impact on port operations, the study supports the assumption that it may compound the Apapa gridlock.
“This is because more than 80 percent of truckers perform dual transactions i.e. drop off empties and pick up imports. This implies that the return of empty containers to depots will add more trucks to the road when they have to return the empties to the terminal,” the report said.
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South Africa joins Afreximbank as a shareholder
In a demonstration of its commitment to promoting intra-African trade and economic integration, South Africa has taken up shareholding in the African Export-Import Bank (Afreximbank), the African continental multilateral trade finance institution.
With the shareholding, South Africa becomes the 47th African country to join Afreximbank as a participating state and/or shareholder. It is being represented by the Export Credit Insurance Corporation of South Africa (ECIC) as its designated investor in line with the terms of the provisions of the Charter of the Bank.
“It is a significant vote of confidence to have South Africa join Afreximbank as a shareholder,” said Dr. Benedict Oramah, President of the Bank, in welcoming the news that the country had joined the Bank as a shareholder.
“South Africa accounts for about 30 to 35 per cent of total intra-African trade, making its membership critical for the attainment of the Bank’s strategic goal of moving intra-African trade share of Africa’s total trade from about 15 per cent currently to 22 per cent by 2021 and raising its annual value to more than $250 billion by that year. We are confident that its membership of Afreximbank will enable it to play a significant role in driving trade across the continent.”
“We are humbled while also motivated by the trust and confidence that the South African government has placed on ECIC to assume the role of designated institution for membership of the Bank,” said Kutoane Kutoane, CEO of ECIC. “We are certain that South African exporters, especially our small and medium-sized exporters, will now have access to the expanded pool of structured trade finance facilities offered by the Bank.”
Mr. Kutoane said that ECIC intended to make the partnership mutually beneficial, adding, “this marks a watershed moment defining the era of more inclusive intra-continental trade facilitation on a grand scale”.
South Africa was unable to join Afreximbank at the Bank’s creation in 1993 as the country was still under apartheid rule at the time.
Countries currently on the list of Afreximbank participating and shareholding states include Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Comoros, Côte d’Ivoire, Democratic Republic of Congo, Djibouti, Egypt, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea Bissau, Kenya, and Lesotho. Others are Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Niger, Nigeria, Republic of Congo, Rwanda, Senegal, Seychelles, Sierra Leone, Sao Tome and Principe, South Sudan, Sudan, Tanzania, Togo, Tunisia, Uganda, Zambia and Zimbabwe.
Afreximbank shareholders are a mix of public and private entities divided into four classes and consist of African governments, central banks, regional and sub-regional institutions, private investors and financial institutions, as well as non-African financial institutions, export credit agencies and private investors.
Class “A” shareholders are African states, African central banks and African public institutions, including the African Development Bank, while Class “B” is made up of African financial institutions and African private investors.
Class “C” shares are held by non-African investors, mostly international banks and export credit agencies, including Standard Chartered Bank, HSBC, Citibank, China Exim Bank and Exim India. Class “D” shares, a tier approved in December 2012, are fully paid value shares that can be held by any investor. SBM Securities, Mauritius, is currently the only investor in this class on behalf of holders of its depository receipts which are listed on the Stock Exchange of Mauritius.
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tralac’s Daily News Selection
Concluding today, in Kampala: CII-Exim Bank conclave on India-East Africa trade and investment. Launched at the conclave: India’s investments in select East African countries – prospects and opportunities (pdf, Exim Bank). Tweeted updates:
@DoC_GoI: 400+ delegates from Uganda, Kenya, Mozambique, Tanzania, Rwanda, Malawi, Sudan, India, Japan, DR Congo, Mauritius, Egypt, Somalia, Eritrea, Burundi are participating. Many delegations are being led by Ministers and senior functionaries. @DoC_GoI: “Commonalities and complementarities of India and Africa agriculture sector should drive partnerships and solutions. Technology, infrastructure and value chain up-gradations should be planned for a sustainable partnership”: Rita Teaotia, Commerce Secretary, at Regional Conclave at Kampala.
US-Africa ministerial session on trade and investment: Tony Elumelu’s remarks
The good news is that the African private sector is maturing, our governments are gradually liberalizing, and the private sector leaders are financially and technically ready to partner with global firms ready to do business in Africa. As a result, foreign companies in the power business, transmission and distribution in particular, who want to come to Africa will today, have more ready African investors who are ready to co-invest in new opportunities. Additionally, there is need to showcase ongoing reform achievements to prevent information asymmetry – one of the major challenges that faces the continent. When new enabling policies are created, or existing ones that hinder business growth are dismantled, it is important to create awareness around these small wins. The more information is provided and accessible to the public news from the continent is, the more likely we will be in winning the fight against changing the pervading negative narrative Africa continues to battle.
Branding and other intangibles account for 30% of product value (WIPO)
The WIPO’s study, World Intellectual Property Report 2017: intangible capital in global value chains, looks at how much income is credited to labor, tangible capital and intangible capital in global value chain production across all manufacturing activities. The report finds that intangible capital accounted, on average, for 30.4% of the total value of manufactured goods sold throughout 2000-2014. Overall, income from intangibles increased by 75% from 2000 to 2014 in real terms, amounting to $5.9 trillion in 2014, twice as much as tangible capital, such as buildings and machinery, contributed to the total value of manufactured goods.
9th Ordinary Meeting of AU Sub-Committee of Directors General of Customs: update (WCO)
The Directors General discussed and adopted a number of recommendations, in particular: how to increase the number of accessions to the WTO TFA; the setting up of National Committees on Trade Facilitation as foreseen in the TFA; and issues related to the further development and implementation of AU objectives and programmes, notably those aimed at boosting intra-Africa trade which continues to show very low levels of improvement. Delegates also endorsed the need for enhanced consultations with trade, as well as the sharing of information and best practices. The meeting elected Cameroon as Chair of the Bureau (Chair of this Group) for 2017/2018, with Comoros, Uganda, Benin, Côte d’Ivoire and Morocco completing the Bureau’s membership.
SACU, WCO agree on Regional Trade Facilitation Programme 2018 roadmap (WCO)
Highlights of 2017 included the finalization of the regional IT Connectivity Blue Print, the official launch of the national Preferred Trader Programme in South Africa as well as the conclusion of the regional enforcement operation in the textile sector “Operation Texo” that yielded in the recovery of nearly $500 000 in customs duties. The 2018 roadmap will particularly focus on intensifying national efforts to operationalize the regional IT frameworks (regional Utility Blocks, regional UCR) developed with the support of the project as well as on fast-tracking legislative reforms and roll-out of the national and regional Preferred trader programme.
Lesotho: IMF staff completes 2017 Article IV visit (IMF)
Lesotho’s new government faces difficult challenges due to external shocks compounded by a fragile political situation. A sharp drop of SACU revenues and slim prospects for a quick recovery put severe pressure on the fiscal accounts. Economic growth is expected to exceed 3% this fiscal year, shielded against the SACU revenue shock by the government’s decision to run large fiscal deficits. Looking at the sectoral contributions, the mining sector and the recovery of agriculture after two years of drought are expected to be major contributors to growth. The implementation of SADC recommendations to stabilize the political situation has reduced the risk for the textile sector to lose access to the US market under AGOA. After two consecutive years of fiscal deficits exceeding 6% of GDP, financed by drawing down government deposits at the central bank, these buffers have been dwindling. The fiscal situation has been compounded by shortfalls of domestic revenues. While SACU revenues have been difficult to predict in the past, prospects for a quick recovery are very slim, given the slow economic growth in South Africa.
Fitch junks Namibia (The Namibian)
Fitch said its downgrade “reflects weaker-than-forecast fiscal outcomes and our projection that public debt-to-GDP will continue to rise over the medium term”. At the same time, Fitch mentions “a weaker-than-expected economic recovery and our view that medium-term growth has shifted to a lower gear” as additional concerns. The ratings agency predicts that Namibia’s GDP growth will decelerate to “0,8% in 2017 from 1,4% in 2016”. In its extensive statement on the downgrade, the ratings agency also points to the expected decline in transfers from the Southern African Customs Union (SACU) as an influential factor, along with Schlettwein’s recent statements indicating that “fiscal consolidation was temporarily interrupted”.
Swaziland: Industrial policy update (The Observer)
Processes to align the SADC Industrialisation Strategy and Roadmap with the National Industrial Policy are underway, according to Minister of Commerce, Industry and Trade Jabulani Mabuza. Following approval of the costed action plan to implement the SADC Industrialisation Strategy and Roadmap, Mabuza said a process has now begun to identify national indicative public coordination costs.
Angola and Mozambique sign visa waiver (Club of Mozambique)
Angolan and Mozambican governments signed on Friday in Luanda a deal on visa waiver on ordinary passports. Angolan Interior minister Ângelo da Veiga Tavares and his counterpart from Mozambique, Jaime Basílio Monteiro, signed the agreement.
Nigeria: GDP grew by 1.40% in Q3’17 (National Bureau of Statistics)
Nigeria’s GDP grew in Q3 2017 by 1.40% (year-on-year) in real terms, the second consecutive positive growth since the emergence of the economy from recession in Q2 2017. This growth is 3.74% points higher than the rate recorded in the corresponding quarter of 2016 (–2.34%) and higher by 0.68% points from the rate recorded in the preceding quarter, which was revised to 0.72% from 0.55% (Q2 was revised following revisions by NNPC to oil output and hence led to revisions to Oil GDP).
Zambia, DRC agree on trade restrictions (Daily Mail)
Zambia and the DRC have agreed to remove trade restrictions imposed on the export and imports of certain goods between the two countries. The DRC had stopped importing beer, carbonated drinks, cement and clinker used in the manufacture of cement from Zambia and would only permit similar goods from South Africa and other countries to be imported into that country. This did not go well with Government, who also had to restrict similar goods to be imported into the DRC from other countries through the Kasumbalesa border post and other gateways to that country. The trade barriers had been going on for a month now and Zambia is estimated to have lost $25m export revenue as a result of the restrictions. [Note: DRC minister of External Trade, Jean Lucien Bussa Tongba, said his country did not ban the importation of carbonated drinks, Cement and beer but introduced reforms to centralize the flow of foreign products to promote the local industry as well as prevent smuggling.]
Mozambique: Regulation to monitor foreign trade underway – Minister Tonela (Club of Mozambique)
The government is developing a regulation to monitor foreign trade and prevent the illicit import and export of goods. Minister of Industry and Commerce Max Tonela says the regulations will ensure that timely information relevant to quantity, prices, origin and destination of imported and exported goods becomes available. Speaking on Friday in Maputo during the closing of the XV Coordinating Council of his ministry, Tonela said that the decision to proceed with the preparation of the regulation comes after work in coordination with the Economy and Finance and the Bank of Mozambique highlighted current weaknesses in the monitoring process.
ITFA pivots to Africa, creates regional committee (GTR)
The International Trade and Forfaiting Association has branded 2017/18 “the year of Africa” and established a regional committee dedicated to setting an African agenda for the association. Newly-appointed ITFA board member, Duarte Pedreira of Crown Agents Bank, will chair the committee. He tells GTR that the committee has already set itself four “strategic pillars”.
At upcoming WTO meet, India and other developing countries to try and keep focus on Doha Agenda (The Wire)
Responding to developed countries’ proposals on e-commerce, India has maintained that the WTO should stick to the existing mandate set out in the 1998 electronic commerce work programme. India has argued that negotiations on rules and disciplines in e-commerce would be highly premature at this stage and like a leap in the dark, especially given the highly asymmetrical nature of the existing e-commerce space. The one-page draft proposal circulated by the developed countries says, “The Working Party shall establish its own procedures and shall report periodically to the General Council”. India has linked the extension of moratorium on e-commerce transactions till 2019 to a similar renewal of moratorium on Trade-related Intellectual Property Rights (TRIPS) non-violation and situation complaints. [India fights for fuel sops for poor fishermen ahead of WTO meeting]
Today’s Quick Links: Kenya’s Trade Principal Secretary Chris Kiptoo harbours hopes of better trade relations with Tanzania Edlam Yemeru: Leveraging urbanization for Africa’s industrialization Enelamah: Our vision is to make Nigeria an attractive business destination Dangote opens new cement plant in Congo on Thursday Brookings: China’s shifting manufacturing labor pool is creating global dreams – and nightmares India’s journey from Fragile Five to favoured investment destination |
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Trump’s Administration and a new type of US-Africa partnership
On Friday, upon invitation from the U.S. State Department, Tony O. Elumelu spoke at the U.S. – Africa Ministerial Session on Increasing Trade and Investment in Washington, DC, chaired by US Secretary of State, Rex Tillerson.
First, let me commend the US government for creating a conducive platform for top US Administration officials and 37 African Ministers and delegates to engage in a rich debate about a new form of partnership where Africa’s economic potential is realized in a sustainable fashion that creates value for the majority and not the minority. It was a productive discussion that covered important aspects of the paradigm shift in development including, adopting more strategic methods of investing in Africa, long-term capacity building for SMEs which will drive greater interconnectivity on the continent, and other forms of intervention that go beyond aid to transform the continent in the 21st century.
Let me start with investments: to drive this, the investment climate must be encouraging for business. We must walk the talk. In my remarks, I stressed to the African country delegates present to take this important counsel very seriously. Additionally, there is need to showcase ongoing reform achievements to prevent information asymmetry – one of the major challenges the continent grapples with. When new enabling policies are created, or existing ones that hinder business growth are dismantled, it is important to create awareness around these small wins. The more information is provided and accessible to the public news from the continent is, the more likely we will be in winning the fight against changing the pervading negative narrative Africa continues to battle.
We can’t forget the issue of electricity. As Chairman of Transcorp, the largest power generator in Nigeria, I recognize that power is not just an end but a critical element that job creation is entirely dependent on. To create employment in Africa, we must deal decisively, once and for all, with the power sector – across the value chain of Generation, Transmission and Distribution- to provide reliable, accessible and affordable electricity to Africans across all 54 countries. In the absence of power, poverty is reinforced and passed on from generation to generation. The good news is that the African private sector is maturing, our governments are gradually liberalizing, and the private sector leaders are financially and technically ready to partner with global firms ready to do business in Africa. As a result, foreign companies in the power business, transmission and distribution in particular, who want to come to Africa will today, have more ready African investors who are ready to co-invest in new opportunities.
Finally, I spoke about the issue of unemployment. Yes, power is critical in addressing this but equally important is what I call a global attention and shift of mind to issues that can help us create massive employment – and that is the small and medium scale enterprises (SMEs). I called for more channelling of resources towards supporting African entrepreneurs and SMEs to significantly address the issue of job creation. The jobs we need in Africa cannot come from the big corporations, the jobs we need in Africa would come from small and medium scale enterprises.
Their success would be the success of Africa. We are not doing so well in this area of supporting these enterprising and entrepreneurial youth to achieve their dreams, and I speak from experience.
As Founder of the Tony Elumelu Foundation where we support African entrepreneurs in 54 African countries in funding of up to $10,000, and other non-financial components, we have seen through experience that these youth can make a great difference, massive impact. They help to generate employment and new revenues, and that is why I commend the interconnectivity programme of the US government because these entrepreneurs need this kind of access to do well.
So I want to say to the country and individual donors, the development world and all others – let us begin to rethink how we support Africa’s development and economic transformation. Let’s see how we can reach the very last mile and support these young African entrepreneurs and SMEs; therein, in my view, lies the true path to Africa’s economic transformation and how to genuinely create jobs, jobs, the jobs we desperately need on the continent.
Tony O. Elumelu is an economist by training, a serial entrepreneur, and philanthropist. He is the Founder and Chairman of Heirs Holdings Ltd, an African proprietary investment company.
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Branding and other intangibles account for 30 percent of product value – UN report
Intangible capital, such as branding, design and technology, is increasingly determining success in the marketplace, as nearly one third of the value of manufactured products comes from such capital, a study conducted by the United Nations intellectual property agency has revealed.
This amount, some US$5.9 trillion in 2014, shows that intangible capital contributes twice as much as buildings, machinery and other forms of tangible capital to the total value of manufactured goods. This underscores the growing role of intellectual property, which is frequently used to protect intangible and related assets in the worldwide economy.
“Intangible capital will increasingly determine the fate and fortune of firms in today’s global value chains. It is behind the look, feel, functionality and general appeal of the products we buy and it determines success in the marketplace,” said Francis Gurry, Director General of the World Intellectual Property Organization (WIPO).
“Intellectual property, in turn, is the means by which companies secure the competitive advantage flowing from their intangible capital,” he added.
The WIPO’s study, ‘World Intellectual Property Report 2017: Intangible Capital in Global Value Chains,’ released on Monday, looks at how much income is credited to labor, tangible capital and intangible capital in global value chain production across all manufacturing activities.
The report finds that intangible capital accounted, on average, for 30.4 percent of the total value of manufactured goods sold throughout 2000-2014. Overall, income from intangibles increased by 75 per cent from 2000 to 2014 in real terms. Three product groups – food products, motor vehicles and textiles – account for close to 50 percent of the total income generated by intangible capital in the manufacturing global value chains.
Smartphones: Substantial Returns Driven by Intangible Capital
In the case of high-end smartphones, crucial intangible assets include technology, the design of hardware and software, and branding. Smartphone firms and technology providers rely heavily on patents, trademarks and industrial designs, generating a high return on their intangible capital.
For every iPhone 7 that Apple sells for about $810, about 42 per cent of the sales price derives from intangibles. Huawei and Samsung also capture significant value in their top-end smartphone models.
Indeed, in the domain of patents, up to 35 per cent of all first filings worldwide may relate to smartphones. The report finds that the 4th-generation (4G) cellular standard used today is associated with close to four times more patents than the 2nd-generation standard.
Coffee: New Consumer Preferences Driving Value
Technology plays a key role in turning a coffee bean into a cup of brew. Brand reputation and image allow companies to differentiate their offering from their rivals.’
Shifting consumer preferences have progressively transformed the global coffee value chain, moving from consumption in the home, then in coffeehouses and now to a new generation of discerning consumers who are interested in their coffee product’s back story, willing to pay premium prices.
Prices commanded in this so-called ‘third wave’ market segment can exceed those in ‘first wave’ consumption by more than four times, with coffee farmers’ incomes tripling. Information on the origin and variety of the coffee beans, how they were farmed and processed, and farmers’ compensation become integral to selling coffee.
Responding to the shifting consumer preferences, coffee growers and even countries are investing in efforts to move beyond generic coffee, adopting their own branding strategies.
Solar Panels: Technological Innovation Prompts Profound Shifts
Technological innovation is prompting profound shifts in the global manufacturing value chain for photovoltaic (PV) solar panels. Solar panels have moved from highly specialized products to low-cost commodities, putting pressure on producers.
Many companies are seeking growth in local service markets – such as the installation of solar panels in private homes. In such consumer markets, company and product branding are key intangible assets that help attract consumers and project finance.
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WCO attends 9th Ordinary Meeting of African Union Sub-Committee of Directors General of Customs
At the invitation of the African Union, WCO Secretary General Mr. Kunio Mikuriya attended the 9th Meeting of the African Union (AU) Sub-Committee of Directors General of Customs, held in Yaoundé, Cameroon from 13 to 17 November 2017.
The theme of the Meeting was “The contribution of Customs to the analysis of international trade data, for security and the boosting of intra-African trade”.
During the opening ceremony, Mr. Fongod Edwin Nuvaga, Director General of Cameroon Customs, welcomed delegates and updated them on current developments in his Administration.
H.E. Ambassador Albert Muchanga, the African Union’s Commissioner for Commerce and Industry, outlined the AU’s current activities, including its work on the introduction of the African Free Trade Area.
Secretary General Mikuriya highlighted the main priorities of the WCO, and urged AU Members to draw on the content of WCO instruments to bring about, inter alia, the implementation of the African Continental Free Trade Area and the WTO Trade Facilitation Agreement. He emphasized that the WCO offers assistance in many relevant areas, mentioning seminars on transit and origin conducted recently for the benefit of AU Members as examples of such support.
The Directors General heard and debated the reports of several Working Groups, and provided orientation for future work based on the outcomes and analyses of the Expert Working Group which had met prior to the Meeting. Issues addressed included the Interconnectivity of Computerized Customs Transit and Clearance Systems, and the outcomes of the Regional Economic Communities Sub-Committee on Customs Cooperation, the 3rd AU Customs Experts Trade Facilitation Forum, and the 1st Extra Ordinary Meeting of the AU Sub-Committee of Directors General of Customs.
The Directors General discussed and adopted a number of recommendations, relating in particular to: how to increase the number of accessions to the WTO TFA; the setting up of National Committees on Trade Facilitation as foreseen in the TFA; and issues related to the further development and implementation of AU objectives and programmes, notably those aimed at boosting intra-Africa trade which continues to show very low levels of improvement. Delegates also endorsed the need for enhanced consultations with Trade, as well as the sharing of information and best practices.
The Meeting elected Cameroon as Chair of the Bureau (Chair of this Group) for 2017/2018, with Comoros, Uganda, Benin, Côte d’Ivoire and Morocco completing the Bureau’s membership.
Secretary General Mikuriya joined delegates in congratulating Cameroon Customs on the excellent arrangements for the Meeting; he also met bilaterally with Cameroon’s Minister of Finance Mr. Alamine Ousmane Mey, to discuss issues of mutual interest.
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tralac’s Daily News Selection
Today is Africa Industrialization Day:
Panel discussions will take place in Vienna and New York, organized by UNIDO. Download the concept note (pdf). António Guterres: “This year’s Africa Industrialization Day highlights the links between industrial development and Africa’s moves towards establishing a Continental Free Trade Area. These are mutually supportive endeavours.”
AfDB reiterates the need to accelerate Africa’s development: comments by Pierre Guislain (VP for Private Sector, Infrastructure and Industrialization)
Today, in Addis: External peer review meeting on the draft Economic Report on Africa 2018. The theme: Development thinking and practice in Africa – ECA’s contributions
The 2017 Ibrahim Index of African Governance was published earlier today.
Updates, commentaries on CFTA, TFTA issues:
(i) The CFTA Negotiating Forum convened today in Abuja for a week-long session
(ii) @rsezibera: Africa should quickly conclude a free trade area agreement, CFTA. If we don’t trade with each other, we will trade one another.
(iii) @olu_fasan: The CFTA negotiations are too fixated on protecting domestic markets and so-called sensitive products and sectors. That’s misguided. Africa needs deep, not shallow, economic integration - a real single market!
(iv) COMESA’s Sindiso Ngwenya has assumed the chairmanship of the Tripartite EAC-COMESA-SADC. He succeeds the EAC’s Liberat Mfumukeko. Speaking on the challenge of funding, Mr Ngwenya informed the meeting that the AfDB has provided some financial resources to support efforts aimed at creating awareness on the importance of the Tripartite FTA Agreement and the need to have it ratified by Tripartite Member/Partner States that have signed it in order for it to enter into force. The incoming Chair said the COMESA-EAC-SADC Tripartite is in dire need of financial resources to support proceeding with Phase II work as the budgetary support from cooperating partners that supported Phase I work has been exhausted.
Underway, in Johannesburg: Regional Economic Communities Transport Coordination Committee
Francis Mangeni: Why a protectionist deal won’t boost intra-Africa trade (Business Daily)
What this means for negotiations is that the core trade provisions can aim to achieve a vastly open Continental FTA, but these must be complemented not by flexibilities that set up numerous exceptions, high tariffs and protected markets, but rather those that seek to directly build and grow domestic industries especially SMEs by addressing their capacity and management constraints. A multi-sectoral high-level development committee can therefore be set up to continuously and holistically address such development challenges. Membership of the committee can be drawn from government, academia, grassroots organisations, private sector and development partners. The composition for each session can be dynamic depending on issues for consideration. [The author is COMESA’s director for Trade, Customs and Monetary Affairs]
Ministerial on Trade, Security, and Governance in Africa: remarks by Secretary of State, Rex W. Tillerson
We’re going to begin today’s proceedings with a discussion on ways we can work together to expand trade and investment, and grow economic opportunities that benefit the people of Africa and the American people. Trade and investment between the United States and African countries is growing. U.S. exports to Sub-Saharan Africa grew from $17bn in 2010 to more than $25bn in 2014. And last year, the US direct investment in Africa grew to $57.5bn – the highest level to date. This administration seeks to refocus our economic relationship squarely on trade and investment – to encourage policies that increase openness and competition within Africa. A more economically vibrant and competitive Africa will grow the middle class, increase standards of living, and make the entire continent more prosperous.
Donald Yamamoto, Acting Assistant Secretary of State for African Affairs: ‘We’re looking at Africa in 2050’ (DW)
But right now we are looking at Africa in the future in 2050, 2100 and you see a 2.2 billion to 2.4 billion population. You have 70 percent under 30 but then the question is: are we preparing our policies to work with not only the African Union, but our African partner countries to address unemployment issues? You know education, health care, and giving opportunities to the youth. Because that in itself is really an important, critical issue. So how many jobs are we going to create every month to address that population in that area? And 25 percent of the world’s labor force is going to be African. Just looking at the data points is really mind boggling. This is going to be the most populous continent and the largest consumer. And if that’s the case then we need to be prepared to look at what the challenges are. How do we partner up with Africa?
US International Trade Commission study on African trade and investment: update
The USITC will hold a public hearing in connection with the investigation on 23 January 2018. Requests to appear at the hearing should be filed no later than 5:15 pm on 9 January 2018. The USITC also welcomes written submissions for the record. Written submissions should be submitted at the earliest practical date, but no later than 5:15 pm on 6 February 2018. All written submissions, except for confidential business information, will be available for public inspection.
US-Sub-Saharan Africa trade data, extracted from USITC’s shifts in US merchandise trade report, September 2017. Profiled tables: US total exports, general imports, and merchandise trade balance, by major industry/commodity sectors, 2012-16; Leading changes in U.S. exports and imports, 2012-16
Kenya: Ambitious project rolled out to increase exports by 20% (Business Daily)
Kenya has crafted a new strategy to revitalise exports that have stagnated for some time. The National Export Development and Promotion Strategy aims to grow exports by 20% by 2022. The ambitious plan targets six items for accelerated development via a public-private working group. While unveiling the plan this week, Trade Principal Secretary Chris Kiptoo said safeguarding Kenya’s exports, with a keen eye on opening up new markets for processed products, underpins the new strategy. The principal secretary said Kenya has identified six sectors that will be prioritized including livestock and livestock products, agriculture, fisheries, manufactured products and handicrafts. Export Promotion Council chief executive Peter Biwott said Kenya should nurture incentives for both local and foreign direct investments as a way of promoting value addition, which will directly increase exports and create jobs. “More economic zones should be created across counties where investors set up shop targeting regional and foreign markets. This will not only create jobs but will nurture technology transfer, especially for large scale industrial operations in agro-processing sectors,” he said. According to the new strategy, the six identified sectors will see private players work with the government to streamline the value chain, with trade exhibitions held in target markets to promote business-to-business linkages. [Download: pdf National Export Development and Promotion Strategy for Kenya 2017-2022 (5.52 MB) ]
Rwanda: Businesses upbeat over new visa regime (New Times)
Conference organisers who spoke to The New Times said that among the major determining factors that influence conference hosting include accessibility of a country. With most major international forums having foreign delegations of about 500 people and above, the visa process can be a deal breaker. For most events organisers who have been involved across Africa, the process could take months and often locks out a section of delegates especially in instances where there is no embassy in the delegates’ country. Matthew Weihs, the managing director of Bench Events, a global firm that has brought the Africa Hotel Investment summit in Rwanda for two years in a row, said that the development is likely to increase the number of summits hosted in the country. RwandAir deputy chief executive for corporate affairs, Yvonne Makolo, told The New Times that the national carrier is upbeat on the development as it is likely to increase their clientele.
Somalia: AfDB Country Brief 2017-2020 (pdf, AfDB)
Regional integration: Despite its strategic geographical location in the Horn of Africa, Somalia has had limited participation in regional economic activities. This is a consequence of the more than two decades of civil war and subsequent state collapse. Nonetheless, the FGS hopes that regional integration can assist the country in achieving its goals of ensuring sustainable, pro-poor economic growth, poverty reduction, and stability. Active participation in regional integration will enable Somalia to benefit from its opportunity of having the longest coastline in Africa. In particular, its strategic geographical location as the bridge and/or corridor between the Horn of Africa region and the Middle East, Asia and Europe, has the potential to transform Somalia into a logistics hub and free trade area for exports from and imports to the region (specifically Kenya, Ethiopia and South Sudan). In this context, regional integration potential benefits to the country would, among others, include increased physical access to markets, an enhanced trade environment, and improved business competitiveness. Currently, Somalia’s main regional trading partners include Ethiopia and Kenya, which respectively account for about 34% and 9% of its imports. However, the country’s exports to the region are very low. Thus, the need to develop potential trade corridors (e.g. Mogadishu-Baidoa-Dolow-Nairobi), and improve customs and border management to facilitate trade and increase revenues, is becoming increasingly important and urgent.
Eritrea: AfDB’s Interim Country Strategy Paper 2017-2019 (pdf, AfDB)
Regional integration: The Government considers regional integration to be an important strategy for promoting its economic development agenda. Consequently, it belongs to various regional trading blocs, which include the COMESA, the Community of Sahel-Saharan States (CEN-SAD), and the Inter-Governmental Authority on Development. However, relations between the Eritrean and Ethiopian governments have remained strained, a state that has and continues to hamper a more rapid and faster integration of the country into regional and international trade institutions and communities. Consequently, Eritrea currently has little interregional trade with COMESA member countries. This prevents the country from benefiting from the opportunities of its strategic location on the Red Sea as a hub of transit trade through its ports of Massawa and Assab. According to the 2016 CPIA, the infrastructure and regional integration of Eritrea is only 2.1 against an average score of 3.2 for Africa as a whole. The Government’s goal of making Massawa and Assab active and vibrant ports will enable the country to reduce transaction costs and boost its regional integration and trade.
South Africa: Davis Tax Committee reports
The following final reports are now available for viewing on the DTC’s website: (i) Funding of tertiary education in South Africa; (ii) Financing a National Health Insurance for South Africa; (iii) Second and final report on base erosion and profit shifting (replaces first report); (iv) Second and final report on hard-rock mining (replaces first report); (v) Oil and gas report coupled with an IMF report on the same topic for the DTC; (vi) Tax Administration.
Behind Magufuli, Museveni deals (The Independent)
If President Yoweri Museveni has a best buddy amongst his East African counterparts, it might as well be Tanzania’s John Pombe Magufuli. When they are not sharing a hearty laugh at an African Union meeting in Addis Ababa, they are holding hands while walking as was the case during Magufuli’s recently concluded 3-day visit to Uganda. This wasn’t all. Quite uncharacteristic of him, Museveni hailed Magufuli for fighting corruption. Magufuli, on the other hand, has equated Museveni to Tanzania’s former iconic president, Julius Nyerere. And some of his ministers are echoing the same. Magufuli was in Uganda for the first time this year exactly three months after Museveni was in Tanzania. President Museveni has been in Tanzania three times - in February, May and August - this year. Apart from the closeness the two presidents have exhibited publicly, they are also closing mega deals that are upsetting old alliances in the region.
Today’s Quick Links Namibia’s Minister of Industrialisation, Trade and SME Development, Immanuel Ngatjizeko: Trade barriers limit continental market integration Mauritius: Blockchain Centre of Excellence to be set up in January 2018 |
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Positive outlook for African governance, but some warning signs
Mo Ibrahim Foundation calls for vigilance as a number of countries struggle to build on recent progress
The 2017 Ibrahim Index of African Governance (IIAG), launched today by the Mo Ibrahim Foundation, reveals that the continent’s Overall Governance trajectory remains positive on average, but in recent years has moved at a slower pace. As many countries struggle to build on recent progress or to reverse negative trends, and as concerns emerge in some key sectors, the Foundation is calling for vigilance on the continent’s future.
The eleventh edition of the IIAG looks at both country and indicator trends over the last five years (2012-2016), within the context of the last decade (2007-2016). By evaluating more recent progress on governance alongside long-term performance, the 2017 IIAG provides the most nuanced assessment to date of the evolution and direction that countries, regions and specific dimensions of governance are taking. Over the last ten years, 40 African countries have improved in Overall Governance. In the last five years, 18 of these – a third of the continent’s countries and home to 58% of African citizens – including Cote d’Ivoire, Morocco, Namibia, Nigeria and Senegal, have even managed to accelerate their progress. In 2016, the continent achieved its highest Overall Governance score to date (50.8 out of 100.0).
However, over the same period, Africa’s annual average rate of improvement in Overall Governance has slowed. Of the 40 countries improving in Overall Governance during the last decade, more than half (22) have either done so at a slower pace in the last five years (i.e. Rwanda and Ethiopia) or show decline (i.e. Mauritius, Cameroon and Angola). Furthermore, eight of the 12 countries registering decline in Overall Governance over the past decade are showing no signs of turning things around, with scores decreasing at an even faster rate over the second half of the decade. This group includes Botswana, Ghana, Libya and Mozambique.
The best performing category of the IIAG, Human Development, reaches its highest average score to date in 2016 (56.1 out of 100.0), with all three underlying governance dimensions – Welfare, Education and Health – improving over the last ten years. However, all register slowing progress over the second half of the decade. Worryingly, in a continent where 41% of the population is under 15 years old, progress in Education has nearly ground to halt. Africans are particularly dissatisfied with how governments are addressing changing educational needs, as reflected by the accelerated pace of decline in the Education Provision indicator over the last five years.
Despite being the slowest improving category over the past decade and within the past five years, Sustainable Economic Opportunity has recorded progress since 2014. While the African average improvement has slowed over the last five years, 16 countries, representing 51% of the continent’s population and 54% of its GDP, have managed to accelerate their rate of improvement in this period. For 22 countries, however, progress is slackening (i.e. Mauritius and Rwanda) or even reversing to decline, as in Angola. The sub-category Infrastructure is a major driver of the continent’s overall performance in Sustainable Economic Opportunity, picking up momentum over the last five years, even if Electricity Infrastructure continues to register average decline. The deterioration in Africa’s Rural Sector over the last five years, which could threaten recent progress in this key area for the continent’s sustainable growth and wealth-creating potential, is a particular cause for concern.
Participation & Human Rights is the only category picking up speed in the last five years, with the greatest number of countries (17) improving at an accelerated rate across all four categories of the IIAG. However, this masks some concerning trends in certain countries and dimensions. 18 countries show either a slower pace (i.e. Congo, Gabon, Nigeria, Rwanda, Togo and Uganda) or even display warning signs, declining in the second half of the decade (i.e. Egypt). The average positive trend is in fact mainly driven by the accelerated progress in Participation, led by a majority of countries improving in Free & Fair Elections. Worryingly, however, Political Participation shows a slight average decline over the last five years, which could threaten the progress made over the decade, while average deterioration in Civil Society Participation appears to worsen over the last five years.
On a more positive note, the pace of deterioration in Safety & Rule of Law seen over the decade has slowed in the last five years. This is mainly driven by slowing decline in Personal Safety – although indicators such as Crime and Political Violence remain on concerning negative trajectories – and by progress appearing over the last five years in Rule of law. However, Accountability, already the lowest scoring sub-category in the IIAG, is lately registering even slower progress. Another concerning trend shows National Security deteriorating at an even faster pace over the second half of the decade, more than doubling its annual average decline. At category level, deterioration worsens over the second half of the decade for 15 countries, including Burundi, Cameroon, Libya, and Mozambique, while some countries, such as Angola and Mauritius, register a recent downturn despite improvement over ten years.
Mo Ibrahim, Chair of the Mo Ibrahim Foundation, said: “As the index shows us, overall governance in Africa is improving. This is good news. However, the slowing and in some cases even reversing trends in a large number of countries, and in some key dimensions of governance, means that we must be vigilant. Without vigilance and sustained efforts, the progress of recent years could be in danger of vanishing.”
To explore the findings please visit http://mo.ibrahim.foundation/.
Africa Industrialization Day 2017: Strategic investment in cross-border infrastructure will advance Africa’s trade, industrial capacity
Industrialization is a primary driver of economic growth and job creation, and will be pivotal in efforts to achieve the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063.
This year’s Africa Industrialization Day highlights the links between industrial development and Africa’s moves towards establishing a continental free trade area. These are mutually supportive endeavours. Strategic investment in cross‑border infrastructure will advance both trade and industrial capacity. Promoting green technologies and low‑carbon solutions can create compelling opportunities for increased commerce and industrialization alike.
Small and medium enterprises, which already contribute 80 per cent of the continent’s gross domestic product and support 90 per cent of all jobs, will remain key actors. Governments, business and civil society will need to forge partnerships to spur innovation and create incentives to power sustainable growth.
It will also be critical to unleash the capacities of Africa’s young people and to strengthen African institutions. Both the 2030 Agenda and Agenda 2063 recognize these imperatives.
On Africa Industrialization Day, I reaffirm the continued strong commitment of the United Nations to support Africa’s industrialization, the implementation of a continental free trade agreement, and the building of inclusive, resilient, peaceful and prosperous societies for all.
– António Guterres, UN Secretary-General
Africa Industrialization Day 2017
African Industrial Development: A Pre-Condition for an Effective and Sustainable Continental Free Trade Area (CFTA)
In 1989, the General Assembly proclaimed 20 November as “Africa Industrialization Day” to mobilize commitment from the international community to the industrialization of Africa.
Since then, UNIDO – as the specialized agency of the United Nations for promoting inclusive and sustainable industrial development – has been leading this celebration through organizing outreach events on the topic including in Vienna and New York. The goal is to raise awareness of the importance of industrialization in African development and to galvanize international support from stakeholders, including governments, the private sector, academia and civil society.
As in previous years, UNIDO, in collaboration with the Office of the Special Adviser on Africa (OSAA) and the Office of the Permanent Observer of the African Union to the United Nations (AU), will celebrate Africa Industrialization Day by organizing a high level event. This year’s celebration will be under the theme “African Industrial Development: A Pre-Condition for an Effective and Sustainable Continental Free Trade Area (CFTA).” The event will take place on Monday, 20 November 2017.
The purpose of this day is to raise global awareness regarding the industrialization challenges faced by the continent with regards to industrialization and to mobilize both African leaders and international Organizations to advocate for the accelerated and sustainable industrialization of Africa.
As 2016 marked the beginning of the Third Industrial Decade for Africa (IDDA III), this year’s AID continues to play a special role in promoting the acceleration of sustainable industrial development in Africa, of which integration between government policies and the private sector is a critical component.
Symposium
The African continent is the second most-populated continent in the world, home to over 1.2 billion people, or 16% of the world’s population. Despite this, Africa currently only accounts for less than 2% of international trade and global manufacturing. In order to curb these numbers, and allow the African continent to assume its role in the international system, it is paramount to focus on Africa’s inclusive and sustainable industrial development. In order to overcome poverty, and lead their countries to prosperity, African countries need to therefore focus on inclusive and productive sector-led growth which is critical to lifting people out of poverty, and allowing vulnerable communities to benefit from and contribute to the economy.
The important contribution of inclusive and sustainable industrial development (ISID) in helping Africa overcome its critical development challenges is clearly recognized in the 2030 Agenda for Sustainable Development, within Sustainable Development Goal 9 (SDG9), calling to build resilient infrastructure, promote sustainable industrialization and foster innovation, and Agenda 2063, encompassed in Aspiration 1 of the First Ten-Year Implementation Plan, under “a prosperous Africa based on inclusive growth and sustainable development”.
To realize their potential, African countries need to achieve a level of industrialization that allows them to implement a Continental Free Trade Area (CFTA), as adopted by the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, in order to expand intra-African trade through better harmonization and enhance competitiveness at the industry and enterprise level.
The objective of this year’s Africa Industrialization Day is to raise awareness of the importance of African industrial development in implementing a successful CFTA, and therefore further growing Africa’s economy and supporting the eradication of poverty. The event will take into consideration the role that industrialization plays in enhancing market competitiveness, and elaborate on the necessary steps to be taken in order for African countries to realize their potential.
Theme
The Continental Free Trade Area (CFTA) was launched by African Heads of States in 2015 to create a single market for Africa. As the first flagship project of the African Union’s (AU) Agenda 2063, the CFTA aims to open the economies of fifty-four African countries to trade, combined possessing a population of more than one billion people and a gross domestic product of more than US $3.4 trillion.
When implemented, the CFTA will significantly help to drive structural transformation and poverty eradication in Africa. The CFTA will enable the free movement of business persons and investments, expand intra-African trade, resolve challenges of multiple and overlapping memberships, and enhance competitiveness at the industry and enterprise level.
However, the success of the CFTA in facilitating structural transformation and poverty eradication also depends on the ability of countries to industrialize. Trade liberalization can help countries exploit opportunities for scaled production, continental market access and better reallocation of resources, but not without key contributors to industrialization such as upgrading productive capacities, increasing technological transfer and institutional capabilities, prioritizing strategic industrial sectors where Africa has comparative advantages, and investing in relevant infrastructure improvements. In order for the CFTA to create structural transformation, coherent, rapid and robust industrial policy strategies must be implemented at the country level.
Background paper
Over the years, African Governments have regularly committed to a process of industrialization that has failed to significantly materialize. This failure is linked to the many structural impediments and supply-side constraints that preclude enterprises in the continent from achieving productive efficiency and competitiveness. Most African countries are small and vulnerable economies that do not have large domestic markets to enhance exports; not surprisingly, enterprises in these countries remain at the bottom of global value chains, and efforts to integrate them into the value chains have had limited success.
Africa’s industrialization efforts have occurred alongside commitments by African Governments to a process of deeper integration and the lifting of tariff and non-tariff barriers. The Lagos Plan of Action (1980) and the Abuja Treaty (1991) established regional economic communities (RECs) for the purpose of achieving greater economic integration. These groups of individual countries in sub-regions would then become the stepping-stones for African continental integration. Deep integration is envisaged in terms of a single common market, and economic and monetary union.
The Abuja Treaty provides for the stabilization, by 2007, of tariff and non-tariff barriers, customs duties and internal taxes in each of the eight RECs recognized by the African Union (AU); it also provides for the establishment, by 2017, of a free trade area (FTA) and customs union in each REC. To date, many RECs have not yet established FTAs. Only EAC and ECOWAS have established a customs union that is in operation; and only EAC, ECOWAS, COMESA, and SADC have FTAs that are in operation without problems. Much work still remains to be done to meet these targets.
Over the years, these measures have made little progress in boosting regional trade. They have also focused more on eliminating trade barriers and less on developing productive capacities, particularly in manufacturing and agro-related industries. And yet, without a robust industrial sector it is highly unlikely that a country or region can achieved prosperity and a decent socioeconomic life for its people. The CFTA stems, in part, from the realization that regional integration is stultified and not equitably pursued amongst all African regional economic communities (RECs), and that intra-Africa trade is at critically low levels compared to African trade with outside partners.
The CFTA’s success will depend, among other things, on how effectively regional economic communities (RECs) are able to streamline their respective free trade areas (FTAs) to be aligned with a future continental free trade area (CFTA). Regional integration has the potential to create opportunities for intra-African trade, but these opportunities cannot be exploited without expanding the industrial base.
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EAC hands over COMESA-EAC-SADC Tripartite Task Force Chairmanship to COMESA
The Secretary General of the East African Community (EAC), Amb. Liberat Mfumukeko handed over the Chairmanship of the COMESA-EAC-SADC Tripartite Task Force (TTF) to Mr Sindiso Ndema Ngwenya, the Secretary General of the Common Market for Eastern and Southern Africa (COMESA) on Friday, 17th November, 2017.
Speaking during the handover ceremony , the EAC Secretary General and outgoing Chairperson, Amb Liberat Mfumukeko commended the incoming Chair for the various occasions he was able to step in on his behalf as TTF Chair during some important events that have taken place over the last few months.
“I wish to specifically make reference to the signing ceremonies of the Tripartite Agreement by the Republic of Madagascar and also the Republic of Mauritius.”
He said during the EAC’s tenure as Chair of the TTF from October 2016 to date, incremental progress has been made towards the realisation of the Tripartite vision of a developmental Free Trade Area that will promote economic development and growth in the 26 Partner States.
The outgoing Chair highlighted the progress made during EAC’s tenure which includes negotiations on all the outstanding Annexes in the Tripartite Agreement; 21 Member States have now signed the Free Trade Area Agreement out of 26; Work and Infrastructure programmes has been developed and was considered during the first Tripartite Ministerial Committee Meeting on Infrastructure.
Amb Mfumukeko informed the participants who attended the ceremony that the Tripartite now entered a new phase towards the realisation of the Tripartite agenda in which the primary focus areas are; concluding the negotiations on the outstanding areas of Agreement such as the Rules of origin and Tariffs, commencing work on Phase 2 negotiations, concluding the Agreement on Movement of Business Person as well as concretizing the ongoing work on the Industrial and Infrastructure Pillars.
“I am happy to tell you that all the EAC Partner States have committed to ratifying the Agreement by December, 2017.”
He called for the incoming Chair to address the main challenge which arises from the lack of funds which has had a paralyzing effect on the implementation of the Tripartite work schedules across the board. “I am confident that the incoming Chair, will successfully pursue and deliver on our engagement with the bank and also explore other diversified source for budgetary support.”
On his part, the incoming Chair and Secretary General of COMESA Mr Sindiso Ndema Ngwenya thanked the EAC, as the outgoing chairperson, for the excellent work done and achievements that have been made during her tenure as chairperson.
Speaking on the challenge of funding Mr. Ngwenya informed the meeting that the African Development Bank (AfDB) has provided some financial resources to support efforts aimed at creating awareness on the importance of the Tripartite FTA Agreement and the need to have it ratified by Tripartite Member/Partner States that have signed it in order for it to enter into force.
He disclosed to the participants that the Agreement requires at 14 ratifications before it may become operational and so far it is only Egypt that has ratified with the EAC being in the process of ratification.
The incoming Chair said the COMESA-EAC-SADC Tripartite is in dire need of financial resources to support proceeding with Phase II work as the budgetary support from cooperating partners that supported Phase I work has been exhausted.
“I am confident that with the concerted effort and support of EAC and SADC in the Tripartite Task Force, the task of mobilizing for resources and clearing outstanding work will be manageable”.
Kenya: Ambitious project rolled out to increase exports by 20 percent
Kenya has crafted a new strategy to revitalise exports that have stagnated for some time.
The National Export Development and Promotion Strategy aims to grow exports by 20 per cent by 2022. The ambitious plan targets six items for accelerated development via a public-private working group.
While unveiling the plan this week, Trade Principal Secretary Chris Kiptoo said safeguarding Kenya’s exports, with a keen eye on opening up new markets for processed products, underpins the new strategy.
The principal secretary said Kenya has identified six sectors that will be prioritized including livestock and livestock products, agriculture, fisheries, manufactured products and handicrafts.
Data shows that about 60 per cent of Kenya’s exports comprise just 10 products, which go to only 12 destinations, half of which are in Africa.
Countries identified as key markets in the new push include USA, UK, Germany, Uganda, Egypt, Democratic Republic of Congo, Rwanda, Pakistan, South Sudan, Belgium and The Netherlands.
The PS said another strategy will aim at improving balance of trade between various countries, particularly Asian powerhouses China and India. Currently, trade between Kenya and the two countries is heavily tilted in their favour.
The Trade PS said while imports from India last year were 12 per cent, and those from China at 13 per cent, Kenya only exported a paltry 1 per cent to these two countries.
In 2015, Chinese imports to Kenya peaked at Sh320.8 billion, compared with Sh8.4 billion worth of exports, while India exported goods worth Sh411.8 billion to Kenya and received imports worth only Sh11.7 billion that year.
Export Promotion Council chief executive Peter Biwott said Kenya should nurture incentives for both local and foreign direct investments as a way of promoting value addition, which will directly increase exports and create jobs.
“More economic zones should be created across counties where investors set up shop targeting regional and foreign markets. This will not only create jobs but will nurture technology transfer, especially for large scale industrial operations in agro-processing sectors,” he said.
According to the new strategy, the six identified sectors will see private players work with the government to streamline the value chain, with trade exhibitions held in target markets to promote business-to-business linkages.
Kenyan delegations have since attended four trade fairs in Pakistani cities of Karachi, Peshawar Lahore and Islamabad, organised by Kenya’s High Commission in Pakistan in association with Pakistani Business Associations.
This year, Pakistan overtook Uganda as the largest buyer of Kenyan goods. Exports to Islamabad jumped 90.8 per cent to Sh24.8 billion in the year to May, from Sh13 billion in a similar period last year.
Kenya’s High Commissioner to Pakistan, Ambassador Julius Bitok, said there are huge business and trade opportunities that need to be explored between the two countries.
“Pakistani businesses have heavily invested in automobiles, media, real estate, health, pharmaceutical and textile industries in Kenya. With Nairobi becoming an East African hub, more Pakistanis have shown heightened interest in investing in Kenya,” he said in an interview.
Kenya’s main exports are raw tea, coffee, pyrethrum, horticultural products and fruits and flowers, meaning that the country exports millions of jobs abroad that could be harnessed locally through value addition and processing.
Africa Coffee Roasters, Sasini, Gibsons, Java and Dormans are among the firms engaged in value addition of coffee before it is shipped to foreign markets for sale. Kenya has also benefited immensely from apparels business, where Europe and US-bound finished products are made at factories located within export promotion zones. These currently employ about 42,000 Kenyans.
The planned strategy will also demystify foreign trade by helping local firms access targeted markets, especially in Africa, where trade in ready-to-brew roasted and branded coffee saw Kenya earn Sh22.57 billion in 2013, before the figure dwindled to Sh762 million in 2016.
Starting 2018, said Dr Kiptoo, sector working groups will have an opportunity to identify challenges and seek government interventions to streamline operations.
As Kenya seeks to expand exports through new markets, the Trade PS said the country would also foster closer ties with traditional markets, especially in East Africa.
Playing down the current Kenya-Tanzania tiff, Dr Kiptoo expressed optimism that cordial relations between the two longtime development allies would be restored soon.
“A lot has been said on the pertinent issues disrupting trade between Kenya and Tanzania. Kenya considers Tanzania an important market for its goods and services, which has seen Tanzania become our second most treasured customer in East Africa and sixth in the world,” he said.
Last year, Tanzania bought goods worth Sh34.8 billion from Kenya, while it exported goods worth Sh12.8 billion to Kenya, among them wheat and cooking gas.
Dr Kiptoo said the emerging mining sector holds great promise, adding that the sector is being closely monitored to ensure Kenyans are trained in various tasks along the value chain, from mining to making end-products such as jewelry.
But traders lament that high energy costs, coupled with many levies from import declaration fees to railway development levies for imported raw materials, as well as statutory and county levies, have made Kenyan goods uncompetitive.
While local firms are exposed to many regulations, firms operating within economic zones are pampered with in-house, one-stop shop regulatory regimes that eliminate the need to hop from one office to another to acquire compliance papers.
Traders say late refunds of VAT adversely affects cash flow, whereby most traders pass on the cost to consumers. Some also seek loans to meet operational obligations, which have recently seen many suffer unforeseen losses when the business environment falters owing to political chaos.
According to the Kenya Association of Manufacturers, a long term taxation regime would help businesses to thrive, instead of the annual changes usually announced on Budget Day.
Inter-county levies have also been a deterrence to regional trade as county governments charge levies for lorries in transit to either side. This has seen many traders reduce their volumes of goods for inter-county markets.
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tralac’s Daily News Selection
Updates on African trade policy processes from Amb. Albert Muchanga (AU Commissioner for Trade and Industry): The 8th CFTA Negotiating Forum to be held in Abuja next week will be followed by the African Union Ministers of Trade meeting in Niamey (1-2 December). Trade facilitation is a key lever for boosting intra-african trade: in this connection, I call on you to ensure that the draft Trade Facilitation Strategy is formulated and approved next year.
Profiled commentaries in the latest tralac e-Newsletter: Elisha Tshuma provides an update on recent import control measures introduced by Zimbabwe while Gerhard Erasmus discusses trade-related dispute settlement in the RECs and the role of private parties
Note: UNCTAD’s 2017 Least Developed Countries Report will be published next Wednesday
African Ministers call for action to combat tax evasion in Africa: Yaounde Declaration (OECD)
On the margins of the 10th Global Forum meeting on Transparency and Exchange of Information for Tax Purposes held in Yaoundé, Cameroon Finance Minister Alamine Ousmane Mey, led a discussion with Ministers, high level representatives and officials from Africa on tax fraud and avoidance. They agreed on a call to tackle illicit financial flows through international tax cooperation. As a result, recognising the recent so called “Paradise Papers”, they have relaunched African political support for more tax transparency and agreed on the Yaounde Declaration to: Extract (pdf): Note that while progress has been made in Africa, many countries still do not fully benefit from the new transparent tax environment: only 27 African countries are participating in exchange of information on request, only five African countries are committed to automatic exchange of financial accounts information, and a large number of African countries continue to have a small EOI network, gaps in their domestic legislation and administrative capacity constraints that hamper efforts to tackle international tax evasion. Consider that tackling illicit financial flows in Africa through improved tax cooperation and transparency would be enhanced if carried out at the continental level under the auspices of the African Union with the support of all development partners and international and regional organisations. Undertake an initiative by the AU to begin a high level discussion on tax cooperation and illicit financial flows and their link to domestic resource mobilisation. Encourage African countries with the support of the Global Forum Secretariat to explore with the AU, UNECA, RECs and the AfDB a collaboration aimed at boosting African countries’ efforts towards implementing the international EOI standards and using EOI tools to improve their domestic resource mobilisation.
John Mbu: African nations are powering up the business rankings: what lessons can we learn from them? (WEF)
The first and most important lesson is that to achieve major reforms, political will is key. Nigeria’s PEBEC had clear objectives and was headed by the vice-president, who for certain parts of the year was the acting president. The PEBEC launched two 60-day action plans in April and September 2017. And in May 2017, the government issued an executive order aimed at promoting transparency in the business environment. The governments of Rwanda, Morocco, Botswana and Kenya also champion business reforms at a very high level. Second, the quality of institutions is critical. Africa’s top performers have very high Country Policy and Institutional Assessment and Ibrahim governance index scores. Botswana, Namibia, Rwanda, Seychelles, Tanzania, Mauritius all score very well in the above indices. In fact, if anything, the results indicate that there is a strong correlation between the CPIA, Ibrahim index and the Doing Business indicators. Third, the top performers are those that market themselves well. Between the 28 May and 15 July 2016, Kenya hosted the presidents and prime ministers of South Korea, Turkey, Ethiopia, Israel and India for bilateral visits. [The author is an economist, Office of the Senior Vice-President, AfDB]
South Africa: 11th WTO MC Business position (dti / Agbiz)
In preparation for the WTO MC, Minister Davies hosted a consultative meeting with the constituencies of NEDLAC. Dr John Purchase, CEO of Agbiz, and the Convenor for Business in the Trade and Industry Chamber of NEDLAC, presented the position of Business. Generally, there was considerable consensus between the constituencies - Government, Business and Labour - on most of the major agenda items of the upcoming 11th WTO MC. Extract: In terms of the proposed transparency on export restrictions, South Africa should support any steps to greater transparency in the management of export restrictions. Business is concerned that the proposed agreement on stockholdings for food security purposes may hold certain risks and implications for South Africa. We need to first understand these risks and long term implications before Business can support the proposed agreement. Special and Differential Treatment for developing countries and LDCs should be a determinant of MC11 outcome. The same goes for the Special Safeguard Mechanism (SSM) provided to developing countries, to provide buffer against import surges and low priced imports. The implication of supporting the SSM to South Africa’s exports requires further consideration and analysis before South Africa should provide unqualified support to this inclusion. While it may be premature to introduce new items, such as e-commerce and investment, into the WTO negotiations, and these could divert the focus of the meetings from the existing developmental agenda, it is also essential that the South Africa government, with its social partners, address these developments as a matter of urgency, and as decided at the recent Nedlac TIC Strategic Session. While the readiness of the developing countries to engage in negotiations in areas like e-commerce remains questionable, we need to understand that these developments are natural developments in business innovation and sophistication, and that many of our trading partners are not going to wait for developing countries and LDC’s.
David Primack: Enhancing access for LDC services to the UK post-Brexit (Commonwealth)
The cornerstone of any UK preferential services regime (and as part of an enhanced effort to support LDC services trade more generally) should be the establishment of an LDC import facilitation mechanism (along the lines of CBI17). This has often been referred to in the waiver discussions as an LDC ‘Services Help Desk’. Such a mechanism could serve to enhance the relationship between the UK government, the UK business community and LDC service providers. It could also serve as an intake point for the kind of information needed to fine tune existing and/or design future preferences. It could also serve as an essential conduit for informing and improving the UK’s Aid for Trade in the services realm. Such a help desk should be user-friendly and easily accessible (online and by phone) and provide straightforward information (i.e. structured with the needs of LDC providers in mind).
Overview of developments in the international trading environment: annual report by the Director-General (WTO)
Key findings: WTO Members applied 108 new trade-restrictive measures during the review period from mid-October 2016 to mid-October 2017, including new or increased tariffs, customs procedures, quantitative restrictions and local content measures. This equates to an average of nine measures per month compared to fifteen in the previous period. WTO Members also implemented 128 measures aimed at facilitating trade, including eliminated or reduced tariffs and simplified customs procedures. At almost 11 trade-facilitating measures per month, this remains significantly lower than the monthly average of 18 recorded in the previous annual overview report. WTO Members continue to implement more trade-facilitating than trade-restrictive measures, a trend observed over the past four years. It is noteworthy that the estimated trade coverage of import-facilitating measures ($169bn) is more than two times larger than that of import-restricting measures ($79bn).
Rwanda to issue visa on arrival for all visitors (New Times)
As part of the recent Cabinet resolution, travellers from across the world will from 1 January 2018, receive a 30-day visa upon arrival following the establishment of a new visa regime. The move, which is set to increase Rwanda’s openness and accessibility to the rest of the world, is part of a new visa regime. According to a brief by the directorate general of Immigration and Emigration, Rwanda will also, with immediate effect, grant a free 90 day visa on reciprocal basis to the following countries: Benin, Central African Republic, Chad, Ghana, Guinea, Indonesia, Haiti, Senegal, Seychelles and Sao Tome and Principe. This is in addition to DR Congo, EAC partner states, Mauritius, Philippines, and Singapore.
Tanzania: Mineral loopholes for tightening (Daily News)
The Minister for Works, Transport and Communication, Prof Makame Mbarawa, yesterday, tabled the National Shipping Agencies Bill of 2017 which, among others, will form a national shipping agent that will deal with clearing and forwarding of mineral concentrates and government trophies. He said that once the shipping agent is formed all deals of mineral concentrates, government trophies, shipment of all mineral concentrates, its products, petroleum, weapons, live animals and government trophies will not be done by private clearing and forwarding agents as is the case at present. Moreover, under the proposed bill, NASAC will play double role of a regulator and an operator, something that was hotly opposed by majority of parliamentarians as it will be against the free and fair trade practices.
Zimbabwe: 15% platinum export tax deadline set to be moved (The Herald)
Government is considering postponing the January 2018 deadline for effecting a 15% tax on raw platinum exports to an indefinite date, an official from the Mines and Mining Development ministry has revealed. The move is informed by the fact that mining companies are still setting up smelters and refineries. The January 2018 deadline was initially proposed by platinum mining companies in 2015 when they pleaded to be allowed time to import their smelters and refineries to value add the raw platinum locally. However, given the current foreign currency shortages in the country; which makes it difficult to import the necessary equipment needed to process the commodity locally, platinum producers have once again pleaded with the ministry to extend the deadline. Director of the Metallurgy Department in the Mines and Mining Development Ministry, Valentine Vera, reportedly said the request has been tabled before the Parliament, adding that the ministry will advise once the issue is finalised.
South African economy resurgent on consumer demand, exports (BRICS Post)
The recent data point to a resurgent South African economy after it exited a technical recession in the second quarter. Bulk exports surged by 30.7%year-on-year (y/y) to a new record of 16.7 million metric tonnes (Mt) in October after a 5.1% y/y gain in the first nine months of this year and a 2.% drop in 2016. The October 2017 tonnage eclipsed the previous record of 16.4 Mt set in January 2015 and was set despite a severe storm that disrupted port operations in the main port of Durban. Inventory replenishment and surging net exports were supposed to be the drivers of economic growth this year, but it now seems as if domestic households, which account for some 60% of economic activity, are joining the party as well. In both August and September, real retail sales grew by 5.4% y/y, which was the highest y/y increase since May 2013.
East Africa: New deal to connect regional SMEs to global markets (New Times)
The East African Business Council has signed an agreement with the World SME Forum to support and enhance African SMEs’ integration into global markets. The World SME Forum is a private sector-led initiative that supports the overall growth and impact of small and medium enterprises globally. EABC executive director Lilian Awinja said the project will be part of a larger EABC initiative to support growth of SMEs in the region “with a specific focus on women and youth in business.” The World SME Forum will work with the EABC to extend the scope of its activities and programmes to the African continent and partnering with leading chambers and SME associations in the region.
South Africa: Ownership of JSE-listed companies (National Treasury)
This report presents data on the ownership of South African companies listed on the JSE and proposes an Ownership Monitor for tracking trends in the composition of ownership over time. Listed companies are typically expected to have diverse ownership - characterised by a large number of relatively small shareholdings - although many will also have one or more strategic shareholders with a significant influence in the company. This assessment focuses on four aspects of ownership, reflecting the policy priorities noted above: Foreign ownership; Ownership through South African institutional investors, including retirement funds, long-term; insurance companies, collective investment schemes and investment managers; Major shareholdings, i.e., significant stakes in the company by one or more shareholders; Black (BEE) ownership.
Today’s Quick Links: South Africa’s Davis Tax Committee: Distinguish between profit shifting and illicit financial flows Zimbabwe: Govt to set up informal business task force Kenya Airways says political turbulence is hitting intra-Africa trade World Bank to conduct sustainability analysis for Tanzania’s debt Tanzania: Causes of Sh6tr budget hole cited Gilbert Saggia: The future of African ports Chubb to sell 100% of its SA stake ahead of controversial new security laws |
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South African government meets with social partners to prepare for the WTO’s 11th Ministerial Conference
South African Minister of Trade and Industry, Dr Rob Davies, attended the National Consultative Forum in Midrand to prepare for the World Trade Organisation (WTO) 11th Ministerial Conference (MC11) to be held in Buenos Aires, Argentina, in December 2017.
The Forum provided an opportunity for the exchange of views between Government, Labour and Business on the possible outcomes in preparation for the upcoming MC11. Dr John Purchase, CEO of Agbiz and the Convenor for Business in the Trade and Industry Chamber of NEDLAC, presented the position of Business.
The Ministerial Conference is the highest decision making body in the WTO and will be attended by 164 countries which are members of the WTO.
Minister Davies said that MC11 will be held at a time of increasing backlash against multilateralism and trade liberalisation due to the lack of inclusive growth.
“There is a need to define a new form of ‘inclusive multilateralism’. The United Nations Conference on Trade and Development (UNCTAD) in its 2017 Trade and Development Report calls for a ‘global new deal’ to enhance growth and development,” said Davies.
Minister Davies said that South Africa’s priorities are aligned to those of the African Group and the Africa, Caribbean and Pacific (ACP) Group. The key priority is therefore to conclude the outstanding work of the Doha Development Agenda (DDA) including in agriculture, to address the trade distorting domestic support subsidies being provided by mainly developed countries.
Minister Davies noted that there were many proposals on the different issues discussed at the WTO but there seems to be very little convergence.
“On the SA side, we are assessing each of the proposed issues, to determine whether they can indeed be delivered, whether they meet SA’s most urgent developmental needs, and whether they involve demands that unacceptably limit our policy space.”
The National Consultative Forum also provided an opportunity for Government and Labour to sign a Pledge not to concede to become a party to the WTO Agreement on Government Procurement. Business undertook to sign the Pledge once the necessary approval has been obtained.
The Pledge is an outcome of the annual NEDLAC Trade and Industry Chamber’s Strategic Session with the Minister of Trade and Industry, Dr Rob Davies, held on 22 September 2017 at NEDLAC House. In the strategic session, a resolution was taken by NEDLAC Constituencies, which include organised labour (COSATU), organised business (BUSA) and Government (the Department of Trade and Industry) not to concede and sign-off on “The World Trade Organisation (WTO) Agreement on Government Procurement”.
The Government Procurement Agreement (GPA) is a plurilateral agreement within the framework of the WTO, meaning that not all WTO members are party to the Agreement. Currently 47 of the 164 WTO members have signed the GPA. The fundamental aim of the GPA is to mutually open government procurement markets among its signatories.
The NEDLAC social partners are concerned that joining the GPA could be to erode policy space available to implement South Africa’s development and employment objectives by constraining local content requirements in government tenders that can be used as a policy tool to facilitate sustainable industrial development. Local content requirements in government procurement are utilised as strategic levers to enhance domestic production capabilities.
11th WTO MC Consultative meeting with Minister Rob Davies at the DBSA
Statement by Dr John Purchase, Business Convenor in Nedlac’s Trade and Industry Chamber
Business sincerely appreciates the opportunity to raise matters with regard to the upcoming 11th WTO MC to be held in Buenos Aires, Argentina, in December 2017. Business also sincerely appreciates the open and inclusive approach followed by Government with regard to engaging on these matters, and including Business in its delegation to the 11th WTO MC.
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The World Trade Organisation (WTO) Ministerial Conference is the highest decision-making body of the WTO. The 11th Ministerial Conference (MC11) should be used effectively towards developing greater consensus on the Doha Developmental Agenda (DDA) priorities that accommodate the needs of the developing countries and Least Developed Countries (LDCs). Business agrees that the implementation of commitments made at the 10th WTO Ministerial Conference (MC10) in Nairobi in 2015, as well as those made on trade facilitation at the 9th Ministerial Conference in Bali, should remain a priority for South Africa. This was also highlighted by Business at the recent Nedlac TIC Strategic Session. In general, Business requires and is willing to engage in more robust engagement with Government in especially Teselico on substantive trade matters affecting the private sector.
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Fair trading conditions can be instrumental in fast tracking the development of the less developed economies. The fairness can be achieved through the prioritization of resolving the issues that harm the development of developing countries and LDC issues in MC11. For South Africa to get any meaningful gains, the developmental objectives and principles of the DDA should take precedence and remain a priority.
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Trade-distorting support in agriculture continues to be a threat in the global markets and hinders growth and development in both developing countries and LDCs. As a crucial sector in South Africa and the continent as an instrument to expand trade, growth of the economy and attain food security, agriculture remains one of the priority negotiation areas in MC11 for SA. Lack of consensus remains a major concern to both industry and the country as a whole.
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In terms of the proposed transparency on export restrictions, South Africa should support any steps to greater transparency in the management of export restrictions.
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Business is concerned that the proposed agreement on stockholdings for food security purposes (PSH) may hold certain risks and implications for South Africa. We need to first understand these risks and long term implications before Business can support the proposed agreement.
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Special and Differential Treatment for developing countries and LDCs should be a determinant of MC11 outcome. The same goes for the Special Safeguard Mechanism (SSM) provided to developing countries, to provide buffer against import surges and low-priced imports. The implication of supporting the SSM to South Africa’s exports requires further consideration and analysis before South Africa should provide unqualified support to this inclusion.
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While it may be premature to introduce new items, such as e-commerce and investment, into the WTO negotiations, and these could divert the focus of the meetings from the existing developmental agenda, it is also essential that the South Africa government, with its social partners, address these developments as a matter of urgency, and as decided at the recent Nedlac TIC Strategic Session. While the readiness of the developing countries to engage in negotiations in areas like e-commerce remains questionable, we need to understand that these developments are natural developments in business innovation and sophistication, and that many of our trading partners are not going to wait for developing countries and LDC’s. Premature agreement on the rules based e-commerce provisions can limit the development of smaller and least developed economies, but we must be wary of using this as an excuse to growth and development. We run the risk of greater marginalisation if we do not participate in this debate constructively, perhaps using it as a trade-off on specific DDA and other ambitions we may have.
Concluding Remarks
A welcome outcome in MC11 would be the one that reduces the amount of agricultural subsidies and other questionable no-tariff barriers, and offers Special and Differential (S&D) treatment provisions in various areas to developing countries as per the Doha Declaration mandate.
The expansion of the WTO work programme could be to the detriment of the existing developmental mandate, but smart positioning and options can benefit South Africa.
Regional integration and related trade negotiations remain a priority for SA. In the absence of consensus on DDA issues, the priority remains the establishment of the beneficial regional trade partnerships. But we must also not neglect potential and improved bilateral agreements with existing and potentially new major trading partners.
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Azevêdo signals ‘cautious optimism’ over trade prospects in annual trade monitoring report
WTO members show restraint in trade restrictions despite ongoing economic uncertainties
WTO members introduced fewer trade-restrictive measures from mid-October 2016 to mid-October 2017 compared to the previous year, according to the Director-General’s annual overview report on trade-related developments presented to members on 4 December.
WTO members continued to implement more trade-facilitating than trade-restrictive measures. The estimated trade coverage of the import-facilitating measures recorded in the review period was more than double the import-restricting measures. In addition, the import-facilitating measures implemented during the review period in the context of the expanded Information Technology Agreement (ITA) amounted to around US$ 385 billion.
The report points out the need for WTO members to show leadership in reiterating their commitment to open and mutually beneficial trade as a key driver of economic growth and a major engine for prosperity and to continue to work together to achieve a successful WTO Ministerial Conference in Buenos Aires later this month.
The report, which was discussed at the 4 December meeting of the WTO’s Trade Policy Review Body (TPRB), shows that 108 new trade-restrictive measures were put in place, including new or increased tariffs, customs regulations, quantitative restrictions and local content measures. This equates to an average of 9 measures per month compared to 15 in the previous period (mid-October 2015 to mid-October 2016).
During the same period, members implemented 128 measures aimed at facilitating trade. At almost 11 trade-facilitating measures per month, this remains significantly lower than the monthly average recorded in the previous annual overview report. It is noteworthy that the estimated trade coverage of import-facilitating measures (US$ 169 billion) is more than twice that of import-restrictive measures (US$ 79 billion).
There was also a slight deceleration both in initiations of trade remedy investigations and in terminations of trade remedy measures compared to the previous annual overview and to the whole of 2016. The trade coverage of trade remedy initiations and terminations recorded in the report is estimated at US$ 76 billion and US$ 12 billion, respectively.
“The economic context for this year’s report is interesting, to say the least. International trade flows have rebounded strongly during the last 12 months after a sharp slowdown in 2016. In September we upgraded our forecast for trade growth in 2017. This was due to a sharp acceleration in global trade growth in the first half of the year. The original forecast was 2.4 per cent, and we are now forecasting growth of 3.6 per cent.
“This improved outlook is very welcome, but substantial risks that threaten the world economy remain in place and could easily undermine any trade recovery. Looking ahead, we need to keep up the hard work to help facilitate trade. And of course, this includes avoiding measures which can hamper and restrict trade flows,” WTO Director-General Roberto Azevêdo said in his address to the TPRB.
“Further progress will require continued commitment. I urge members to redouble efforts to refrain from implementing new trade-restrictive measures, and to reverse existing measures,” he added. His full speech is available here.
Key findings
- WTO members applied 108 new trade-restrictive measures during the review period from mid-October 2016 to mid-October 2017, including new or increased tariffs, customs procedures, quantitative restrictions and local content measures. This equates to an average of nine measures per month compared to fifteen in the previous period.
- WTO members also implemented 128 measures aimed at facilitating trade, including eliminated or reduced tariffs and simplified customs procedures. At almost 11 trade-facilitating measures per month, this remains significantly lower than the monthly average of 18 recorded in the previous annual overview report. WTO members continue to implement more trade-facilitating than trade-restrictive measures, a trend observed over the past four years.
- It is noteworthy that the estimated trade coverage of import-facilitating measures (US$ 169 billion) is more than two times larger than that of import-restricting measures (US$ 79 billion). In addition, the import-facilitating measures implemented during the review period in the context of the ITA Expansion Agreement are estimated at around US$ 385 billion or 2.4% of the value of world merchandise imports.
- On trade remedy measures, the review period saw a slight deceleration both in initiations of investigations and in terminations of measures, compared to the previous annual overview and to the whole of 2016. Anti-dumping measures continue to make up the bulk of all trade remedy initiations.
- Transparency and predictability in trade policy remains vital for all actors in the global economy. Collectively, WTO members must show leadership in reiterating their commitment to open and mutually beneficial trade as a key driver of economic growth and a major engine for prosperity. In preparing for the 11th WTO Ministerial Conference, members must continue to work together to achieve a successful meeting in Buenos Aires in December.
Recent economic and trade developments
Overview
World trade growth picked up markedly in the first half of 2017 after slowing sharply in 2016. The volume of world merchandise trade as measured by the average of seasonally-adjusted exports and imports was up 4.2% in the first half of this year compared to the same period last year. Trade was also up strongly in value terms, with year-on-year increases of 9.3% for merchandise exports and 4.9% for commercial services exports in current U.S. dollar terms.
These increases represent a substantial improvement over 2016, when international trade flows declined in value terms and trade volume growth fell to its lowest level since the financial crisis. The dollar value of world merchandise exports fell 3.2% to US$16 trillion in 2016 while exports of commercial services were nearly unchanged at US$4.8 trillion. Meanwhile, merchandise trade grew just 1.3% in volume terms in 2016 (average of exports and imports), down from 2.6% in 2015.
Global economic activity also appears to be strengthening in 2017 according to consensus estimates of gross domestic product (GDP). World real GDP growth at market exchange rates looks set to expand by 2.8% in 2017, up from 2.3% in 2016 and roughly equal to the average rate of increase since 1980.
Several factors have contributed to the upturn in world trade in 2017. Asian trade flows have strengthened, partly due to stronger intra-regional trade as China and its neighbours have recovered from a period of financial volatility in early 2016, and partly due to stronger extra-regional shipments as demand has risen in the United States and remained steady in the European Union.
Prospects for imports in resource exporting regions have also brightened as commodity prices have risen year-on-year, boosting export revenues that support higher imports. South America in particular should exert less of a drag on the world economy going forward as Brazil emerges from its two-year recession.
Global economic performance has also been influenced by more fundamental changes in the structure of global demand. In particular, the rebalancing of China’s economy away from manufacturing and toward services may cause Chinese import demand to moderate, due to the fact that the import content of services is relatively low. An increasing share of services in Chinese value added (up from 43% in 2008 to 54% in October 2017) may weigh on trade growth in the short-run, but this shift should permit stronger, more sustainable growth over the longer term.
Export volumes of developed economies are up 3.1% for the year-to-date in 2017, compared to 1.4% for the whole of 2016. Shipments of developing economies have grown even more, up 5.9% in 2017 compared to 1.3% in 2016. Imports of developed economies have continued to grow at a modest pace, rising 2.1% in the first two quarters of 2017 compared to 2% in 2016, but this is expected to pick up in the second half of the year. Meanwhile, imports of developing economies are up sharply this year (6.8%) after stagnating last year (0.2%). Trade developments in current dollar terms should be interpreted with caution as they are strongly influenced by commodity prices and exchange rates. In the first half of 2017, the dollar depreciated by 2.5% on average against the currencies of U.S. trading partners, while the price of oil increased by 34%. Despite their recent rise, oil prices remain low by recent historical standards.
Trade growth was stronger than expected in the first half of the year, prompting the WTO to upgrade its trade forecast for 2017 and 2018 on 21 September. The WTO Secretariat now anticipates merchandise trade volume growth of 3.6% in 2017, set within a range of from 3.2% to 3.9%. Trade volume growth should moderate to 3.2% in 2018, set within a wider range of from 1.4% to 4.4% reflecting the higher level of uncertainty associated with longer-term forecasts. The improved outlook for trade could still be undermined by downside risks, including the possibility that protectionist rhetoric translates into trade-restrictive actions, increasing geopolitical tensions and a rising economic toll from natural disasters across several regions. On the other hand, synchronized trade expansion across regions could be self-reinforcing, leading to more positive outcomes. As a result, optimism about trade prospects should be tempered with an appropriate degree of caution.
Trade Forecast and Economic Outlook
Due to stronger than expected trade growth in the first half of 2017, the WTO issued an upward revision to its trade forecast on 21 September 2017. The volume of world merchandise trade is now forecast to grow by 3.6% in 2017. The previous estimate for 2017 was 2.4%, though this was set within a range of 1.8%-3.6%, reflecting high economic and policy uncertainty. The new estimate puts the focus on the top end of that range. Growth of 3.6% represents a substantial improvement on the lacklustre 1.3% increase in 2016. The new estimate is placed within a range of from 3.2% to 3.9%, reflecting the typical variability of previous forecasts. Trade in 2018 should grow by 3.2%, with this figure set within a wider range of from 1.4% to 4.4% to reflect the inherent uncertainty of more distant forecasts.
If the revised trade forecast estimates are realized, 2017 will be the first year since 2013 with imports of developing economies growing faster than those of developed economies. Whether this means an end to the so-called emerging market trade slowdown remains to be seen. The trade recovery in 2017 should be led by increased shipments in Asia and North America. South America and other resource rich regions may continue to see relatively weak export growth, but their imports should see stronger growth.
The ratio of world trade growth to world GDP growth, also known as the “elasticity” of world trade, has been stuck at historically low levels of 1:1 or less for the last five years. The ratio fell below 1 to 0.6 in 2016, leading to concerns about a weakening relationship between world trade and output. If the current trade forecast is realized, the elasticity should rebound to 1.3:1 in 2017, easing those concerns somewhat.
Despite the improved outlook, world trade could easily be undermined by several downside risks, including trade policy measures, tighter monetary policy in developed countries, geopolitical tensions and natural disasters. Some of these risks, although real, are difficult to quantify. As a result, risks to the forecast are predominantly on the downside. On the other hand, the fact that trade growth is now more synchronized across regions than it has been for some time could make the current expansion self-reinforcing and provide some upside potential. More positive outcomes could convince countries to limit recourse to trade-restrictive measures and engage constructively within the multilateral trading system.
This Report is submitted to the Trade Policy Review Body (TPRB) to assist in undertaking its annual overview of developments in the international trading environment that are having an impact on the multilateral trading system. It builds on the Director-General’s Report to the TPRB on trade-related developments circulated to Members on 10 July 2017.
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Primary commodity trap in Africa has at least three consequences
Primary commodity trap in Africa has at least three consequences, Economic Commission for Africa (ECA) Southern Africa regional director Said Adejumobi has observed.
Speaking at the official opening of the Ad-hoc Expert Group Meeting (AEGM) on the theme “Promoting Growth and Economic Transformation in Southern Africa: The Challenges and Implications of Declining Commodity Prices”, Mr Adejumobi observed that firstly, the primary commodity trap which Africa finds itself has exposes the economic trepidations and vulnerabilities of African economies and the weak structural foundations on which they are constructed.
Mr Adejumobi added that secondly, it reinforces Africa’s role in the skewed international economic regime, which is characterised by gross inequality and domination. “It is a system in which Africa largely produces what it does not consume and consumes what it does not produce,” he said.
He also observed that the global system limits opportunities and perpetuates poverty in many developing countries including Africa.
And, thirdly, Mr. Adejumobi observed that as revenue dwindles from primary products, foreign debt has intensified. “Foreign debt as percentage of GDP has risen significantly in many African countries,” he added.
“As we set new dreams and aspirations for the World and the Continent with Agenda 2030 and Agenda 2063, our major goal should be how to reset the global economic regime,” he said.
Mr Adejumobi recommended that this required that Africa and indeed, Southern Africa moves up in the production value chain either in the agricultural, industrial or service sector. He explained that “creating expanded markets through market integration without commensurate production expansion will only lead to “market capture”, capital outflow and deepening underdevelopment”.
Meanwhile, Chief Executive Officer of the Walvis Bay Corridor Group (WBCG), Mr Johny Smith, acknowledged the partnership with the African Trade Policy Centre (ATPC) spanning more than 10 years. He noted that Africa best practices models such as the corridor development model could be used for other sectors of economies in the subregion.
And speaking at the same meeting, the Director of the Macroeconomic Policy Division of ECA, Mr Adam B. Elhiraika, noted that Industrialization and Structural Transformation are some of thematic areas of research at ECA.
In his presentation entitled “Commodity Prices and Africa’s Growth and Structural Transformation”, Mr Elhiraika highlighted ECA work in 2011 on the role of the State in governing development in Africa and other work on industrialization including the one on commodity based industrialization which he said are published on the ECA website.
Participants at the meeting will review the report on “Promoting Growth and Economic Transformation in Southern Africa: The Challenges and Implications of Declining Commodity Prices” and provide recommendations to improve the draft.
The meeting is organized by Economic Commission for Africa (ECA) Southern Africa in collaboration with The Walvis Bay Corridor Group (WBCG). In attendance are experts in the areas of development economics, international development, trade and regional integration, academia, government, regional economic communities, development partners, private sector and civil society.
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South African economy resurgent on consumer demand, exports
South African bulk exports surged by 30.7 per cent year-on-year in October to a new record
The recent data point to a resurgent South African economy after it exited a technical recession in the second quarter. Bulk exports surged by 30.7 per cent year-on-year (y/y) to a new record of 16.7 million metric tonnes (Mt) in October after a 5.1 per cent y/y gain in the first nine months of this year and a 2.8 per cent drop in 2016.
The October 2017 tonnage eclipsed the previous record of 16.4 Mt set in January 2015 and was set despite a severe storm that disrupted port operations in the main port of Durban.
Inventory replenishment and surging net exports were supposed to be the drivers of economic growth this year, but it now seems as if domestic households, which account for some 60 per cent of economic activity, are joining the party as well.
In both August and September, real retail sales grew by 5.4 per cent y/y, which was the highest y/y increase since May 2013. This brought the increase for the third quarter to 4.1 per cent y/y, almost double the 2.2 per cent y/y rise seen in the second quarter. The recovery in consumer demand was not confined to retail sales as new vehicle sales have shown a y/y increase from June to October.
In September, the second quarter 2017 gross domestic product (GDP) data released by Statistics South Africa exceeded the consensus forecast of 2.1 per cent as it came in at a 2.5 per cent growth rate at a seasonally adjusted annualised (saa) pace. The first quarter contraction was revised to show a 0.6 per cent drop rather than a 0.7 per cent fall.
On a year ago basis growth accelerated to 1.1 per cent in the second quarter from 1.0 per cent in the first quarter and 0.7 per cent in the fourth quarter.
Agriculture, mining hold strong
In terms of detail, the production measure of GDP showed that the weakness in the first quarter was broad-based with only the agriculture and mining sectors expanding out of the ten production sectors, while in the second quarters it was only two sectors that declined. These sectors were construction and government services.
From an expenditure point of view, there were only three out of the six categories that had a negative contribution to growth. Exports soared by 14.4 per cent quarter-on-quarter (q/q) saa to contribute 4.1 percentage points to growth, but this was offset to a large extent by a 13.3 per cent q/q saa jump in imports which reduced growth by 3.9 percentage points.
Inventories saw their second consecutive increase in the second quarter and that is likely to be boosted in the third quarter as the record maize harvest of 16.7 Mt needs to be stored. Harvesting takes place from May to August, so some is already included in the second quarter.
Consumers were in fact fairly confident as final consumption expenditure by households soared by 4.7 per cent q/q saa in the second quarter after a contraction in the first quarter.
The main positive contributors to growth in household consumption were food and non-alcoholic beverages (up 10.1 per cent q/q saa and contributing 1.9 percentage points), clothing and footwear (up 26.7 per cent q/q saa and contributing 1.4 percentage points), and the ‘other’ category of expenditure (up 8.2 per cent q/q saa and contributing 1.0 percentage point).
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African Ministers call for action to combat tax evasion in Africa
On 15 November 2017, in the margins of the 10th Global Forum meeting on Transparency and Exchange of Information for Tax Purposes held in Yaoundé, Cameroon Finance Minister Alamine Ousmane Mey, led a discussion with Ministers, high level representatives and officials from Africa on tax fraud and avoidance.
They deliberated on the theme “Fighting illicit financial flows through international tax cooperation: A Call for Action in Africa” and agreed on the call.
As a result, recognising the recent so called “Paradise Papers”, they have relaunched African political support for more tax transparency and agreed on the Yaounde Declaration to:
- Recall the commitment of the Addis Ababa Action Agenda to redouble efforts to substantially reduce illicit financial flows by 2030 and affirm that sustainable development and good governance are among the seven African aspirations of the African Union Agenda 2063.
- Acknowledge that the report from the African Union and United Nations Economic Commission for Africa’s High Level Panel on Illicit Financial Flows from Africa has focused attention on the scale of the issue of illicit financial flows in Africa, which includes tax evasion and other criminal activities, and its negative impact on Africa’s development and governance agenda while also identifying ways in which to tackle it, in particular the exchange of tax information among countries.
- Emphasise the unprecedented efforts made by the international community to improve tax transparency and exchange of information which are a prerequisite for effectively tackling international tax evasion and addressing gaps and mismatches in tax rules that allow for artificial profit shifting.
They have asked that these efforts are also carried out at the continental level under the auspices of the African Union with the support of all development partners and international and regional organisations.
Taking this opportunity, France has committed to provide a substantial financial contribution for the new phase of the Africa initiative, which was renewed for three years, and will support African countries to fight illicit financial flows.
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tralac’s Daily News Selection
Postponed: The EAC announced today that the 1st EAC Joint Heads of State Retreat on Health and Infrastructure, scheduled for 28-29 November in Kampala, has been postponed.
Underway, in London: @APPG_TOP hearings in the House of Lords for the Inquiry into the potential of the Commonwealth to help developing countries trade out of poverty. tralac’s Trudi Hartzenberg is one of the commissioners: background to the hearings
Diarise: Single African Air Transport Market ministerial working group (5-8 December, Addis Ababa). Concept note (pdf): The meeting will address the following issues: Progress report on implementation of the Activity Road Map for establishment of the Single African Air Transport Market especially on the budgeted activities of 2017 including: final validation of the policy, institutional and regulatory instruments for the Yamoussoukro Decision and the Single African Air Transport Market; and the development of a continental air transport infrastructure master plan. Related: concept note for the launch of the Single African Air Transport Market (25-28 January 2018, Addis Ababa)
Boost for pharmaceuticals as EAC mulls single regulator (The Standard)
The single regulator is expected to cut time and costs of evaluations and approvals of medicines and medical devices, allowing drug firms to access the 160 million-strong EAC market with ease. A secretariat within EAC’s department of Medicines and Food Safety will coordinate the joint activities in preparation for a single medicine and food safety agency. This is expected from 2018. The proposed agency is modelled on the European Medicines Agency which regulates certain medicines for 28 EU countries with a combined population of 510 million. Since 2015, national drug regulators of EAC, except Burundi and South Sudan have been implementing joint drug evaluation and market authorisation procedures, including joint inspections of drug manufacturing sites. Under the joint evaluations, firms seeking to introduce new medicines to the region, still have to submit applications and pay fees to all countries individually. The proposed creation of a single regulatory agency seeks to eliminate duplication that so that applications are made to one institution only.
Ecobank Group reveals three key emerging trends for Africa (Myjoy)
The 2017 version of Ecobank Research’s Fixed Income, Currency and Commodities (FICC) Guidebook, provides expert knowledge and analysis on African markets for investors and businesses. Indicating a positive outlook for the continent, three key trends are forecast to take hold during the next 12 months. The firstindicates an economic rebound in sub Saharan Africa driven by a recovery in the region’s economic heavyweights, Nigeria and South Africa, and ongoing growth in the top performers, Ethiopia, Côte d’Ivoire and (more recently) Ghana. Growth will be driven by a rise in oil production (notably in Ghana, Republic of Congo, Nigeria and Angola), strengthening infrastructure investment across West and East Africa, and improved weather conditions which bode well for crops. Strengthening economic activity, plus a moderate improvement in oil and mineral prices, will help narrow the current account deficit, but pressure on SSA currencies will remain.
The second emerging trend points to West Africa’s gas sector becoming a hive of activity in 2018 from Senegal to Angola, with the development of gas pipelines, floating liquefied natural gas (FLNG) platforms and major gas field projects. Governments in the Gulf of Guinea and across West Africa have ramped up efforts to secure gas supply in order to boost domestic power generation and diversify their revenues away from crude oil. Deregulating the gas market and allowing market-driven gas prices will be key to unlocking further gas infrastructure investment across the region. The third trend suggests fintech innovation in Africa picking up speed in 2018 buoyed by a new generation of Africans who are ‘digital natives’. The proliferation of tech hubs across Africa (notably in South Africa, Kenya, Rwanda, Nigeria, Ghana and Côte d’Ivoire) will nurture the next wave of African start-ups and help connect them with investors. [African banks must ‘adapt or die’ as emerging fintechs]
Mauritius: Faltering exports to widen current account deficit (BMI, ProShare)
Mauritius will see further weakness in exports for the remainder of 2017, due to low demand amongst its key trading partners, increasing the country’s current account deficit. However, we expect that this expansion will be temporary as growth begins to recover in Mauritius’s key export markets from 2018. Imports have been rising partially on the back of ongoing construction projects, but will likely begin to stabilise as poor economic growth will begin to dampen demand for consumer goods imports. Slowing investment into the ocean economy – following the changes to Mauritius’ double tax treaty with India – will see the financial account surplus narrow over our shortterm outlook, although fixed investment will remain stable. Although these dynamics are likely to weigh on the country’s stock of foreign reserves, this is unlikely to undermine the stability of country’s external position, especially as pressure begins to decline from 2018.
Sudan-Uganda HoS communique (GoU)
During the visit, a Business Forum which brought together the Sudanese Business Delegation and their Ugandan counterparts was held. The Forum discussed opportunities for trade and investment particularly in agriculture, agro-processing, manufacturing, pharmaceuticals and commodities especially coffee and tea. The Heads of State agreed to convene a Joint Investment Conference in Khartoum, on dates to be confirmed, to showcase trade and investment opportunities in both countries with participation of the private sector from the Sudan, Uganda and Arab countries.
Zimbabwe: Exporters surrender $1,2bn to RBZ (Financial Gazette)
Exporters from different sectors have surrendered $1,2bn to the Reserve Bank of Zimbabwe between January and September, 30% of their $4bn foreign currency earnings over the period. In return for their foreign currency, the RBZ credits exporters’ local accounts using real time gross settlement system. RBZ deputy director for international banking and portfolio management Ernest Matiza, told The Financial Gazette that this is the money the central bank was now using for critical imports such as fuel, and electricity.
Tanzania: Govt clears way for Bagamoyo project (Daily News)
The government has officially submitted its letter of approval for the Bagamoyo Special Economic Zone venture to China Merchants Port, agreeing and accepting the investor’s comprehensive project proposal. The Tanzania Ambassador to China, Mr Mbelwa Kairuki, submitted, on behalf of the government, the letter from the Prime Minister’s Office to China Merchants Port Managing Director, Bai Jingtao, on 10 November. China Merchants Port will work with Oman partners to promote the Bagamoyo Special Economic Zone project. [Chinese urban planners helping small African cities transition into major metropolises]
USAID chief announces scale up of trade facilitation alliance (Devex)
The Global Alliance for Trade Facilitation, an initiative aimed at helping countries reduce import barriers, will scale from four to 20 countries, US Agency for International Development Administrator Mark Green announced Tuesday. “We believe that private enterprise is the only sustainable way to lift lives, to build communities, and so we’re dedicated to working to find ways to ease the barriers for businesses to participate,” Green told a crowd of business leaders at the U.S. Chamber of Commerce Foundation’s Corporate Citizenship Conference.
The value of ISO 20022 standards in the evolving FinTech landscape: new SWIFT discussion paper
New technologies have been proliferating in the last decade and are already transforming conventional banking systems as FinTechs and banks are working together to co-create the financial landscape of tomorrow. However FinTech innovation comes in different shapes and sizes and without the adoption of common standards, the use of divergent technologies could lead to inefficient and ineffective fragmentation. SWIFT, the Registration Authority for ISO 20022, is working closely with the industry globally to standardise messaging and best practices. This new discussion paper captured the opinions on the use of the standard in the context of established technologies such as RTGS and CSD systems, as well as new technological innovations such as contactless and mobile protocols, DLT and APIs. ISO 20022 offers a number of benefits for FinTech innovation, the discussion paper states:
FDI spillovers and high-growth firms in developing countries (World Bank)
The paper also evaluates spillovers stemming from MNCs with different motivations to invest in developing countries. Employing a survey of around 71,000 firms across 50 sectors in 122 developing countries, the paper shows that high-growth firms internalize spillovers through both avenues and that contractual linkages are the most powerful transmission channel. FDI embedded in global value chains generates larger spillovers to high-growth domestic firms than investment that seeks to serve the host economy. There is no evidence that natural resource-seeking FDI generates spillovers. The results have important implications for policy design, as public funding in developing countries is often directed to support programs that seek to connect domestic suppliers with MNCs.
Taxing telecommunications in developing countries (IMF)
Developing countries apply numerous sector-specific taxes to telecommunications, whose buoyant revenues and formal enterprises provide a convenient “tax handle”. This paper explores whether there is an economic rationale for sector-specific taxes on telecommunications and, if so, what form they should take to balance the competing goals of promoting connectivity and mobilizing revenues.
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