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Global finance and e-trade giants threat to African players
Experts are warning that global financial and e-commerce giants will take over the African market if the continent’s players do not innovate and come up with models that address the real needs of the people.
Although there is some level of digitisation on the African landscape through companies like Jumia, there is still a big gap in well-segmented customer data, which has left millions of people unserved or underserved.
This is something e-commerce giants like Alibaba and Amazon can exploit in Africa, said the programme manager of financial inclusion at Mastercard Foundation Olga Morawczynski.
“The disruption is already happening; some African players like Jumia are digitising but the real strength lies in understanding local needs and responding accordingly,” Ms Morawczynski said at the 2017 Mastercard Foundation Symposium on Financial Inclusion in Ghana recently.
Giving the example of how over-the-top communication platforms like WhatsApp and Facebook have disrupted the telecoms business, forcing mobile network operators to go back to the drawing board, experts said the same is likely to happen in the financial sector.
Amolo Ng’weno, the regional director for BFA for the East African region – a consulting company specialising in financial services – said enabling access and sharing information free of charge on giant data companies like Facebook and Google will give global firms an upper hand.
Strong growth
The strong growth in consumption driven by digital innovations like mobile money – which is growing five times faster in Africa than in any other region – is an attraction for global e-commerce companies.
According to analysts, technology is opening up new doors and companies that hold more consumer data and are digitally inclusive will survive in the market.
For example, Japan’s largest online retail marketplace, Rakuten, also runs one of the country’s largest online travel portals and its own messaging app – which can suggest items based on an individual’s recent chats. It also uses credit cards and gives mortgages to its customers.
Other tech companies are breaking into finance in the West for example Amazon now provides loans for small and medium-sized businesses, Facebook is integrating person-to-person Paypal payments into its Messenger app while Apple is starting to allow iMessage users to send cash to each other.
Experts say the ground is being prepared for these giants to come to Africa, which will render some financial service providers redundant.
The downside about this, according to Chris Locke from Caribou Digital, a research and delivery consultancy, is that they give little to economies they operate in.
“They look more like digital extractive industries, they pay no taxes yet they make huge profits doing business in foreign markets,” he said.
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FDI spillovers and high-growth firms in developing countries
This World Bank Policy Research Working Paper evaluates the heterogeneous impact of spillovers from multinational corporations (MNCs) to domestic enterprises in the developing world.
The paper focuses on the impact of spillovers on high-growth firms, which are enterprises with high job creation rates and, therefore, assumed to have high absorptive capacities. The paper also evaluates spillovers stemming from MNCs with different motivations to invest in developing countries.
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.
Introduction
Foreign Direct Investment (FDI) enables economic growth, job creation, and poverty reduction. Countries that are more open to trade and investment tend to be more productive and grow faster. Policymakers seek to attract FDI to create jobs, bring in cutting edge knowledge and technology, connect to global value chains, and diversify and upgrade their economies’ production capabilities. The potential transmission of knowledge between foreign firms and local enterprises is an additional benefit of FDI that can improve the productivity of domestic enterprises and, therefore, make economic growth more inclusive.
The effects of Multinational Corporations (MNCs) on the host economy are therefore a crucial element in a country’s development strategy. These FDI spillovers can be positive or negative, depending on whether local firms improve or worsen their performance due to the presence of MNCs. The reason for this ambiguity is that FDI brings two opposite forces to the market. On the one hand, it brings foreign technology and frontier knowledge that, if successfully transmitted to the local firms, can improve their productivity. On the other hand, foreign firms may compete with local incumbents in input and output markets and, therefore, have a pro-competitive effect that can negatively affect some firms. The balance between these two forces determines the overall effect of MNCs on individual local enterprises. At the sectoral level, tougher competition results in the efficient reallocation of resources from less productive to more productive firms, thereby increasing sectoral productivity over the long run.
This paper evaluates two main channels through which horizontal FDI spillovers can be accrued by indigenous firms in the developing world. First, contractual linkages between MNCs and local suppliers could entail a formal transmission of foreign firms’ knowledge and practices that may help domestic suppliers to upgrade their technical and quality standards – the linkages channel.
Second, domestic firms can imitate foreign technologies or managerial practices either through observation or by hiring workers trained by the foreign company – the demonstration channel. The analysis employs firm-level information from around 71,000 firms from 122 developing economies across 50 sectors, using the World Bank Enterprise Surveys (WBES) to construct sectoral measures of these transmission channels and relates them to the performance of indigenous enterprises operating in the sector. The proxy for the linkages channel is the average share of inputs that MNCs source domestically; the proxy for the demonstration channel is the share of MNCs’ output in total sectoral output.
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.
From a policy perspective, developing countries are interested in enhancing the benefits of FDI to the local economy. The evidence presented shows that linkages programs to connect high-potential local suppliers with foreign firms provide a means of achieving this goal. The design of programs that identify and connect high potential suppliers with MNCs seems critical to create FDI spillovers. Manufacturing sectors with MNCs operating within regional or global value chains are more prone to generate knowledge transmission to the host economy, but the automatic creation of domestic linkages may be hampered by market failures, such as information asymmetries, low scale, and quality constraints.
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USAID: The future of international development is enterprise driven
USAID Administrator Mark Green’s Remarks at the U.S. Chamber of Commerce Foundation’s 2017 Corporate Citizenship Conference in Washington, DC
First off, I’d like to begin by saying that it really shouldn’t surprise anyone that the Chamber and its national foundation want to explore opportunities in international development. After all, back in the 1980s, with the strong support of now-chamber president Tom Donohue, the foundation was an early partner in President Reagan’s historic democracy program.
That partnership ultimately led to the International Republican Institute, where I once worked, and of course, the U.S. Chamber’s own development arm, Center for International Private Enterprise, or CIPE. Tom’s commitment really laid the groundwork for decades of collaboration between USAID and CIPE. Following the fall of communism, we worked together to strengthen market economies in Europe and to promote democratic governance. In Hungary, we worked together to promote legal and regulatory reforms that would improve the business climate.
More recently, we partnered in Belarus to bring business associations and think tanks together to advocate for reform. We helped build a coalition of 256 organizations that successfully lobbied for over 420 different reform proposals. During this time, Belarus advanced from 106th to 37th in the World Bank’s Ease of Doing Business Index.
In short, I’m grateful for the work that we’ve done together, but I’m even more grateful for the work that we’re going to do together in the months and years ahead.
So, ladies, and gentlemen, in the brief time that I have with you, I’d like to briefly describe what we see as three revolutionary changes underway in the field of development, and then I have an announcement to make that I hope you’ll appreciate and enjoy, that I think will pave the way to further collaborations and further partnerships that we can all take on.
So, revolution number one. The first revolution is one that shouldn’t be surprising to anyone here. It’s a revolution in technology. Not just the everyday discoveries, but far more importantly, the rapidly growing availability and affordability across the developing world. Now, I began my own journey in development some 30 years ago. My wife and I served as volunteer teachers in a small village in Kenya. Those were different times.
In our little village there was but one telephone. It was a wind-up telephone on a wooden box. I remember that if you wanted to make a long-distance call, you would pick up the receiver, turn the crank, and say something like, “Operator, give me six, six, two, Kisumu,” put the phone down, go outside, sit under the mango tree, wait for the phone to ring so the operator could tell you that your call had gone through.
Just one dozen years later, I visited that same village and I came across a young boy walking along the path. I asked him if he knew Niva, one of my former students, and could he go find him for me. And he said, “Sure,” and he picked out his mobile phone to call him. (Laughter)
Five years after that, I was an ambassador in East Africa, and my African staff were using cheap mobile phones to pay their bills, to conduct small business, and to make calls everywhere, all over the world. So, that’s the personal lens through which I see technology and the opportunities in development. It is making the impossible possible, the unsolvable solvable.
In West Africa, USAID is supporting a tropical weather forecasting company called Ignitia, which is sending daily seasonal forecasts via text message. This forecasting model benefits 320,000 users across West Africa, giving them knowledge about rain and drought during the growing season.
In Ethiopia, there are now electronic billboards all across the rural parts of the country that give small, older farmers the latest price for coffee and the cattle. The goal is to help these small farmers against the unscrupulous middlemen who might try to take advantage of their remoteness from Addis Ababa, all of this not so many miles away from that village where I once taught school.
The second revolution that we see is a little more subtle, but I would argue it’s no less important, and it’s really the fundamental change in the relationship between America and the developing world. So, when USAID was created 56 years ago, something like 80 percent of the financial flows between the U.S. and the developing world were government dollars, traditional development funds, what we call ODA. Today, that figure is nine percent.
Now, to be clear, ODA isn’t fading away. Government spending isn’t going down, but instead, financial flows, private financial flows, are roaring ahead. Philanthropy, remittances, but more than anything else, commerce, investment. The world’s fastest growing economies are in the developing world.
According to the World Bank, half the nations in Africa are now lower-middle income or higher. Many of these same nations are demographically young, which means more and more of their consumers are very likely interested in the kinds of products and services that U.S. businesses make and supply.
In the past decade, the international market for American goods grew by more than $200 billion, and nearly two thirds of this growth occurred in the countries where USAID works. I think the lesson’s pretty clear. American business has business in the developing world, and I think it’s fair to say that we in the Trump administration could not be more excited about the possibilities.
Now, the third and final revolution I’d like to describe this morning is the one that makes me most excited as (inaudible), and that’s the burgeoning new relationship between private enterprise and the development community. Leaders in both sectors are finally realizing, finally figuring out how to take advantage of the unique capabilities that each have and apply them to challenges that neither could fully take on alone, problems that once seemed insurmountable.
It’s hard to overstate how big a shift this is for the development community. For years, whether we realized it or not, USAID and others saw donors and governments as the most important, if not the only, drivers of progress in the developing world. Private enterprise was something to keep at a distance, or perhaps try to bend to our will. We welcomed donations from private enterprise, and we were even willing to contract with private business to obtain goods and services.
Today, all that’s changing. We’re trying to move beyond contracting and grant-making to collaborating, co-financing, co-designing programs, tools, initiatives. Today, we’re recognizing that agencies like USAID don’t need to be the sole actors in the development space when we can more effectively serve as catalytic actors in that space. We’re rethinking how international development initiatives are designed and tested and rolled out. We’re embracing the creativity and the entrepreneurship that the private sector brings.
I’ll give you an example. A few weeks ago, at the World Food Prize sessions in Iowa, I announced our partnership with Syngenta. Working with Syngenta, under the umbrella of our Feed the Future initiative, we will help local African agribusinesses gain access to high-quality seeds to sell at affordable prices.
Now, to be clear, we’re not simply buying those seeds and donating them to farmers. That’s what we would have done in the past. Instead, what we’re doing is using our vast networks and relationships; we’re connecting the labs that develop cutting-edge seed varieties with the remote farmers and communities that desperately need them. In the places where Feed the Future is working like this, we estimate that poverty has dropped an average of 19 percent.
As those farmers’ incomes rise, they want to purchase American farm equipment, IT equipment. As they really rise, maybe a John Deere or a Ford. And given where I come from, if they really rise, maybe a Harley or a Trek. We believe in the power of private enterprise. We believe that private enterprise is the only sustainable way to lift lives, to build communities, and so we’re working, dedicated to working, to find ways to ease the barriers for businesses to participate.
For example, from 2001 to 2013, USAID invested about $30 million to help Vietnam improve its domestic business regulatory environment and open its economy to foreign competition. Over that same time, we’ve seen U.S. exports to Vietnam increase from about $460 million to more than $10 billion today.
To better systemize our work supporting global trade, we have created something called the Global Alliance for Trade Facilitation. The Alliance is our first public-private partnership specifically aimed at supporting efforts to eliminate red tape for all of you (inaudible). It’s a new way to deliver assistance, and its a success in part due to the on-the-ground (inaudible) that our key partner, your very own CIPE, brings to the table.
Through the Alliance, we’re joining with public bilateral donor companies and private sector companies, including several chamber members, to pool financial and in-kind resources for targeted technical assistance. For the first time, companies, through the Alliance, have a say in determining the countries their assistance dollars are being spent and what activities will actually take place.
We are using commercially meaningful measures, but to tie in cost to move goods across borders to ensure that we have an impact both on development, which is our mission, and business. In Vietnam, for example, the Alliance is working with high-level government officials in multiple ministries and the private sector to establish a new bond system which allow those to be cleared much more quickly, lowering the cost of business.
In Colombia, CIPE has led Alliance efforts with Colombia’s national food and drug monitoring (inaudible). Next month, thanks to CIPE, a new automated clearing system will be launched which will make it easier for U.S. producers to import agricultural products into Colombia. And now, for the announcement.
Today, I’m announcing that we are expanding the Global Alliance for Trade Facilitation from its initial pilot roster of four countries to 20, and we’re especially excited because we believe that the new Alliance focus countries, including Argentina, Brazil, and Sri Lanka – they represent some of the most exciting opportunities and some of the most important emerging export markets worldwide.
This is good for business, but we believe it’s just as good for development. Nothing attacks poverty, nothing lifts lives, nothing pushes back against hopelessness and despair, nothing better than inclusive economic growth. So, I hope the crux of my message is clear. The future of international development is enterprise-driven, and we at USAID, working with all of you, we will embrace it.
In the Trump administration, we believe the purpose of foreign assistance must be to end the need for its existence, and that only happens with the power of private enterprise. We’re here to encourage the chamber and its members to join us in this effort and even make a buck or two along the way. So, thank you for all that you’ve done.
Thanks for your partnership. We’re going to expand that partnership, and I think we’re going to do it in ways that will be good for business, good for development, and really expand the those principles and values that bring us all here together. Thank you.
About
The challenges of today present opportunities for tomorrow. Thus the theme of the 2017 Corporate Citizenship Conference is Opportunity Forward.
At the most basic level – businesses are problem solvers. From providing invaluable services to innovating new products, the private sector – by design – finds opportunity and drive solutions. So it only makes sense that leading businesses are turning their problem-solving abilities to the greatest social issues of our time. From water scarcity to disaster relief, businesses are taking the problems we face head-on and building innovative cross-sector solutions that drive us forward.
The business community is uniquely suited to see and embrace the opportunities that lie in the most vexing problems we face. The U.S. Chamber of Commerce Foundation organised a conference on November 14-15 to learn how the business community – together with their partners – are taking action and creating solutions today that build greater opportunities and prosperity for all.
Some of the topics and strategies addressed at the conference included:
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What does it mean to “future-proof” your business?
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Seeing the challenges ahead, how do you adjust perspective to find the possible opportunities?
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How can the private sector look at challenges in a more holistic way?
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How can a future-looking mindset be applied both internally and externally at your organization?
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How can organizations utilize data to inform their future? And put it to work
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How to grapple with interconnectivity across business and societal challenges
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What’s leadership got to do with it?
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tralac’s Daily News Selection
Underway, in Yaoundé: 9th AU Sub-Committee of Directors General of Customs meetings (13-17 November)
Mr Nadir, head of the AUC’s Trade Division, underscored the dire need to address issues of corruption and integrity and improvement of data handling in the context of digitalization which has resulted in an explosion of available data. “One of the questions is how, and to what extend Customs Administrations can help diversify the types and sources data with a view to create a data-rich repository. The project of establishing an African Union Trade Observatory constitutes one of the plausible solutions and Customs Administrations should contribute to the realization of this project”
Yesterday, in Windhoek: SACU stakeholders discussed Namibia’s request on sugar tariff rebate mechanism and an increase in the wheat rebate quota
Calestous Juma: How Africa can negotiate an effective continental free trade area agreement (The Conversation)
The negotiations need to shift their [focus] from protectionism to greater regional trade integration. One way to do this is to set up a high-level expert committee or panel – drawn from government, private sector, academia and civil society – to include other relevant perspectives on issues such as infrastructure, technological capacity, and industrial growth. This would help to broaden discussions to reflect Africa’s current needs of trade as an instrument for economic transformation. This committee would be guided by evidence-based research as well as by Africa’s own regional trade experiences. There are many examples that show how quickly Africa is learning about the risks of using bans and exemptions to restrict regional trade. For example, Zambia’s positive decision to reverse a ban on fruit and vegetable imports. The committee would also need to draw on lessons from other regions of the world.
Reading the 2017 Ibrahim Index of African Governance results (Ibrahim Foundation)
To construct the 2017 Ibrahim Index of African Governance, the Foundation’s research team collected 177 variables that measure governance concepts from 36 independent sources. These were combined to form 100 indicators, which are organised under the IIAG’s key governance dimensions: the 14 sub-categories and four categories that make up the Overall Governance score. The 2017 IIAG structure covers 17 years’ worth of data from 2000-2016, inclusive for all 54 African countries. This construction method provides vast amounts of data, and in total there are over 200,000 data points where the IIAG has data for any given country, in any given year, for any given measure. [The author: Yannick Vuylsteke] [David Pilling: Rise of Africa’s wealthy class drives change from within]
A series of postings on evolving US-Africa trade and investment policy processes:
(i) US Secretary of State Rex Tillerson will welcome 37 African foreign ministers to Washington later this week in the largest African foreign policy event to date under President Donald Trump. The event (16-17 November) will include discussions on trade and investment, counterterrorism, and good governance. In addition to the ministerial attendees, AU Chairperson Moussa Faki Mahamat and other AU representatives will attend. Acting US Assistant Secretary of State for African Affairs Donald Yamamoto said the goal is to craft policy that goes beyond aid to build mutually beneficial partnerships.
(ii) The President’s Advisory Council on Doing Business in Africa will hold an open meeting (29 November) to deliberate on analysis of the top three obstacles US companies face (pdf) in approaching African markets, competing for business opportunities, and operating business activities. Topics may include market risk, capital market development, market size, localization requirements, foreign government support to enable competitors, procurement practices, local skilled workforce availability, foreign exchange, trade facilitation, and infrastructure.
(iii) Extract from transcript of the 22 August meeting of the Advisory Council on Doing Business in Africa (pdf). Wilbur Ross, US Commerce Secretary: As you articulated in your letter, economic growth and demographic trends across Africa are translating into rising buying power and demand for high quality products, services and infrastructure. American companies should be meeting this demand. However, it’s not happening. Last year US exports to Africa hit a 10-year low just two years after an all time high. Now I know that African imports are down but we are also losing market share. The market itself we can’t control. We know that commodity prices have a strong influence on the total trade statistics with Africa but the part we can try to control is our market share. And US exports to Africa account only for around 2% of our total exports to the world but the demand is there and will grow and our competitors are capitalizing on it so there’s vast potential for us to reverse this trend. As you know, your work will inform the Trump administration’s economic and commercial strategy for Africa that’s currently being developed by the National Security Council. The goal is to have that strategy in place by the start of Calendar 2018 and so we request you to deliver your report by the end of October this year.
(iv) Selected commentaries: K. Riva Levinson: With Nikki Haley’s Africa visit, White House finally gets it right; John Campbell: Trump’s dangerous retreat from Africa
Nigeria: Be strategic in dealing with WTO – Institute cautions FG (Daily Post)
A Senior Research Fellow from Economic Policy Research Department, NISER, Bashir Adelowo Wahab gave this warning while delivering monthly lecture of the institute titled “Competitiveness of the Nigeria Textile Industry”. Wahab charged textile firms in Nigeria to begin to look inwards in terms of fabricating local technology through investment in Research and Development (R&D), urging firms to plough back part of their profits to contribute to funding R&D activities to develop local engineering capacity. He attributed the decline in the number of firms in the modern textile sector partly to inconsistent policies of various governments, including the WTO agreement, which he said affected the textile industry negatively by allowing inferior or low quality textile products to flood the country and the ineffective monetary policy and exchange rate volatility, which he observed affected the importation of raw materials used in the production of textile products.
South Africa: Decline of the poultry sector has far-reaching negative implications (Business Day)
Until a year or two ago, the chicken industry was the largest agricultural sector in SA. It was also the most important market for maize, as animal feed. The total value of production in the local chicken industry is estimated to be R51bn a year and it consumes two-thirds of the 6.5-million tonnes of animal feed every year. The decline in the chicken industry has far-reaching negative implications and directly damages the grain farmers’ market.
Adan Mohamed: Improved business environment is good news for local investors (Daily Nation)
Through a multi-institutional Business Environment Delivery Unit under the Ministry of Industry, Trade and Cooperatives, government agencies, the Kenya Private Sector Alliance, and the World Bank Group/International Finance Bank, we’ve undertaken reforms; as a matter of fact, amongst the highest on the continent. Benchmarking on competitive global best practice, Kenya diagnosed its regulatory business environment and found the need to get rid it of the red-tape that hinders entrepreneurship and creativity among citizens. Burdensome regulation has been a big culprit that we have dealt. With 200 businesses registered daily, we are certainly on the rise. Eventually, the sequence of expected results is to trigger an increase in the registration of start-ups, ensuring their smooth operation and further investments and direct increase in sales/turnover or net income. [The author is Cabinet Secretary, Ministry of Industry, Trade and Cooperatives]
European Commission posts an update Aid for Trade strategy (EU)
The updated Communication proposes to: (i) Better combine and coordinate tools for development finance of aid for trade, both at European and national level; (ii) Improve synergies with other instruments, such as EU trade agreements, trade schemes or the EU’s innovative External Investment Plan, which will support investments for sustainable development. One of the aims is to support local small and medium-sized enterprises in benefitting more; (iii) Strengthen social and environmental sustainability, together with inclusive economic growth. This will be done for example through increased stakeholder-engagement such as structured dialogue with the private sector, civil society and local authorities; (iv) Better target least developed and fragile countries, as well as tailoring approaches to individual countries’ specificities.
DAC High Level Meeting: communiqué (pdf, OECD)
We thank the High Level Panel on the Future of the Development Assistance Committee, whose report provided thoughtful and insightful suggestions for transforming the DAC into a more robust, responsive, transparent and inclusive institution. We will provide an update in January 2018 on the measures taken to implement any recommendations and make a public report available online. While the DAC continues to focus on its core strengths, we have identified six main strategic priorities in transforming the Committee to ensure it is fit for purpose to respond to the realities of the 2030 Agenda: (i) focus on fostering development impact and mobilising resources; (ii) learn from existing development approaches; (iii) explore new development approaches; (iv) reach out to development actors beyond its Membership to influence and be influenced; (v) increase transparency, proactively self-assess and hold itself to account; and (vi) work in effective governance, systems and structures. At the heart of this transformation, we adopt a new mandate for the DAC (see Annex C):
The Global Cleantech Innovation Index 2017 (UNIDO)
A new report analyzing the potential to produce entrepreneurial cleantech start-up companies in eight countries taking part in the Global Cleantech Innovation Programme has been launched at the UN Climate Change Conference (COP23) in Bonn. The GCIP is an initiative of UNIDO and the Global Environment Facility conducted in Armenia, India, Malaysia, Morocco, Pakistan, South Africa, Thailand and Turkey. The Global Cleantech Innovation Index 2017 (pdf) – Global Cleantech Innovation Programme Country Innovation Profiles draws on a wide range of factors and sources, and seeks to answer the question: which countries currently have the greatest potential to produce entrepreneurial cleantech start-up companies that will commercialize clean technology innovations over the next 10 years?
Today’s Quick Links: Can regional groupings help change Africa? African leaders urge support for new security doctrine Deloitte: Mozambique Economic Update As Mozambique marks historic Cahora Bassa transfer, attention shifts to big capex plan OECD: Issue paper on a proposed framework for a satellite account for measuring the digital economy (pdf) Financial Times: Will blockchain accelerate trade flows? WEF: Countries are so last-century. Enter the ‘net state’ Why the Standing Committee on Copyright and Related Rights Matters for India Launched, yesterday in Accra: The AU’s Gender and Development Initiative for Africa |
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African Union customs experts meet prior to the 9th AU Sub-Committee of Directors General of Customs meeting
The Department of Trade and Industry of the African Union Commission (AUC) is organizing the 9th African Union Sub-Committee of Directors General of Customs Meeting at Expert level from 13-17 November 2017.
The objective of the Meeting is to take stock of the work carried out by the various Technical Working Groups (TWGs) for the period under review, endorse the recommendations of the Experts and reflect further on the Meeting theme: “The contribution of customs to the analysis of International Trade Data, for security and the Boosting of Intra-African Trade”.
The Meeting is being attended by Experts from AU Member States, Customs Experts from the Regional Economic Communities (RECs), Experts from the African Development Bank (AfDB), the United Nations Economic Commission for Africa (UNECA) and the World Customs Organization (WCO).
While welcoming participants, Mr. Adrian Peter Swarres, Ag. Commissioner Customs for Zimbabwe Revenue Authority (ZRA) thanked the Director General of Cameroon Customs for the warm welcome and great hospitality that participants have received since arriving in Cameroon.
Mr. Swarres pointed out that the theme of the meeting very aptly, provides the Meeting with a platform to exchange views and discuss the role that African Customs Administrations play in contributing to the analysis of International Trade Data, as way of enhancing Security and Boosting Intra-African Trade.
According to the Ag. Commissioner, effective border management can only be achieved through by increasing cooperation between various border agencies and all key stakeholders in the supply chain, the simplification and harmonization of border procedures and by leveraging on technological advancement.
Before he concluded, he urged the Meeting to continue to promote the faster movement of goods and people across African borders thereby reducing the cross border transactional costs, promoting Intra-African Trade.
“The benefits of enhanced trade facilitation can never be over emphasized especially as we progress towards a Continental Free Trade Area,” he concluded.
In his opening remarks on behalf of Mrs Treasure Thembisile Maphanga, Director for Trade and Industry, Mr. Nadir Merah, Head of the Trade Division of the African Union Commission, thanked the Government and the people of Cameroon for their hospitality.
He reminded the Meeting that the 18th African Union Assembly of Heads of State and Government endorsed an Action Plan for Boosting Intra-African Trade (BIAT). The objective of the BIAT, he said, is to enhance the level of Intra-African Trade from the current levels to approximately 23% or more by 2022.
“Whilst we will be able through the Continental Free Trade Area (CFTA) to gradually eliminate tariff barriers hindering Intra-African Trade, we must also tackle non-tariff barriers with a view to reduce the high trade costs that African private sector continue to experience,” he mentioned.
Mr. Nadir underscored the fact that there is a dire need to address the issues of corruption and integrity and improvement of data handling in particular in the context of digitalization which has resulted in an explosion of available data.
“One of the questions is how, and to what extend Customs Administrations can help diversify the types and sources data with a view to create a data-rich repository. The project of establishing an African Union Trade Observatory constitutes one of the plausible solutions and Customs Administrations should contribute to the realization of this project,” he said.
According to the Head of Trade Division, the role of the Customs during the negotiations and implementation of the CFTA needs to be highly underlined.
“While negotiations are ongoing on the various issues, it is critical to note that the potential gains that form the establishment of the CFTA will only be harnessed if there is a simplified and standardized customs procedures and processes and more importantly modernized Customs Administrations,” he emphasized.
Mr. Nadir Merah concluded by commending Experts of the Customs Administration, Regional Economic Communities (RECs) and the different partners and organizations for the good collaboration throughout the year.
In his opening speech, the Director for Legislation and Litigation, Mr. Gasper Konneh on behalf of the Director General of Cameroon Customs thanked the African Union Commission and Customs Administrations for the trust placed in his country to serve as host for the Meeting.
He pointed out that the Meeting provides an opportunity for Experts to identify and solve problems that could hinder the implementation of the African Economic Community, through the progressive processes by which the Regional Economic Communities will form free trade areas, then merge to a Continental Customs Union.
“The future is therefore within our reach. We need to strengthen trade between African countries, creating a larger and more secure market. This would involve improving policies conducive to the free movement of people and goods, such as streamlining border processes,” he stated.
He urged the Meeting to formulate strong proposals and recommendations to the 9th AU Sub-Committee of Directors General of Customs in order to move forward the Contribution of customs to the analysis of International Trade data, for Security and the Boosting of Intra-African Trade.
The 9th AU Sub-Committee of Directors General of Customs meeting will follow the Expert Meeting from 16-17 November 2017 in Yaoundé, Cameroon.
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African Union Commission organizes the 1st AU Symposium on Special Economic Zones and Industrial Development
The Department of Trade and Industry of the African Union Commission organised the 1st African Union Symposium on Special Economic Zones (SEZs) and Industrial Development from 7 to 10 November 2017 in Lusaka, Zambia.
The objective of the forum was to provide a platform for policymakers, practitioners, financial institutions, investors and academia to exchange views and experiences on how SEZs can be utilized as vehicles for industrialization in African countries. Particular emphasis will be placed on environmental-friendly manufacturing SEZs promotion.
The transformation of African economies in order to create shared growth, decent jobs and economic opportunities for all is one of the priorities of the new vision of the continent, the Agenda 2063 which is the opportunity to undertake massive and bold industrialization of Africa.
The meeting was attended by delegates from South Africa, Zambia, EAC, COMESA, ECOWAS, World Bank, Representative of China-Africa Development Fund and different experts on SEZs and Industrial parks.
In his opening remarks, Mr. Hussein Hassan, Head of Industry division, Department of Trade and Industry, highlighted the key aspect of the special economic zone which become an efficient economic policy tool to capture part of global manufacturing value addition.
“The purpose of this forum, is to share experience on how these new vehicles for development operates and how they can support the overall development strategy of many African Union Member States who prioritized industrialization development to alleviate a tense labor market,” said Mr. Hussein.
After welcoming the participants, Mrs Kayula Siame, Permanent secretary Ministry of Commerce, Trade and Industry of the Republic of Zambia, informed the meeting that the government has set an ambitious Agenda aimed at bringing business environment and investment climate to international standards whilst remaining cognizant of the unique attributes of the country.
“Government has also put in place a number of policy measures aimed at diversifying the economy and in particular up scaling the manufacturing sector towards higher value addition and upgrading capacity in the provision of related services.
“One of the programmes that Government has embarked on is enhancing the manufacturing sector with the emphasis on value addition through the development of multi facility economic zones and industrial parks,” she added.
The meeting was expected to provide a better understanding of SEZs development challenge in Africa; Showcase African SEZ success stories and foster the exchange of lessons learned;Identify SEZ development and management needs of African Governments; Facilitate the exchange of experience among African SEZ developers and managers and interaction with their international counterparts and build the capacities of participants in implementing Green SEZs and related planning concepts such as Low-carbon Towns, Green Business Zones, Ecocity, Smart city and Eco-Industrial Parks.
The most important outcomes of this symposium will be a Policy Paper on SEZs Development in Africa and Action Plan for the creation of an African Platform of SEZs to strengthen the cooperation between African SEZs/private sectors and policy makers and development partners.
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How Africa can negotiate an effective continental free trade area agreement
African countries are forging ahead to complete negotiations for a continental free trade area between 55 countries by early next year. The idea, adopted by the African Union in 2012, is to create a single market which includes the free movement of goods, services and people. The integrated African market covers 1.2 billion people and a combined GDP of over USD$3.5 trillion.
Large markets are job-creating as they support more trade in goods, services and assets. It is expected that a well designed agreement would help Africa boost industrial development, promote economic transformation and create new wealth. The benefits won’t be automatic but will require continuous national, regional and continental efforts.
Large regional markets are also essential for industrialisation. This is because they attract investment into firms that can diversify their product lines and stimulate the creation of related industries. This includes the supply of spare parts, distribution of goods and provision of advisory services. Some of these may start as their supplies but they may also grow into independent enterprises.
Viewed against the odds of success in getting 55 countries to foster meaningful regional integration, Africa has made commendable progress in crafting its own creative approach. But reports from recent talks and a slowdown of regional integration efforts suggest a disturbing trend.
Some government delegates are likely to seek to include protection for existing products and industries. This would be detrimental to the process if these lists ended up shaping the final agreement given the 2018 signing deadline. Such a retreat would run counter to recent advances in Africa’s trade integration efforts. In 2015 for example, three regional trading blocs, covering 650 million people in 26 countries, signed the landmark Tripartite Free Trade Area with a combined GDP of over USD$1.5 trillion.
Agreement challenges
The trade agreement nevertheless needs to be carefully thought out, particularly given that Africa is starting with a low intra-regional trade of 15% compared to 19% in Latin America, 51% in Asia and 72% for Europe.
There is the risk that rushed negotiations could result in an agreement with too many exceptions to cover protected industries. This could include using non-tariff barriers – like safety measures – to protect local industries. A range of African countries use non-tariff barriers to curb imports of goods such as maize, milk, sugar, food oil products, and steel and iron.
Sensitive and excluded products – like sugar and dairy products – might in some cases cover up to 600 tariff lines (product codes used at the national level). But these exceptions should be used sparingly to enable domestic industries to access the larger regional and global markets needed for their growth.
In addition, the trade agreement needs to address the effects it may have on existing industries, environment, peace and security. It also needs to provide the policy space needed for governments to promote social policies such as job creation that could provide new performance standard for industries. Such policies should also balance between social goals and the need to be competitive on the global market.
Concerns over the expansion of foreign imports, rather than regional trade integration, also needs to be carefully assessed to avoid the free trade area becoming a conduit for imports. This could undermine Africa’s goals to increase its industrial and trade capacity. At present, nearly 85% of the goods traded in Africa come from outside the continent. Only 15% of the goods traded in Africa are produced locally, leading to an annual food import bill of over USD$35 billion.
But the focus of the negotiations should not be the fear of imports. Rather the focus should be on scaling up export production in existing niche markets through the creation of new industries. Examples of growing industries include the supply of semi-processed processed foods that are turned into final products by importers. African firms such as the Agro Chemical and Food Company in Kenya are also producing speciality chemicals which are used in a variety of medical and manufacturing industries.
Moving away from protectionism
The alternative to protection is therefore market growth. This involves having deeper knowledge of markets through the collection of key information market, eliminating trade barriers, reducing subsidies and upgrading the quality of infrastructure. It also involves building capacity to manage the rules of origin of products to avoid illegal dumping of goods, customs and trade procedures and reporting and resolution of trade barriers.
The negotiations need to shift their from protectionism to greater regional trade integration. One way to do this is to set up a high-level expert committee or panel – drawn from government, private sector, academia and civil society – to include other relevant perspectives on issues such as infrastructure, technological capacity, and industrial growth. This would help to broaden discussions to reflect Africa’s current needs of trade as an instrument for economic transformation.
This committee would be guided by evidence-based research as well as by Africa’s own regional trade experiences. There are many examples that show how quickly Africa is learning about the risks of using bans and exemptions to restrict regional trade. For example, Zambia’s positive decision to reverse a ban on fruit and vegetable imports.
The committee would also need to draw on lessons from other regions of the world. As I set out in Emergent Africa: Evolution of Regional Integration, Africa has a lot to learn from regional trade integration, especially the Association of Southeast Asian Nations .
The bloc’ approach to integration transcends the traditional focus on the free movement of goods. It includes measures such as the creation of industrial parks to foster industrial development. The region also uses technology-based agreements covering key fields such as information and telecommunications technologies. This is particularly important because of the role of engineering and technology in all aspects of trade covering product design, production and distribution through international logistics chains.
The future is open
The challenges facing African trade negotiators are not easy. Africa’s regional integration efforts are the most complex ever undertaken. They are not just about emulating trading rules used in other regions of the world. They are about remaking the continent to create new networked interactions between sovereign states in a flexible way. This makes for a more open future with expanding possibilities to use regional trade integration to spread prosperity.
The author, Calestous Juma, is Professor of the Practice of International Development, Harvard Kennedy School, Harvard University.
Dr Francis Mangeni, Director of Trade, Customs and Monetary Affairs at the Common Market for Eastern and Southern Africa (COMESA), contributed to this article, and is co-author of ‘Emergent Africa: Evolution of Regional Economic Integration’.
This article was originally published on The Conversation. Read the original article.
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Trade facilitation to be among topics of meeting on Doing Business in Africa
The President’s Advisory Council on Doing Business in Africa will hold an open meeting November 29 to deliberate on analysis of the top three obstacles U.S. companies face in approaching African markets, competing for business opportunities, and operating business activities.
Topics may include market risk, capital market development, market size, localisation requirements, foreign government support to enable competitors, procurement practices, local skilled workforce availability, foreign exchange, trade facilitation, and infrastructure. This meeting will be broadcast via live webcast.
The Council provides information, analysis, and recommendations that address a number of Africa-related issues, including creating jobs in the U.S. and Africa through trade and investment, facilitating U.S. business participation in Africa’s infrastructure development, encouraging partnerships to bring innovative agricultural technologies to Africa, developing and strengthening partnerships and other mechanisms to increase U.S. public and private sector financing of trade with and investment in Africa, and identifying other means to expand commercial ties.
Tasking for the President’s Advisory Council on Doing Business in Africa, FY 17/18
When it comes to doing business in Africa, some American companies have never considered exploring the opportunities, some are actively pursuing strategies to enter or expand into the market, and some have been operating on the continent for decades.
Recognizing this range of perspectives, the PAC-DBIA will draw on its collective experience negotiating these three different stages of doing business in Africa – approaching the market, competing for the market, and operating in the market – to identify the top challenges that affect the greatest number of American companies, to recommend actions for the U.S. government that will benefit the greatest number of American companies, and to highlight the top opportunities and keys to success.
These insights will inform the Administration’s economic and commercial strategy for Africa, in order to advance the President’s mission of supporting American jobs through increased exports to Africa.
Tasking #1 – due the end of October 2017
A. Three stages of doing business in Africa
1. APPROACHING Africa
Despite available and emerging opportunities, most American companies are still not looking at most African countries as viable markets for their goods and services.
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From a regional perspective, what are the greatest areas of opportunity for American industry in West, Central, East, and Southern Africa?
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Identify the top three issues that keep American companies from choosing to approach African markets.
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What can the U.S. government do to get more American companies to seek out and pursue business opportunities in Africa?
2. COMPETING in Africa
Despite the superior quality and reputation of American products and services, when American companies compete for project tenders and consumer markets in Africa, they are too often unsuccessful.
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Identify the three factors that most hinder the ability of American companies to successfully compete for business opportunities in Africa.
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How can the U.S. government help American companies be more successful in competing for projects and market share in Africa?
3. OPERATING in Africa
While the perceived level of risk of doing business in Africa is often higher than reality, most African markets do present an array of challenges to efficient, stable, and sustainable business operations.
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Identify the three biggest challenges African markets present to American companies in executing their business in Africa.
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What can the U.S. government do to mitigate those challenges?
B. Keys to success
Drawing on your collective experiences negotiating the three stages of doing business in Africa, compile a list of keys to the successes you have had in each stage, including any U.S. government programs that have been particularly helpful to your success.
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Aid for Trade: Helping developing countries to achieve prosperity through trade and investment
The European Commission has set out a renewed vision on how to help developing countries fight poverty and create more and better jobs through trade and investment.
The updated “Aid for Trade” Strategy 2017 builds on 10 years of EU Aid for Trade assistance and aims to strengthen and modernise EU support to partner countries. The new Communication adopted today sets out ways the Commission can improve and better target its aid for trade. It puts a strong focus on Least Developed Countries, and countries in situations of fragility.
Commissioner for International Cooperation and Development Neven Mimica said: “Together the European Union and its Member States are already the biggest supporters of aid for trade worldwide. We are setting out a new strategy to better respond to the complex challenges of today and increase the impact of our actions – to reduce poverty, boost sustainable economic growth and most importantly to ensure that it leaves no one behind.”
Globally the EU and its Member States are the biggest provider of Aid for Trade. In 2015 alone, EU commitments amounted to a record €13.16 billion per year.
What’s new in the Aid for Trade Strategy 2017?
The Communication proposes to:
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Better combine and coordinate tools for development finance of aid for trade, both at European and national level.
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Improve synergies with other instruments, such as EU trade agreements, trade schemes or the EU’s innovative External Investment Plan, which will support investments for sustainable development. One of the aims is to support local small and medium-sized enterprises (SMEs) in benefitting more.
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Strengthen social and environmental sustainability, together with inclusive economic growth. This will be done for example through increased stakeholder-engagement such as structured dialogue with the private sector, civil society and local authorities.
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Better target least developed and fragile countries, as well as tailoring approaches to individual countries’ specificities.
Background
The new Aid for Trade Communication builds on the 2007 Joint EU Strategy on Aid for Trade. It sets out ways in which the EU can improve the effectiveness of the 2007 Strategy, which was a joint European response to the efforts led by the World Trade Organisation (WTO).
Trade is essential for sustained economic growth and development. However, developing countries often face internal constraints that prevent them from accessing the economic benefits of expanded trade. The December 2005 World Trade Organisation (WTO) Ministerial Conference in Hong Kong acknowledged these constraints and paved the way for the Aid for Trade Initiative, as a complement to the Doha Development Agenda. The Initiative aims to improve the quantity and quality of Aid for Trade (AfT), allowing developing countries to more easily access the benefits of WTO agreements, expand their productive sectors and integrate more fully into the international trading system.
EU aid complements and tries to make the most of other Commission trade policy measures in favour of developing countries. The EU’s Generalised Scheme of Preferences (GSP) allows all developing countries to pay less or no duty on their exports to the EU. The standard GSP arrangement offers generous tariff reductions to developing countries on two thirds of all product categories; the “GSP+” enhanced preferences mean full removal of tariffs on essentially the same product categories; and the Everything but Arms (EBA) arrangement grants duty-free, quota-free access to all products, except for arms and ammunition.
The EU is engaged in bilateral trade negotiations with many countries, and trade agreements are a key instrument through which the EU creates economic opportunities for developing countries. These agreements open up new markets for goods and services, increase investment opportunities, and reduce the costs of trade by eliminating customs duties and other charges.
Trade agreements also speed up the trade process by facilitating transit through customs and setting common rules on Technical Standards and Sanitary and Phyto-Sanitary Measures. These agreements also make the policy environment more predictable through joint commitments in areas such as Intellectual Property Rights and so on. The latest state of play on Free Trade Agreement negotiations with third countries can be found here.
Economic Partnership Agreements (EPAs) are trade and development agreements negotiated between the EU and African, Caribbean and Pacific (ACP) partners. Dating back to the signing of the Cotonou Agreement, EPAs are tailor-made, WTO-compatible agreements that open up EU markets fully and immediately, but allow ACP countries long transition periods during which they can protect sensitive sectors of their economies. EPAs are also designed to be drivers of change that will help kick-start reform and contribute to good economic governance in partner countries. The latest state of play on EPAs with countries in the ACP region can be found here.
An independent study into the economic benefits generated by EU trade regimes towards developing countries was concluded in 2015. The study demonstrates that EU trade policy (in particular the GSP) has significantly increased exports from developing countries and contributed to their economic diversification. This double impact was particularly felt by LDCs.
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tralac’s Daily News Selection
Underway, in Dar es Salaam: The East African Business and Entrepreneurship Conference & Exhibition 2017. The theme: Accelerating industrialization, innovation and investment in the EAC
Chidi Odinkalu: Understanding Morocco’s application to join ECOWAS (Vanguard)
Founded in 1975, ECOWAS last admitted a new member in 1976, when Cape Verde joined. With Morocco’s application, it confronts new territory and epic dilemmas having far reaching implications for Africa’s largest regional bloc. The requirement in the founding treaty limiting membership to “such other West African States as may accede to it” was removed when the ECOWAS Treaty was revised in 1992. As such, no question of regional contiguity necessarily arises at this time. Nevertheless, the decision to consider Morocco’s application favourably pits West Africa’s rich historical affinity with Morocco against clear legal stipulations governing regional integration in ECOWAS treaties. How the Community resolves this tension will have significant implications for the future peace, security and stability of ECOWAS as a regional institution and of its member countries as they confront the shared challenge of stemming radicalization in the Sahel. Resolving this tension will not be easy.
ECOWAS inches towards the realisation of the Abidjan-Lagos Highway (ECOWAS)
With the ratification of the enabling treaty by all five countries of the Abidjan-Lagos Corridor, ECOWAS is inching towards the realization of the dream six-lane regional super highway that connects Nigeria, Benin, Togo, Ghana and Cote d’Ivoire. And excited by this development, the ECOWAS Commission President, Marcel de Souza stated at the 9th ministerial steering committee meeting of the ALC which held in Abuja, Nigeria on the 10th of November 2017, that the boost in transport infrastructure will serve as a catalyst to intra-west African trade and an economic revamping of the region. [AfDB, EU commit to invest $18m in Abidjan-Lagos corridor project]
Ghana condemns obstacles to easy movement of goods into Nigeria (The Guardian)
In spite of the seemingly rosy economic and business relations that exist between Nigeria and Ghana, the Deputy Minister of Trade and Industry, Ghana, Carlos Ahenkora, has decried the many obstacles mitigating the easy movement of goods and services along the Ghana-Nigeria corridor. Ahenkora, while speaking at the ongoing 2017 Lagos International Trade Fair, Ghana Day, said there was a need for both countries to deal and address these outstanding issues in order to facilitate the movement of goods and services into the country. The key issues he identified included the prohibition list, the flagrant disregard for the ECOWAS Protocol on Trade, and the difficulty associated with the National Agency for Food Drugs Administration and Control certification. He recalled several meetings and discussions held between both countries to tackle the challenges have not yield results. He said: "I think it is time for action; it is time to walk the talk. I hope the Ghana Nigeria Business Council will take these matters and expeditiously deal with them."
Madagascar Economic Update: coping with shocks (World Bank)
Extract: The External Sector (pdf): The projected scaling-up of investment is expected to weaken the current account balance. Madagascar runs a structural current account deficit, but 2016 was an exception, with the current account recording a small surplus of 0.6% of GDP, reflecting an increase in vanilla export prices, higher textile exports, and a decline in mining-related imports. Going forward, the current account balance is expected to fall back into deficit, at around 3.4% of GDP in 2017. The current account deficit is primarily expected to be financed by external financing of public sector investment and foreign direct investment. Even though exports continue to perform well, the rise in imports is leading to a trade deficit (Figure 9). Exports continue to perform well, mainly due to extraordinarily high vanilla prices and a well-performing textiles industry (Figure 8). However, as expected, the value of imports is rising to support the scale-up of public investment activities, which is projected to increase from 5.2% of GDP in 2016 to 10.5% of GDP in 2019. Notably, the value of equipment imported by the end of September 2017 is equal to the total value in 2016. While the total value of rice imports continues to be small relative to total imports, the value of rice imports in the first few months of 2017 have exceeded the total value of rice imports in 2016, as domestic production was affected by the severe drought (Figure 7).
South Africa’s economic engagement in Sub-Saharan Africa: drivers, constraints and future prospects (Chatham House)
A key weakness of South Africa’s external policy in sub-Saharan Africa is that it lacks an effective strategy designed explicitly to bring benefits to its domestic economy – and thus to its own citizens and enterprises – relying instead on domestic rewards falling into place as a by-product of its political engagement. This contrasts with the obvious success of economic diplomacy employed by investors from other emerging countries and more developed economies such as China, Turkey and South Korea. The failure to develop a discrete economic strategy as part of its external engagement reflects in part the ANC’s vision of itself as the driver of a ‘developmental state’ – i.e. using macroeconomic policy and state intervention for the objective of domestic development – rather than as a facilitator of business and investment. [The author: Dianna Games ]
Nigeria: Achieving sufficiency in rice production requires a dedicated Customs Service (BusinessDay)
Tunji Owoeye, managing director, Elephant Group Plc, and chairman, Rice Investors Group of Nigeria attributed the decline in rice imports to the commitment of both government and private sector in Nigeria, to end the era of needless importation. This, he says has manifested through incentives for local food production from the Federal Government, and championed by the Central Bank of Nigeria through its Anchor Borrowers’ Programme. According to Owoeye, by discouraging imports, while at the same time encouraging local production, and supporting the value chain in ramping up production, the country has been able to achieve appreciable growth in self-sufficiency in food production, particularly, rice. The concluding part of the FMARD policy document captured above, which highlights smuggling, is where some bad news lies for Nigeria. While rice exports to Nigeria have dipped (from at least Thailand), increase in imports by neighbouring countries such as Benin may imply more smuggling in getting the commodity into Nigeria. Data by the Thai rice exporters showed that Benin Republic has between January and September 2017 imported 1,330, 809 metric tonnes of rice, a 51.9% increase from 876, 228 metric tonnes which was imported within the same period last year. Comparing the 2017 imports (so far) to total imports in 2015 also shows there has been a 65% increase.
Ghana to cut $2.2bn import bill with farm support (Bloomberg)
Ghana has a target of supporting one million farmers in the next four years with plans to invest in agriculture as the West African nation seeks to increase trade and cut its reliance on food imports that cost about $2.2 billion annually. The nation of 28 million people’s food import bill is “simply scandalous,” Akufo-Addo, 73, said Monday at the Africa Business Media Innovators conference, which is sponsored by Bloomberg and is taking place in Accra. “Initially, 200,000 farmers have been targeted in the program and they are going to be given support with inputs, fertilizers, insecticides and assistance from extension officers,” Akufo-Addo said. “We believe we can scale that, hopefully, so that at the end of my first term in 2021 we will have about a million Ghanaian farmers involved in the program.”
Zimbabwe: Govt clarifies import relaxation (Bulawayo24)
Government has clarified the easing of import controls on basic commodities saying the move does not render Statutory Instrument 64 of 2016 ineffective, but rather is a call for organisations with free funds to obtain licences for import permits to ensure adequate supplies during the Christmas period. Industry and Commerce Minister Dr Mike Bimha told The Herald Business that the SI 64 of 2016 (now consolidated into SI 22 of 2017) explained itself in that imports would chip in whenever demand exceeds supply. [Govt relaxes restrictions on fertilizer imports]
Trade between China and Portuguese-speaking countries rises 29.36% between January and September (Macauhub)
With Angola trade amounted to $17.133bn (+45.37%), with Chinese companies exporting goods valued at $1.657bn (+33.65%) and imported goods worth $15.476bn (+46.75%). China’s trade with Mozambique trade amounted to $1.339bn (+0.74%), with Chinese companies exporting goods valued at $953m (-4.04%) and importing goods worth $386m (+14.83%).
China-Africa expo provides new platform for industrial capacity cooperation (Xinhua)
An upcoming exposition will create a new platform for Chinese and African businesses to strengthen industrial capacity cooperation, officials said Monday. The China-Africa Industrial Capacity Cooperation Exposition will take place in Nairobi, 13-16 Dec 13, organized by the China Council for the Promotion of International Trade, according to Chen Zhou, vice-chairman of CCPIT, at a press conference. Preparatory work has been basically completed for the expo, which is being organized by the CCPIT in Africa for the first time, according to Chen.
The Moroni Communique: 21st meeting of the East African Intergovernmental Committee of Experts (pdf, UNECA)
The meeting acknowledged that the blue economy in East Africa has enormous potential for job creation as well as sustainable and equitable growth, the blue economy can facilitate economic diversification. Africa has considerable resources that must be used in a sustainable manner for the benefit of member States and their populations to achieve the SDGs. To this extent, the meeting has recognized that cruise tourism is a leading sector of the blue economy and is set to develop in an important way in East Africa. The participants also noted the importance of cooperation between member States at all levels to ensure a peaceful resolution of disputes concerning the delimitation of borders and sea areas, an essential condition for a perfect optimization of the resources of the blue economy. Establishing special funds within intergovernmental organizations represent an opportunity to consolidate achievements in the blue economy. The meeting stressed the need to take into account the interests of landlocked countries in the modernization of port infrastructure in order to promote the creation of regional value chains. The development of dry ports, corridors and transport infrastructure is a priority, as part of an integrated regional approach to investment.
The meeting noted that the choice of exchange rate regime is a critical policy decision facing central banks. The advantages and disadvantages of different regimes were discussed. Experts shared the experience of their countries, illustrating the wide range of regimes currently adopted in Eastern Africa. The meeting agreed that the optimal choice depends on country circumstances and policy objectives. Exchange rate policy impacts on macroeconomic performance – such as inflation rates and export competitiveness – but it is crucial to undertake structural reforms and develop productive capacities to ensure that the benefits of each regime are realised. More research on the impacts of different exchange rate regimes would support policymaking.
(WTO suggests moderating trade growth in fourth quarter of 2017)
The WTO’s latest World Trade Outlook Indicator (pdf) suggests that global merchandise trade growth will likely moderate in the fourth quarter of 2017. The reading of 102.2 signals continued trade expansion in volume terms, although the pace of growth should be slower than earlier in the year, when trade recorded strong increases. These results are broadly consistent with the upgraded forecast for world merchandise trade growth that the WTO issued on 21 September 2017, which predicted 2017 trade expansion at 3.6% following stronger than expected trade growth in the first half of the year.
African aviation industry calls on governments to ease revenue repatriation (New Times)
The International Air Transport Association has called on African governments to address the issue of blocked funds that is affecting the industry’s capacity to become profitable. The appeal was made yesterday at the opening of the 49th annual African Airlines Association general assembly in Kigali. According to IATA, in Africa, airlines are experiencing varying degrees of difficulty repatriating revenues earned in most countries on the continent especially in Angola, Algeria, Eritrea, Ethiopia, Libya, Mozambique, Nigeria, Sudan and Zimbabwe. The repatriation is mainly hampered by monetary policies of some countries mainly because the industry largely trades in US dollars. Dr Elijah Chingosho, the outgoing African Airlines Association Secretary General, said up $1 billion airlines’ cash is currently blocked, affecting the industry’s capacity to reinvest. According to Chance Ndagano, the acting chief executive officer of RwandAir, the habit of blocking funds has equally often affected the national carrier’s ambitious plans to expand its wings across the Africa.
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Ghana condemns obstacles to easy movement of goods into Nigeria
In spite of the seemingly rosy economic and business relations that exist between Nigeria and Ghana, the Deputy Minister of Trade and Industry, Ghana, Carlos Ahenkora, has decried the many obstacles mitigating the easy movement of goods and services along the Ghana-Nigeria corridor.
Ahenkora, while speaking at the ongoing 2017 Lagos International Trade Fair (LITF), Ghana Day, said there was a need for both countries to deal and address these outstanding issues in order to facilitate the movement of goods and services into the country.
The key issues he identified included the prohibition list, the flagrant disregard for the ECOWAS Protocol on trade (ETLS), and the difficulty associated with the National Agency for Food Drugs Administration and Control (NAFDAC) certification.
He recalled several meetings and discussions held between both countries to tackle the challenges have not yield results. He said: “I think it is time for action; it is time to walk the talk. I hope the Ghana Nigeria Business Council will take these matters and expeditiously deal with them.”
Ahenkora, who spoke on the theme, “Education Services Export: A Key Driver in Africa’s Integration”, added, “There is one thing that I know; Ghana-Nigeria relations predate all of us here, although the relationship gets frosty from time to time. I am quite pleased that over the years the building blocks of the cooperation keep strengthening. We are gathered here today in furtherance of a mutually beneficial partnership, and to encourage overall ECOWAS trade. Without these encounters and deliberations, we would not be able to bring positive development to our people.”
“It is in line with increased trade regime between the two countries that we coordinate and facilitate the participation of Ghanaian enterprises in many of the fairs and shows organised in Nigeria. This year is not an exception.”
The President of the Lagos Chamber of Commerce and Industry, Dr Nike Akande, also reiterated the need for consistency in the ongoing reforms by the federal government, which is driven to achieve industrialisation, boost non-export, attract Foreign Direct Investment (FDI) as well as create a more conducive business environment.
She said this became necessary following efforts by the federal government on the ease of doing business in Nigeria, and the improvement of its position in the World Bank’s ease of doing business ranking.
Akande, who recalled the robust bilateral trade and diplomatic relations which both countries have enjoyed, stressed that the export promotion functions of Ghana Export Promotion Council (GEPC) have positively impacted intra-African trade, and especially within the West Africa coast.
The LCCI President while congratulating the management of GEPC in promoting trade between Nigeria and Ghana, emphasized on the need for countries within the West African coast to work together towards the achievement of more efficient ports that would facilitate trade amongst the economics in the sub Saharan economic bloc.
With the theme of this year’s trade fair: “Promoting Industrialisation for Economic Recovery and Sustainable Growth”, Akande added, “In response to the yearnings to the business world, the LITF is a testimony of the Chamber’s commitment to trade promotion, bilateral trade relations and the advancement of the Nigerian economy.”
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China-Africa expo provides new platform for industrial capacity cooperation
An upcoming exposition will create a new platform for Chinese and African businesses to strengthen industrial capacity cooperation, officials said Monday.
The China-Africa Industrial Capacity Cooperation Exposition will take place in Nairobi, Kenya, from 13 to 16 December, organized by the China Council for the Promotion of International Trade (CCPIT), according to Chen Zhou, vice-chairman of CCPIT, at a press conference.
Preparatory work has been basically completed for the expo, which is being organized by the CCPIT in Africa for the first time, according to Chen.
“Altogether 56 Chinese companies will take part in the expo to showcase high-quality products and advanced technology in railway and road construction, infrastructure, telecommunications, machinery, manufacturing and farm produce processing,” Chen said.
“The expo will provide a new platform for Chinese and African businesses to conduct full-scale communication and deepen cooperation, and encourage more Chinese firms to enter Africa and speed up its industrialization process,” Chen said.
“While Africa has rich natural and human resources and stands at the starting period of industrialization, China has the technology, equipment, talent and funds that can help Africa realize independent, sustainable development,” he said.
Michael Kinyanjui, Kenya’s ambassador to China, said the expo aimed to attract local and regional delegates from over 30 African countries.
“We believe the expo will add impetus to the ongoing China-Africa collaboration in trade, investments, and also cooperation in industrialization,” Kinyanjui said. Chen hailed the win-win cooperation between China and Africa in recent years, speaking of rapid growth in trade and investment.
The two sides saw their trade volume rise 19 percent year-on-year to $85.3 billion in the first half of this year, when Chinese firms’ non-financial direct investment in Africa increased 22 percent year-on-year to $1.6 billion, according to Chen.
The China Africa Development Fund, an equity investment fund managed by China Development Bank, has authorized $4.5 billion of investment in 91 projects in 36 African nations since its establishment in 2007, according to Zhou Chao, vice-president of the fund.
“With investment areas ranging from industrial capacity and infrastructure to energy and agriculture, those projects are estimated to drive more than $20 billion of investment from Chinese enterprises after their completion,” Zhou said.
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African aviation industry calls on governments to ease revenue repatriation
The International Air Transport Association (IATA) has called on African governments to address the issue of blocked funds that is affecting the industry’s capacity to become profitable.
The appeal was made on 12 November 2017 at the opening of the 49th Annual African Airlines Association General Assembly in Kigali.
The meeting was opened by Prime Minister Edouard Ngirente who underlined Rwanda’s commitment to the growth of the aviation sector and free movement of people across the continent. Ngirente called upon African governments and airlines to harmonise their operations, including airport taxes, improve and expand the aviation infrastructure, and train the required personnel as a means to promote intra-Africa trade.
According to IATA, in Africa, airlines are experiencing varying degrees of difficulty repatriating revenues earned in most countries on the continent especially in Angola, Algeria, Eritrea, Ethiopia, Libya, Mozambique, Nigeria, Sudan and Zimbabwe. The repatriation is mainly hampered by monetary policies of some countries mainly because the industry largely trades in US dollars.
“Practical solutions are needed so that airlines can reliably repatriate their revenues. It’s a condition for doing business and boosting connectivity,” said Alexandre de Juniac, IATA’s Director General and CEO. According to IATA, safety, connectivity, blocked funds, and human capital should top the agenda for Africa to drive the sector’s maximum economic and social benefits in Africa.
Dr Elijah Chingosho, the outgoing African Airlines Association (AFRAA) Secretary General, said up $1 billion airlines’ cash is currently blocked, affecting the industry’s capacity to reinvest.
According to Chance Ndagano, the acting chief executive officer of RwandAir, the habit of blocking funds has equally often affected the national carrier’s ambitious plans to expand its wings across the Africa.
“Some governments, through their central banks, often don’t allow airlines to repatriate revenue, especially when earned in dollars, posing a challenge to airliners,” he said adding that, he remains optimistic about the airline’s strategy to continue expanding its footprint across the globe. “Our growth will always be driven by demand,” he added.
Aviation currently supports 6.8 million jobs and contributes $72.5 billion in GDP to Africa. Over the next 20 years, passenger demand is set to expand by an average of 5.7 per cent annually. Raphael Kuuchi, the IATA Vice President, Africa, said “Africa also faces great challenges and many airlines struggle to break-even. And, as a whole, the African aviation industry will lose $1.50 for each passenger it carries.”
Governments should be aware that Africa is a high-cost place for aviation taxes, fuel and infrastructure charges are higher than the global average and need to be addressed urgently, he added. Meanwhile, the aviation body lauded safety in Africa’s skies, which they said had greatly improved over the years.
In 2016, there were no passenger fatalities or jet hull losses in Sub-Saharan Africa. “African safety has improved, but there is a gap to close. Global standards such as the IATA Operational Safety Audit (IOSA) are key. Performance statistics for IOSA show that the accident rate of the 33 IOSA registered carriers in Sub-Saharan Africa is half that of carriers not on the registry. That’s why I urge African Governments to use IOSA in their safety oversight,” said de Juniac.
IATA urged the 22 states that have signed-up to the Yamoussoukro Decision (which seeks opening up of intra-Africa aviation markets) to follow through on their commitment. And it further urged governments to fast-track the African Union’s Single Africa Air Transport Market initiative.
“African economic growth is being constrained by a lack of intra-Africa air connectivity. Opportunities are being lost simply because convenient flight connections are not available. While we cannot undo the past, we should not miss out on a bright future,” said de Juniac.
The aviation body also urged industry consultation on air traffic management investment decisions. That will ensure alignment with airline operational needs and avoid over-investment, experts say. Experts believe “investments must improve safety and efficiency from the user’s perspective. Otherwise, they are just an additional cost burden.”
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tralac’s Daily News Selection
Underway, in Arusha: EAC Sectoral Council on Trade, Industry, Finance and Investment. High on the agenda of the meeting are progress reports on; Status of the implementation of previous decisions; update on the EAC-EU-EPA; AGOA out-of-cycle review; Sectoral Committee on Investment and the Committee on Customs.
Diarise: SAIIA, in collaboration with Institute for International Trade, Australia workshop – The challenges of regional integration, trade facilitation and gender equity for Africa (1 December, Johannesburg)
EAC Industrial Competitiveness Report 2017: harnessing the EAC market to drive industrial competitiveness and growth (EAC/UNIDO)
The most encouraging finding of this report comes from the detailed analysis of the market opportunities offered by the EAC to its Partner States for expanding their manufacturing sectors. First of all, the EAC acts as a fundamental market for most of its Partner States, with high shares of manufactured exports remaining within the region, in particular for Rwanda, Uganda and Kenya. Exports to the rest of the world did not play the same role. In addition, it also provided the opportunity for all countries to expand their exports further to the regional market between 2000 and 2014, leading to a significant increase in their intra-regional manufactured trade ranging between 9% and 31% on average per annum. Secondly, throughout the years, the EAC market provided Partner States with the opportunity to export a larger share of higher value-added products. All countries, apart from Rwanda, exported a larger percentage of manufactured goods, as well as medium and high-tech products to the EAC, than to the rest of the world. Thirdly, and following from above, the EAC market allowed a more pronounced level of diversification of manufactured products traded within the region, with no domination of a particular sector. The largest exports came from the chemicals and plastic sector, as well as metals, followed by food and beverages. Whereas the top three products traded within the EAC contributed to 58% of total manufactured exports in 2014 in the EAC, the same figure at global level stands much higher at 71%.
Nonetheless, since 2010 we observed a slight contraction from the two biggest actors, Kenya and Tanzania, that diversified their markets more to Sub-Saharan African countries other than the EAC (in the case of Tanzania – mainly Congo, DRC, Zambia), and outside of Sub-Saharan Africa (for Kenya – mainly US, Serbia, India and China). Jointly, therefore, intra-regional manufactured trade has slowed down significantly, from an annual growth rate of 16% per annum between 2000 and 2010, to only 2% between 2010 and 2014. EAC manufacturing firms have therefore lost market share in one of the most dynamic regions, where demand for processed goods has been increasing at almost 17% per annum since 2010.
Findings concretely show several missed opportunities for EAC firms to tap into their own dynamic regional market. This was measured by trends in market shares across the period 2000-2014. A close examination of top 25 most demanded manufactured products showed that in most cases (22/25) EAC firms lost market share in the period, including cement, pharmaceuticals, iron/steel products, and fertilisers. In most cases, EAC manufacturing firms managed to increase their capacities, experiencing positive growth rates in the period (except for heavy petrol/bitum oils) but not at the pace and extent needed to keep up with the growth of EAC demand, therefore allowing other international firms to gain larger market share.
Protection of cars, dairy blocks EAC trade deal with southern Africa (Business Daily)
Protection of East Africa’s dairy and motor vehicle industries from competition is one of the stumbling blocks facing a trade agreement with southern African states. The EAC is negotiating a deal with SACU to scrap import duty on at least 60% of products traded between the blocs. However, a report released last week by the Council of Ministers on EAC Affairs and Planning shows that the two bodies failed to agree on several key tariff lines in a September meeting in Johannesburg. SACU requested that the EAC scrap duty on dairy products and motor vehicles within five years of signing the deal. The EAC did not respond positively. “On motor vehicles and dairy products, (the) EAC has responded that the products are sensitive due to their strategic importance for economic development in the EAC,” says the report. The EAC did agree to carry out an analysis on the implications of scrapping duty on motor vehicles. SACU also asked for immediate the liberalisation of trade in refrigerators, plastic tubes, beef, salt and wines once the deal is signed. EAC “agreed to offer only refrigerators for immediate liberalisation,” pleading time to consult on the rest. The southern African countries were similarly unreceptive of EAC’s request to liberalise trade in textiles, cut flowers, edible oils, fruit juices, coffee and vegetables.
COMESA trade policy, implementation: selected highlights from the recent Council of Ministers meeting
(i) Full FTA in sight as remaining states make steady progress to join. Fifteen of the 19 COMESA Member States as now fully in the regional Free Trade Area, with only four countries remaining. The Council of Ministers’ meeting in Lusaka last week noted the steady progress that the remaining countries are making towards full participation. Except for Swaziland which is exempted owing to its membership of SACU, the DRC, Congo, Ethiopia and Eritrea are all at various stages of eventually becoming full members of the FTA. The DRC is expected to achieve full participation by 2018 after reducing tariffs for COMESA originating products by 40%, 30% and 30% each year since it issued a gazette notice in December 2015. Eritrea is already offering 80% tariff preference to COMESA originating products. A study on the implications for joining COMESA FTA on the Eritrean economy was carried out and validated on 16 June 2017. This study will assist Eritrea in arriving at a decision regarding participation in the COMESA FTA. As a first step toward joining the FTA, Ethiopia reduced tariffs for COMESA originating products by 10% in 1989. In 2014, a study on the competitiveness of Ethiopian firms in participating the COMESA FTA was undertaken. The study recommended a phase down of products on which tariffs could be reduced to zero by 2019. The country is consulting on effecting further reductions. [COMESA mulls a shipping line to address high transport costs]
(ii) Digital Free Trade Area instruments ready for trials in member states. COMESA Secretariat has completed the design of the Digital Free Trade Area and its action plan and the Electronic Certificate of Origin (eCO) and its draft regulations. The two instruments are now ready for piloting in 15 Member States that are willing and ready to participate. They include: Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Seychelles, Uganda, Swaziland, Zambia and Zimbabwe. Ministers attending the recent Ministerial Council meeting in Lusaka (3-4 November) welcomed the progress made on the development of electronic trade facilitation tools noting that they have the potential to transform regional trade. The Council recommended for a phased approach for rolling out the instruments for the Digital FTA. This will begin with the instruments that are ready and Member States that are ready to participate during the year 2017. Other segments will be finalized concurrently while addressing constraints Member States may have.
(iii) Ministers pledge support to innovation to raise product quality. Their decision was informed by a report presented to them showing that, on average, the level of technological sophistication of exported products from the COMESA region was not only low, but has also declined. The report noted that a narrow range of product sophistication across the member States has persisted. This notwithstanding that primary and resource based products in the COMESA region have continued to account for the largest share in the export basket. Except for Mauritius (43%), primary and resource based products together accounted for more than 60% of the export basket in all Member States, up from 50% in 2014. For Rwanda, Malawi and Zimbabwe these two categories accounted for more than 80% of the exports while for Burundi, DRC, Zambia, Comoros, Seychelles, Ethiopia and Djibouti they accounted for more than 90% of total exports. “Put together, the products accounted for more than 60% of the export basket in all Member States, up from 50% in 2014,” the report said. “Rwanda, Malawi and Zimbabwe accounted for more than 80% of the exports while Burundi, DRC, Comoros, Zambia, Seychelles, Ethiopia and Djibouti they accounted for more than 90% of total exports.”
Delays at Mombasa Port costing cargo importers millions in fines (Daily Nation)
Lack of multiple grain handlers, rains and inefficiencies at the Port of Mombasa are costing importers an arm and a leg. Delays in off-loading cargo has compelled importers to pay demurrage of up to Sh1.5 million a day. Grain importers have been the hardest hit by the delays, with huge volumes of maize and wheat being held at the facility awaiting discharge, a situation that could affect consumers in future as they will have to absorb the extra charges. Logistics firms and millers have raised concerns over the delays that have now cut supply of goods in the market, signalling a looming shortage. According to millers, the total expected grain arrivals at the port through 20 November is 720,000 tonnes. With no further delay caused by the rains, it might take 72 days to discharge the entire consignment.
Doing Business in Rwanda: Govt to introduce 15 new reforms (New Times)
For instance, under access to electricity, Rwanda ranked 119th globally and under this indicator, government plans to introduce five reforms by May next year, to ensure adequate and constant energy supply to investors. Rwanda Energy Group is working on a system that will monitor outages and record frequency and durations of power outages so that it is predictable for people running factories. The Government also seeks to reduce the time for connection from the current 34 days to 20 days as well as revising tariffs to introduce preferential rates for productive users. Other reforms under the indicator include introducing electricity quality service codes and reducing the cost of connection. The starting a business indicator, which ranked at 78th position in the last report, is scheduled to have three reforms which could influence a change in position. Under the indicator, three reforms are set to be introduced, including free application of online electronic billing machines, exemption of payment of trading license ‘patente’ for startups that are small and medium enterprises as well as simplified process of employee benefits registration. [Botswana committed to ease of doing business – Masisi; Uganda Investment Authority: Low publicity dipped ease of doing business ranking]
Nigeria’s first Sub-National Competitiveness Index is now posted: access the National Competitiveness Council of Nigeria report here (pdf)
Lagos targets third largest economy by 2020, Africa's mega city in 2025 (The Guardian)
With a target to become Africa's third largest economy by 2020 and Africa's model mega city in 2025, the Lagos State government has reiterated its commitment to sustain the existing partnership with the private sector. This it aims to do by creating more business-support infrastructure and developing sound policies, which will build a solid framework and enable businesses thrive.
African economic growth rides on wireless rails (Bloomberg)
From the Atlantic to the Indian Ocean, hand-held phones are letting people become their own ATMs, increasing economic activity by enabling payments for food, travel, school and business. Wireless communication is driving economic growth in sub-Saharan Africa much as the railroad did in the 19th-century US, accounting for almost a tenth of global mobile subscribers and a growth rate that's beating the world. The transformation is reflected in the more than 1,300 publicly-traded companies that make up corporate Africa. The value of communications firms increased during the past five years to 25% of the total market capitalization of African companies, up from 16%, according to data compiled by Bloomberg. Materials and energy, the natural-resources benchmarks that defined the region since its colonial days, diminished to a combined 18% from 27% during the same period.
Tax avoidance threatens development agenda, UNCTAD meeting told
The inaugural meeting of the Intergovernmental Group of Experts on Financing for Development happened to coincide with the publication of the Paradise Papers by a consortium of journalists exposing the vast scale of tax avoidance by transnational corporations and superrich individuals. Topics covered by the experts included the problem of “illicit financial flows”, a catch-all term for tax evasion, capital flight, trade mispricing, foreign exchange manipulations, money laundering and other maneuvers – including tax avoidance. The three-day meeting also looked at ways of strengthening domestic tax frameworks, the role of development banks, modernizing the Official Development Assistance system, and how private finance could be exploited through “blended” financing instruments. [Background papers available for download], [Tax base protection workshop ends with call for more support to strengthen Africa’s capacity]
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Doing Business Update: Rwanda to introduce 15 new reforms
The Rwandan Government plans to roll out 15 new reforms across various sectors over the next six months, as a means to ease doing business in the country.
The development follows recent World Bank Doing Business Report that ranked Rwanda 41st globally and second in Africa out of the 190 economies globally.
The reforms are informed by the report and attempt to address key concerns of investors across the World Bank Doing Business report’s indicators.
For instance, under access to electricity, Rwanda ranked 119th globally and under this indicator, government plans to introduce five reforms by May next year, to ensure adequate and constant energy supply to investors. Rwanda Energy Group (REG) is working on a system that will monitor outages and record frequency and durations of power outages so that it is predictable for people running factories.
The Government also seeks to reduce the time for connection from the current 34 days to 20 days as well as revising tariffs to introduce preferential rates for productive users. Other reforms under the indicator include introducing electricity quality service codes and reducing the cost of connection.
Under the quality service codes, Karim Tushabe, the head of doing business unit at Rwanda Development Board (RDB), said that the reform will ensure that scheduled power outages do not affect investors’ productivity. If an outage goes beyond the agreed time, REG will be required to compensate firms that loose productivity.
“This is a rule from RURA saying that should people get a power outage, which goes past the agreed outage time, they should be paid as it is a deterrence, it is sort of checking the Rwanda Energy Group to protect investors from losing due to outages,” he said.
Another indicator scheduled for reforms is dealing with construction permits which featured at 112th position globally.The government is planning to introduce a risk based approach for Environmental Impact Assessment whereby projects will be evaluated in accordance to their risk factor. This, the Government says, is likely to reduce time and cost incurred by contractors as well as eliminate numerous procedures cited by the report’s authors.
Tushabe said RDB is in disagreement with the way the report’s authors captured a previous reform under the building permits systems. He said that despite the permitting system being online and reducing the time taken to acquire a permit, the authors have probably not understood its impact.
“We are inviting them on ground; take them through how the system operates so that they can really see how it works. It’s partly because of communication and understanding of the reform and impacts to the targeted investors,” he said. “We will also employ someone in communication to ensure users have a good understanding of reforms.”
The starting a business indicator, which ranked at 78th position in the last report, is scheduled to have three reforms which could influence a change in position. Under the indicator, three reforms are set to be introduced, including free application of online electronic billing machines, exemption of payment of trading license ‘patente’ for startups that are small and medium enterprises as well as simplified process of employee benefits registration.
Previously investors spent time registering their employees benefits at the Rwanda Social Security Board, however, under the new system, it can be done when one is registering their business on the RDB portal. Property registration which is at the moment second globally is scheduled to have two new reforms which include combing due diligence and notarisation into one step as well as introduction of electronic titles.
This is expected to reduce the time and costs taken up in the process as well as improving the quality of land administration. Paying taxes, for which Rwanda was ranked 30th globally, could also improve as Rwanda Revenue Authority (RRA) moves to put up a tax appeals board, introduce an online single declaration and payment of Pay As Your Earn and pension contributions. RRA is also expected automate reconciliation of Value Added Tax input and output to reduce time taken to repay investors.
Contracts enforcement are set to be improved as commercial courts are working on establishing small claims procedure as well as introduce an improved insolvency law. The reforms are quite ambitious in that the government has a six months window to roll them out ahead of May 2018 for the report to consider them in the next ranking.
The Minister for Trade and Industry, Vincent Munyeshaka, told The New Times that they were not oblivious to the fact that the timelines involved were quite ambitious but they are positive they will achieve the reforms.
“We are very ambitious but we are also very realistic, we can commit that we will do all we can to make sure that we have the 15 reforms implemented in the remaining timeline,” he said. RDB chief executive Clare Akamanzi said there will be strong emphasis on areas where the country did not perform well such as getting electricity, getting construction permits and resolving insolvency.
“Naturally, we would want to prioritise where we rank the least and that is where we will focus our energies, we hope that we will not have any ranking beyond 100, we are going to be focusing a lot on electricity, permits and insolvency. We also need to consolidate where we have done well such as property registration,” she said.
Commenting on the planned reforms, Private Sector Federation chairperson Benjamin Gasamagera said that if implemented, they would go a long way to improve business conditions in the country. He said among the areas that require urgent reforms from a private sector perspective are getting credit and electricity.
Rwanda rose 15 ranks in the 2018 World Bank Doing Business Report to feature in in position 41 globally. Rwanda featured 2nd in the continent behind Mauritius. Last year, Rwanda featured in 56th position and 62 in the previous year.
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Tax avoidance threatens development agenda
The inaugural meeting of the Intergovernmental Group of Experts on Financing for Development happened to coincide with the publication of the Paradise Papers by a consortium of journalists exposing the vast scale of tax avoidance by transnational corporations and superrich individuals.
Topics covered by the experts included the problem of “illicit financial flows”, a catch-all term for tax evasion, capital flight, trade mispricing, foreign exchange manipulations, money laundering and other maneuvers – including tax avoidance.
The meeting took place against a background of sluggish global economic growth in the decade since the financial crisis. “Many observers argue, including here at UNCTAD, that the structural problems laid bare by the global financial crisis of 2007-08 remain unresolved,” UNCTAD Deputy Secretary General Isabelle Durant said. “Developing countries face multiple challenges in this climate, including a net outflow of capital and low commodity prices.”
She added: “The urgency of combatting illicit financial flows, for example, was recently underlined by the publication of the Paradise Papers. We cannot tackle the issue of domestic resource mobilization properly without addressing the systemic factors that allow illicit financial flows to continue.”
Among these systemic factors, the three-day meeting also looked at ways of strengthening domestic tax frameworks, the role of development banks, modernizing the Official Development Assistance system, and how private finance could be exploited through “blended” financing instruments.
Panelists included current and former government officials such as ministers and central bankers, academics, and civil society representatives.
“We are moving away from a Millennium Development Goals framework [2000-2015], in which even tax didn’t even feature, toward one in which tax is the first means of implementation and illicit financial flows are identified as a key obstacle,” Tax Justice Network Chief Executive Alex Cobham said.
“Tied in with that is the idea of moving away from an old-fashioned view of corruption as a problem in lower-income countries and as a problem in terms of aid effectiveness towards seeing corruption as a global phenomenon driven, not by low-income countries, but by financial secrecy on high-income jurisdictions.”
All forms of illicit financial flows, Mr. Cobham said, ranging from the criminal theft of state assets to legal tax avoidance (and often a complex mix of many forms) “give rise to a reduction in the funds available to states and in the effectiveness with which states use those funds – that’s the basis of their damaging impact”.
“The common feature of illicit financial flows is that they are deliberately being hidden,” he said. “They may be being hidden because revelation would lead to criminal prosecution but they may also be being hidden because they are socially unacceptable even if illegality is less clear, and that’s where we see a lot of multinationals’ [tax] avoidance – legality may be arguable but they are kept as far as possible out of the public eye.”
The experts were convened in response to United Nations’ member States call to strengthen UNCTAD’s mandate in this crucial area of the 2030 development agenda at UNCTAD’s fourteenth ministerial meeting in Nairobi, Kenya, in 2016.
This followed a 2015 summit on financing for development which resulted in the Addis Ababa Action Agenda proposing a series of bold measures to overhaul global finance practices and generate investments for tackling a range of economic, social and environmental challenges.
“This expert group meeting is therefore a direct response by Member states to the call in Paragraph 88 of the Addis Ababa Action Agenda to strengthen UNCTAD’s role as the focal point within the United Nations for the integrated treatment of trade and development and the interrelated areas of finance, technology, investment and sustainable development,” Ms. Durant said.
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AU Member countries urged to tackle socio-economic, political problems
Member countries of African Union (AU), have been urged to tackle the various political, economic and social problems especially poverty plaguing their countries by creating environment that promotes trade and investment for economic growth and development.
Cape Verde Minister of Finance, Olavo Correia, gave the charged in his closing remarks at the just concluded Advanced Structured Trade Finance Seminar and Workshops organised by the African Export-import Bank (Afreximbank) at Sal Island, Cape Verde recently.
He said: “Our continent needs to grow in order to fight the problems we have, such as poverty, and we must speed up the transformation if we want to see results; “there is no economic growth without trade and we must work to provide a political, economic and social environment in order to reinforce regional exchanges.”
Highlighting the importance of intra-African trade, and the need for member countries to contribute their quota towards its success, Correia, said that Cape Verde was already working to solve the challenge posed by transportation, which was one of the key barriers to effective regional trade.
He said that Cape Verde was developing increased maritime and air links and is aiming at becoming a major transport hub serving the African continent by developing excellent links to Africa, Europe, North America and South America.
“That development will not be possible without the help of Afreximbank, which has opened new lines of credit, helped with pre-financing and was providing other tools to Cape Verde,” he said.
Correia called for increased support for Afreximbank, saying, the bank, which helps the continent needs support so that it can be of service to the whole African continent.
During the workshop, Afreximbank launched a new guarantee programme aimed at unlocking capital and leveraging much-needed financing into Africa.It said the AFGAP initiative, would help to de-risk African transactions in order to make them more attractive to investors and financiers.
He said the programme, which offers a variety of credit enhancement solution to clients in Africa, has an aspect tagged Exim-plus, a broad strategy developed by Afreximbank to position itself as a comprehensive trade facilitation and financing solution centre in Africa.
AFREXIM Bank’s Executive vice president in charge of Business Development and Corporate banking, Arm Kamel, said under Exim-plus, Afreximbank is offering a broad array of instruments that are often associated with export credit agencies and other specialised trade and development finance institutions, thereby differentiating itself from normal commercial banks and development financial institutions.
He said that AFGAP was a demonstration of Afreximbank's unwavering commitment to delivering on its mandate of promoting intra- and extra-African trade, in particular, the mandate of using risk bearing instruments to promote trade in Africa, by introducing new risk mitigation solutions to address the trade finance needs of the continent.
“AFGAP would bring “additionality” to Africa, by mobilising financing that would otherwise not have been possible, to support the economic development of the continent,” he said.
Kamel called for support for the programme from partners and other relevant stakeholders, adding that although Afreximbank had taken a giant step in launching the programme, it could not achieve the desired results alone.
“We are, therefore, calling on partners interested in Africa’s development and all relevant parties to work with Afreximbank to support the promotion of trade and trade-related investments in Africa.”
He commended Cape Verde for hosting the Advanced Structured Trade Finance Seminar and Workshops and enjoined the participants to put into practice what they had learnt when they returned to their stations.
The workshops attracted several speakers from Africa, Europe and Asia who in their presentations, highlighted Africa’s potentials and said that the potentials could be realised through increased intra-African trade and diversification away from commodities.
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EAC unveils Industrial Competitiveness Report 2017
The East African Community (EAC), in partnership with the United Nations Industrial Development Organization (UNIDO) and the Government of Korea, on Friday launched the EAC Industrial Competitiveness Report 2017 (ICR 2017) in Dar es Salaam, Tanzania.
Themed ‘Harnessing the EAC Market to Drive Industrial Competitiveness and Growth,’ the report assesses EAC’s industrial performance vis-à-vis other regions and role models in Asia and Africa and sheds light on strategic short- and long-term industrialization paths that the EAC should pursue.
ICR 2017 provides a compass to policy-makers, the private sector (in particular manufacturing firms and associations), and a wide range of stakeholders on the broader direction of the industrial development trajectory of the EAC and of the internal competitiveness dynamics among Partner States.
Speaking at the event, Uganda’s Minister of State for EAC Affairs, Hon. Julius Muganda, said that Industrialization in the context of the EAC region will depend on how the region strategically leverages itself to maximize on the opportunities created by the Common Market Protocol as a stimulus for demand, while simultaneously capitalising on other emerging markets for manufacturers.
“The realisation of a fully functioning Common Market and the deepening of regional integration through a monetary union are crucial for providing the much-needed impetus for industrialisation in the region,” said Hon. Muganda, who represented the Chairperson of the EAC Council of Ministers, Hon. Kirunda Kivejinja, Uganda’s Deputy Prime Minister and Minister for EAC Affairs.
Hon. Muganda further emphasized on the need for leaders and technocrats to think of a collective regional strategy to respond to unemployment including expanding the manufacturing sector capacity and promoting micro, small and medium enterprises (MSMEs) and youth entrepreneurs.
In his remarks, the Director of Trade at the EAC Secretariat, Mr. Alhaj Rashid Kibowa, contribution of the manufacturing sector remains at paltry 10 percent, adding that the sector has been on a decline in the recent past.
“It is against this background and in recognition of the existing challenges that the region embarked on the programme “Strengthening Capacities for Industrial Formulation and Implementation in the East African Community,” said Alhaj Kibowa.
Alhaj Kibowa noted that the implementation of the programme had enhanced the region’s capacity for industrial policy design, monitoring and evaluation, culminating into the development of the ICR 2017.
“Consistent with the EAC Industrialization Policy and Strategy, the ICR 2017 has enhanced the region’s capacity to: design, manage and implement an industrial policy and collect industrial statistics and data. Further to this, it has strengthened the institutional capacity of the EAC Secretariat, Governments of all EAC Partner States and key private sector stakeholders,” said Alhaj Kibowa.
Also present at the launch of the report was South Korean Ambassador to the United Republic of Tanzania, H.E. Geum-Young Song who reaffirmed his country’s commitment to continue supporting the EAC in realizing its goal of industrialization.
Dr. Stephen Kargbo, UNIDO representative to Tanzania, Mauritius and EAC speaking at the ICR 2017 launch expressed hope that the EAC would use the findings of the report to revitalize the industrial sector in East Africa.
“While we conclude successfully the implementation of the current regional project, we are also exploring with our main counterpart, the EAC Secretariat, options for a phase II that would ensure produced diagnostics translate into concrete industrial policy processes, instruments and action plans creating significant positive impact for the industrial development in the region,” said Dr. Kargbo.
He also assured stakeholders that whereas UNIDO will continue to play its role, supporting relevant institutions in capacity building activities for strengthening industrial policy making capacities, it was the responsibility of Partner States’ governments and other stakeholders to transform the initiative into meaningful strategies for the attainment of sustainable and inclusive economic development in EAC.
Prof. Elisante Ole Gabriel, the Permanent Secretary in Tanzania’s Ministry of Industry, Trade and Investment, urged EAC Partner States to foster close cooperation in order to realize sustainable competitive advantage on the global market.
Closing the one-day event, the EAC Deputy Secretary General in charge of Planning and Infrastructure, Eng. Steven Mlote, said that East Africa was on the way to becoming a regional hub for manufacturing and a gateway to investment in Africa.
“To be successful in this venture, our industrial policies should seek to promote structural changes,” said Eng. Mlote.
Implementation of phase two of the project will switch from diagnostics to industrial policy processes and instruments. This means that the focus will be on the establishing a regional industrial intelligence and policy advisory support, enhancing capacity for competitiveness analysis of the Industrial sector, putting in place a regional competitiveness framework to facilitate benchmarking and establishing an e-Industrial information Resource Centre.
Policy recommendations
The findings from the report call for increased efforts to boost industrial development in the region, particularly through the design and implementation of well-ground strategies and action plans, in order to achieve, or come close to, the EAC’s industrialisation objectives at both regional and Partner State level.
The report presents a wealth of evidence on the development of the manufacturing sector since the turn of the century. The key findings and relevant and concrete policy recommendations are summarised in four groups:
1. Exploiting the opportunities in the dynamic EAC market
The EAC has a significantly larger capacity to produce manufactured goods than to export them (69 USD per capita and 38 USD per capita in 2015/2014 respectively). At the same time, the EAC provides a very dynamic market where demand for manufactured goods is growing annually at 16 %, and at double digits for all the 20 most demanded manufactured products of the region. The report explains that a fast-growing market increases the possibility of enlarging production scale. Currently, the EAC Partner States are together losing market share of manufactured goods from over 9% in 2010 to below 6% in 2014. Some of the products for which EAC provides plenty of opportunities given their dynamic demand trends are: fixed vegetable oils, medicaments and pharmaceuticals, iron and steel products, fertilisers, cement, cotton apparel, leather footwear and heavy petroleum. Other attractive product groups to export to the region should be identified and all examined in more detail.
The region is also an important market for medium and high tech products, providing a better playing field for EAC firms to export this high-value added type of products compared to other markets (the analysis in Chapter C has shown that four of the five EAC Partner States export a higher share of MHT products to the EAC than elsewhere). Moreover, the fast growth in demand for a number of MHT products suggests firms’ efforts to do so are indeed worthwhile. More analysis on the market for products of interest should be undertaken to learn about current opportunities.
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Further measures to ease intra-regional trade would benefit exporters and potential future exporters: A number of interventions have already been put in place to reduce trade barriers across the EAC, such as the implementation of the Common Market Protocol, transport corridors, implementation of one-stop border posts, monitoring of NTBs, harmonisation of standards, single customs territory, a harmonised Export Promotion Platforms, common external tariffs, authorised economic operator and an e-single window for monitoring trade. Nonetheless, more can still be done, such as further reducing these TBTs and NTBs, improving road and rail infrastructure, cutting red tape and harmonising procedures, in order to incentivise firms to increase exports, or start exporting within the region. Currently some of the more specific recommendations for the EAC are the following, though these are by no means exclusive:
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To ensure better coordination of policy instruments across the region in order to enhance intra-regional trade (including in regard to CET).
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To improve business environment instruments for the identified key sectors, including but not limited to, serviced industrial land (as in Vietnam or South Africa), investment promotion tools, phasing out of second-hand clothes trade.
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To produce a further study for an EAC market recapturing strategy, which goes into significantly more in-depth analysis than the work undertaken in Chapter C and D of this report.
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Provide market information highlighting demand trends and opportunities: Publishing regular information on demand trends across the region, together with updates on measures undertaken to further ease trade will ensure firms are aware of the opportunities to find end markets and/or link up with other enterprises in the region, thus increasing intra-regional trade in manufactured goods, developing regional value chains and strengthening the EAC manufacturing base.
2. Diversifying and upgrading through realistic, well-defined and comprehensive strategies
3. Strengthening of forward and backward linkages to boost industrial and overall economic growth
4. Supporting the development of key industrial drivers to boost industrial production and exports
Background
The EAC Secretariat in collaboration with UNIDO is implementing a programme on “Strengthening Capacities for Industrial Policy Formulation and Implementation in the East African Community” which was approved by the Sectoral Council on Trade, Industry, Finance and Investment during its meeting held on 22nd May, 2015.
Through the Programme, specific trainings have been delivered at both national and regional levels to create, among other things, capacity for industrial competitiveness analysis as envisaged in the EAC industrialization policy and Strategy. As a result, the programme has greatly contributed to enhancement of capacity for industrial policy, analysis, design, monitoring and evaluation at Partner States and the Secretariat levels.
To ensure sustainability and full use of knowledge acquired in the trainings, the Secretariat in collaboration with UNIDO and a team of experts from Partner States took the initiative of preparing the EAC Industrial Competitiveness Report, 2017.
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Trade negotiators double down on efforts to get fish subsidies result at MC11
Close to 31% of the world’s marine fish stocks are now overexploited and depleted. Estimated at between US$ 20 to 35 billion per year, harmful subsidies compound the problem of overfishing because they make it cheaper for industrial fishing fleets to operate further from their ports and out-compete small-scale fishermen.
"We urgently need an agreement that regulates harmful fisheries subsidies and cracks down on unfair competition in our seas," UNCTAD Secretary-General Mukhisa Kituyi said." ''The trade community has a responsibility to safeguard fisheries resources, and protect the livelihoods of the billions of people around the world who rely on fish for food and income," Dr. Kituyi added.
Target 14.6 of the Sustainable Development Goals states that the world should "By 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such subsidies…"
IUU is the label for fishing that is illegal, unreported and unregulated, factors that together have driven stocks to the brink. SDG 14 covers a large range of issues related to life below water and how it contributes to global sustainability. UNCTAD, the UN Food and Agriculture Organization, UN Environment and more than 90 countries have led a call since July 2016 to urgently regulate fish subsidies at the multilateral level, in order to comply with SDG target 14.6 by 2020.
So far, a "draft compilation text" based on seven earlier proposals for MC11 outcomes on fisheries subsidies has been submitted by New Zealand, Iceland and Pakistan; the European Union; Indonesia; the African, Caribbean, Pacific (ACP) Group of States; the Latin American group composed of Argentina, Colombia, Costa Rica, Panama, Peru and Uruguay; the Least Developed Countries (LDC) Group; and Norway. This compilation effort is a significant step forward toward building international consensus on the issue.
And big global fisheries players such as China and the United States are showing positive engagement with their respective proposals on prohibiting subsidies to IUU fishing, and on enhancing transparency and notification requirements in the WTO.
To help keep the focus on the issue and enable a positive outcome in line with SDG 14.6 at MC11, UNCTAD will organize a high-level event on 11 December in Buenos Aires.
The UNCTAD event, entitled Fish Trade, Fisheries Subsidies and SDG 14, will provide a platform for a better understanding of trade-related aspects of the goal, , including regulatory issues, market access and fish management systems, in order to help build political consensus towards a potential solution at MC11.
Key issues under discussion will include:
- The significance of fish and fish products to international trade, food security, nutrition, poverty reduction and development
- The regulatory framework and relevant international instruments applicable to fisheries, including on fish subsidies and IUU fishing
- The various non-tariff measures applicable to the fish trade
The event will be co-organized in partnership with the UN Food and Agriculture Organization and the Commonwealth.
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tralac’s Daily News Selection
Featured African trade tweets:
@AnnMbiruru: Good news for transporters from Dar. Only 3 police roadblocks are official in Tanzania between Dar es Salaam and Mutukula, said TZ President @MagufuliJP during launch of Mutukula One Stop Border Post. = less transit time.
@diwahoza: Today was a good day for the Tanzania private sector; the final ground work was laid between @tpsftz and @ESRFTZ for the State of the Private Sector Report. The first report is expected to assess the contribution of the private sector to Tanzania’s economy in terms of exports, tax revenue, employment etc - a figure which has been illusive in the past. We expect to launch it at our next Ministerial Dialogue, in Dodoma, January 2018.
Featured infographics: Quartz Africa: Eurobond debt has grown rapidly in Africa between 2007-2016; Wandile Sihlobo: Sub-Saharan Africa’s wheat consumption is outpacing production - pushes imports higher
Namibia and SACU: Namibia’s struggle to get sugar rebate (The Namibian)
Under the current sugar arrangement in SACU, Namibia cannot develop downstream industries such as confectionery manufacturing because sugar becomes an industrial input, and a company in that position requires a reliable, sustainable, transparent and certain supply chain. Also, it appears that if Namibia sources sugar from South Africa, it cannot export value-added products manufactured from that sugar. Again, it will be blocking confectionery downstream manufacturing, plus it defeats the purpose of intra-SACU trade as it creates only one-way trade traffic in favour of South Africa. What appears to be a challenge in this process is that South Africa and Swaziland as SACU members do not support the Namibian sugar rebate application. Delaying tactics have been applied by sending the application from one meeting to another. And because SACU has no legal institutions to deal with such a process, ITAC has no obligation to Namibia to take its needs into consideration. In the end, it is the private sector which is losing; it is the development of the sector which is delayed; and generally, industrialisation sabotaged. In conclusion, SACU needs to sort itself out if it wants to seriously promote industrialisation and create employment through manufacturing. [The author, Maria Immanuel, is an international trade analyst, agricultural economist and entrepreneur]
Key characteristics of African tourism GVCs (Commonwealth Secretariat)
Africa’s tourism GVCs are notable for many features, including the durability of package booking channels, low domestic demand for tourism, the presence of global - rather than regional - lead firms and the corresponding implications for leakages from the local economy as well as the importance of business travel. This paper examines some of the most significant aspects of African tourism that influence the economic upgrading that is available to local stakeholders. It then concludes by identifying policy initiatives that may facilitate those upgrading trajectories. [The author: Jack Daly]
Aubrey Hruby, Jonathan Said: How to close Africa’s jobs gap (Devex)
Instead, governments that focus on a modern industrial policy - concentrating on trade-oriented sectors that can compete in the global marketplace and knocking down the barriers that can hold them back - tend to create more jobs. The word “modern” is deliberate. It means embracing - not shying away from - the globalized economy, technology, open trade, and markets. It means being politically savvy to foster a working partnership with the private sector that will form competitive industry clusters to create jobs at scale. However, even the best strategy will fail without effective implementation. In countries where government capacity is limited, partners should focus on working with and strengthening “islands of effectiveness,” or agencies staffed with technically competent employees who have sufficient authorization to develop strategies, coordinate players, execute directives, and implement, coordinate, and guide sector strategies. Examples include the Rwandan Development Board and Ethiopia’s Agricultural Transformation Agency. [AfDB consultancy: Research assistance on jobs in Africa project]
Tanzania: Commission launches report about national assessment on business (IPPMedia)
The Commission for Human Rights and Good Governance yesterday launched the national baseline assessment on business and human rights report showing large existing gaps in land laws and right of access to information. Delivering the findings to participants in Dar es Salaam during the programme for the multi-stakeholders workshop to launch the report, CHRGG chairman Bahame Nyanduga said that the baseline is the response that providing a comprehensive account of the status of protection of human rights with regard to business activities in Tanzania. The baseline was developed by CHRGG with technical support from the Danish Institute for Human Rights.
Kenyan firms struggling with gender inequality, corruption - UN (Business Daily)
Kenyan companies lead their African peers in the race to adopt sustainable business practices even as they struggle with gender inequality, graft and failure by firms to publish sustainability reports, the United Nations has said. The UN Global Compact executive director, Lise Kingo, said that Kenyan firms account for nearly a third of its membership base in Africa after signing up to its binding creed of sustainable pillars like anti-corruption, gender equity, labour, governance and environment. “Kenya provides us with the largest membership in Africa and that’s quite encouraging since it shows more firms here are striving to reach sustainability goals,” Ms Kingo said in an interview in Nairobi where she is on an official visit. The agency has a membership pool of 650 companies in Africa, with Kenya leading with 200 firms. [Kenya: Strike revives automation call in world’s top tea exporter]
SADC One-Stop Border Posts to pilot MoveAfrica’s Traffic Light System (Nepad)
The SADC Committee of Ministers of Transport have endorsed Beitbridge, Kazungula, Kasumbalesa and Chirundu One-Stop Border Posts for the piloting of the NEPAD Agency MoveAfrica’s Traffic Light System, as well as the roadmap for implementation of the TLS on the selected pilot border posts. The roadmap for the implementation of the TLS on the pilot border posts will be done in a 3-phase approach. Phase 1, will look at the reporting of different indexes and sources. Phase 2, will look deeper into the market dynamics, investment potential vis-à-vis risk assessments to ascertain the type and level of effort needed in a particular corridor by classifying the One-Stop Border Posts into A, B or C categories. Phase 3 will give the overall ranking based on the variables in the first two sections to arrive at the traffic light categories of Green, Orange and Red.
Mutukula OSBP to ease trade between Tanzania, Uganda (New Vision)
Loopholes for revenue collection sealed as both Tanzania Revenue Authority and Uganda Revenue Authority have recorded marked improvement in their revenue collections at Mutukula. TRA records show it has collected Tsh 27,776,716,217.00 ($12m) since August 2016 to June 2017, the time within which OSBP operations took form, compared to the year 2014/2015 where Tsh 18,646,417,015.00 ($8.1m) was collected. URA has more than doubled its revenue collection from sh70,332,001,143 (or $20m) in 2014 to sh147,724,206,969 (or $43m) in 2017. On daily basis, 542 vehicles (310 of those cargo trucks) pass through Mutukula border post. [The author, Moses Sabiiti, is TMEA Country Director, Uganda], [Uganda: Establishment of OSBP at Lamia, Kyanika and Bunagana Border Crossings: consultance service pdf]
Reps, MAN, Falana, others reject Morocco’s bid to join ECOWAS (Punch)
Members of the House of Representatives and other prominent Nigerians on Thursday warned Nigeria against supporting the application by Morocco to join ECOWAS. They also said Nigeria must not consider the option of exiting ECOWAS, having sacrificed so much for regional integration in the West African sub-region. The stakeholders spoke at a public hearing in Abuja organised by the House Joint Committees on Foreign Relations and Cooperation/Integration in Africa. All the stakeholders held the view that Morocco joining ECOWAS would have regrettable economic and political consequences for the sub-region, particularly for Nigeria. They also noted that Morocco and West Africa had no geographical closeness and would be a direct breach of the ECOWAS Treaty to admit a non-regional country into the bloc. Both Akinterinwa and Falana noted that Nigeria was the target of Morocco’s plan, as the latter would use its tariff-free ties with the European Union to flood the country with foreign goods. [By trading with Morocco, Buhari in breach of AU position on Western Sahara]
The Do’s and Don’ts of the Economic Partnership Agreement (ThisDay)
A position paper, submitted by Dr Femi Badejo (CEO/Chief Economist Global Trade Policy Initiatives), to the High-level roundtable on the EU-West Africa Economic Partnership Agreement EPA, 24 October held in Lagos. [Cameroon: No more chicken, please (pdf)]
South Africa: Financial Stability Review (SARB)
The SADC Integrated Regional Electronic Settlement System (pdf): The September 2013 and March 2015 editions of the Financial Stability Review reported on the plans to establish the SADC Integrated Electronic Settlement System (SIRESS) and provided an update on progress with SIRESS. The SIRESS system is one of the building blocks that contribute to greater regional financial integration, one of the key goals of SADC. Over the last two and a half years, participation in SIRESS has grown from nine to 14 countries, with at least one bank in each country being active on the SIRESS platform. The overall number of participants has also increased to 83 banks of which seven are central banks and 76 are commercial banks (Table 8). SIRESS volumes and values have shown gradual growth over the last two years. Volumes have grown from an average of around 22 000 transactions per month in the third quarter of 2015 to about 24 000 transactions per month in the second quarter of 2017. Values settled have also increased steadily from about R90bn per month in the third quarter of 2015 to just below R100bn per month in the second quarter of 2017. The total values settled since inception reached the R1 trillion mark in April 2015 and by end July 2017 the total value and volumes of transaction settled were R3.49 trillion (US$267.59 billion) and 813 551 respectively (Figure 43). Given the increasingly important role that SIRESS plays in the regional payment settlement environment and the significant values of transactions settled, it is likely that SIRESS will be formally designated a financial market infrastructure participant active in the payment area, warranting closer attention and supervision in terms of the Principles for Financial Market Infrastructure and will probably be designated a domestic systemically important financial institution. It is also likely that SIRESS will be able to fill some, but not all, of the gaps brought about by the decline of correspondent banking relations in SADC associated with the derisking that have taken place recently in the region by some globally active banks.
‘Flexible mediation’ in Chinese province strengthens China-Africa trade (Front Page Africa)
A trade and commerce mediation committee established in 2013 to probe misunderstanding between Chinese businessmen – manufacturers or middlemen – and foreign exporters or traders is making “significant progress” in a major import-export concentrated city in Eastern China. The mediation committee, comprising of Ethiopians, Sudanese and Chinese nationals, is based in Yiwu City, a coastal Zhejiang Province in eastern China. The province also has the second largest African community in the entire China. There are over 3,000 African residents living in the city. Guangzhou, in Guangdong Province – southern China, has the largest African community. Merchants from over 100 countries are based in Yiwu city. Most of the mediators are African merchants themselves living in the city and they too are traders who export tones of commodities back to the continent.
China’s ambitions in Sub-Saharan Africa: efforts to rebalance bilateral relations still needed (Coface)
The slowdown in the Chinese economy and the reorientation of its growth model towards private consumption are reflected in a weakening of demand for commodities from Africa. This will have inevitable consequences for exporters. According to Coface economists’ calculations, sub-Saharan Africa had a significantly higher export dependency ratio (on a 0-to-1 scale) than other emerging countries in 2016, at 0.24 compared to 0.16 for South-East Asia (one of China’s largest trading partners) and 0.19 for Russia, Brazil, and India. The differential is even greater with the European Union (0.07) and the United States (0.12). Unsurprisingly, the countries that have benefited the most from China’s expansion and those with a less diversified economy are likely to feel the effects of lower demand more acutely. The strongest trade dependency is concentrated around crude oil exports and, according to the index established by Coface, South Sudan has been at the top of the ranking since its independence was declared in 2011, followed by Angola and Congo. The Gambia, which produces wood, is not far behind. Eritrea, Guinea, and Mauritania are also among the most dependent countries because of their exports of metal ores (iron, copper, aluminium).
The hardscrabble business of Chinese manufacturing in Africa (Harvard Business Review)
Irene Yuan Sun, a consultant at McKinsey, explains why so many Chinese entrepreneurs are setting up factories in Africa. She describes what it’s like inside these factories, who works there, what they’re making—and how this emerging manufacturing sector is industrializing countries including Lesotho and Nigeria. Sun’s new book is The Next Factory of the World: How Chinese Investment Is Reshaping Africa. Transcription of interview: [Africa will take China’s place as the next factory of the world]
Today’s Quick Links: Mauritius: Prime Minister denies Mauritius being a tax haven (GoM) Jaindi Kisero: Kenya deep in the middle of debt trap Magufuli pushes for more sugar production locally EU lifts ban on Ghana’s vegetable exports Horasis Asia Meeting (26-27 November, Kolkata): Asia needs more dialogue on trade Global Forum on Competition (7-8 December): Competition and democracy (pdf, submission by Prof Spencer Weber Waller) Zimbabwe budget deficit widens sharply on runaway government spending |