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Gerhard Erasmus, an Associate at tralac, comments on the International Economic Crisis, the G20 Summit and African Countries.
In the preparations for the G20 summit much has been said about international co-operation to tackle the financial crisis and about the need to reform the world’s economic system. Many commentators have, at the same time, warned against unrealistic expectations. Within the bigger debate as to how the danger of protectionism should be addressed, what reforms should be adopted and how financial systems should be stabilised it is very important not to lose sight of what is happening in the developing world and how Africa in particular is affected.
Many African nations are facing a catastrophic loss of export revenue, rising food prices, declining aid flows and a drop in remittances (worth more than aid in recent years). Political stability could be at stake; which holds risks for developed countries too as the trafficking of drugs and of people, piracy, and conflict will increase.
What could the governments of African countries do? Are they only bystanders to this crisis which has started in the rich world? Will the needs of the world's poorest people be considered?
One of the present dangers is that the summits, international debates and discussions in the developed countries will be dominated by the experience and perceptions of the rich nations; that the needs of developing countries will not receive adequate attention. There are serious and obvious risks for wealthy countries but some of the emergency measures taken by them can harm those who are most vulnerable. State subsidies to local industries, priority for the jobs of nationals or policies to encourage banks to lend at home are examples. Donor organizations may also face big budget cuts.
We can end up with a situation where individual nations look after their own interests and the collective (which is the engine for the recovery) ends up worse. African governments should recognise and resist this dangerous temptation.
There is more that can be done. African leaders should do their utmost to keep our needs on the international agenda. This is a global crisis and it requires responses which must also address the effects on developing countries. And this is not a matter of charity; large scale instability and the devastation caused by severe poverty will have disruptive effects far beyond the borders of distant poor nations.
Economic reform and development (as global issues) should not disappear from the international agenda. The danger is that the positive developments in some developing countries in recent years (as their economies began to stabilise and they grew less dependent on aid) can be wiped out. These governments cannot respond with a massive fiscal stimulus. Now no one wants to lend to them. Borrowing from the IMF (as the G20 summit may propose) is not a realistic option. IMF loans are tough (with different effects compared to the stimulus packages being used in wealthy countries) and the IMF has limited funds; as commentators have pointed out. The Fund lends only part of what nations need. The borrower must then come up with the rest by making cut-backs elsewhere. That can have devastating consequences in poor countries - as seen in the East Asian crisis ten years ago.
African leaders should also look at their policies at home and their plans for regional integration deserve special attention. Regional integration can make important contributions to growth and development if geared to sound policies on trade promotion and facilitation, institutional reforms and respect for the rules of the game. Regional integration is not an end in itself. It must be used as a vehicle towards the end of development and global integration. Producers in African states will be failed if their governments do not adopt the frameworks which will allow them to become competitive. That is why services (and the connection between services and trade in goods) are so important. Poor transport services, high banking costs, expensive telephony and favoured monopolies will undermine whatever other efforts are made.
The present financial crisis makes domestic reforms and the adoption of realistic regional policies that more urgent. - Also read the new Trade Brief by Prof Colin McCarthy on the global financial and economic crisis and its impact on Sub-Saharan economies. Read more here...
Back to top Special Features - New book launched: South Africa's way ahead: looking East, by authors Ron Sandrey, Hans Grinsted Jensen, Nick Vink, Taku Fundira, Ferdi Meyer, Charles Hughes, Bonani Nyhodo, Lilani Smit. The book was launched in Beijing, China on 24 March 2009.
The photo shows tralac's Ron Sandrey and Professor Fan, trade modeller from the Chinese Academy of Social Sciences in Beijing.
tralac’s book “South Africa’s way ahead: looking east” was launched at a function hosted by the South African Embassy in Beijing last week. This event attracted an audience of thirty persons, drawn from the Beijing-based African diplomatic and business community, the media and several Chinese academics. It was hosted by a combined team that included the Center for Chinese Studies, Tru-Cape, National Agricultural Marketing Council and the Beijing South African Business Council, with refreshments provided by tralac.
The senior author of the book, Dr Ron Sandrey, spoke briefly at the launch. He emphasised that researching and producing the book had been a truly cooperative undertaking involving several individuals and institutions in South Africa. Discussing the results, he highlighted that there are significant economic gains to a free trade agreement between South Africa and China, and he urged policy makers in both countries to actively pursue such an agreement. China has become an important trading partner for South Africa; it is the Republic’s second main source of imports and its sixth main destination for exports.
The question and answer session was a lively affair, ranging over several topics. These included some technical questions regarding the model used, discussions on the impacts of free trade agreements and some of the problems relating to South Africa’s clothing sector.
- New book launched in Cape Town on 30 March 2009: Monitoring Regional Integration in Southern Africa Yearbook 2008.
The photo shows tralac's Executive Director, Trudi Hartzenberg with Dr Anton Bösl, Resident Representative of the Konrad Adenauer Foundation.
The 2008 collection of papers reviews the developments in the Southern African region, hoping to stimulate debate about regional integration matters at a time when important decisions for the region’s longer-term future are being taken. Read more here... (Printed copies can be obtained from tralac. Click here and send us your full contact and delivery details and number of books you require.) - New Trade Brief by Prof Colin McCarthy on the global financial and economic crisis and its impact on Sub-Saharan economies. Read more here...
- CALL FOR PAPERS: Monitoring Regional Integration in Southern Africa Yearbook 2009: The announcement in October 2008 that the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for East and Southern Africa (COMESA) have agreed to establish a Tripartite Free Trade Area is but one important development on the regional integration front in east and southern Africa. The 2009 Monitoring Regional Integration in Southern Africa will be the ninth collection of papers reviewing and assessing aspects of regional integration in Southern Africa. This call for papers presents an opportunity to contribute to the important debate on regional integration matters in Southern Africa. Read more here...
Back to top African investors eyeing South-South trade to help combat crisis
South-South trade still offers huge opportunities despite the challenges facing Africa and other developing regions in the southern hemisphere as they deal with the global economic crisis.
The importance of cross-border trade in the EAC
The East African Community (EAC) is set to undertake a study on cross-border informal trade to determine its full extent in the region. The EAC secretarial tender committee, through an international tender, has sought consultancy services for the study.
Busa urges tough stand on protectionism at G20
Jerry Vilakazi, Chief Executive of Business Unity South Africa (Busa), has urged those participating in the Group of 20 (G20) summit to take a hard stance against protectionism, which he said has increased since their last meeting.
African trade could drop by up to 25%
African trade could fall by up to 25 percent in 2009/10 from last year’s commodity-driven highs, senior executives from the African Export Import Bank (Afreximbank) said yesterday. The Cairo-based Bank has 33
Barbados private sector to help companies exploit EPA
The Barbados Private Sector Trade Team (PSTT) is to implement a 12-month programme aimed at preparing companies on the island for the increased duty-free market access into the European Union (EU) provided by the new EC-Caribbean Forum economic partnership agreement (EPA).
Better planning the key to successful negotiations
Small nations can improve their prospects in international trade negotiations as well as securing deals that bring benefits to their citizens through better planning and preparation while making use of methods employed by their more successful counterparts, a distinguished British scholar has said.
EAC govts to finalise trade talks
Members of the East African Community (EAC) and the European Union (EU) have yet to reach a final position on their ongoing trade negotiations under the Economic Partnership Agreements (EPAs) after a year of negotiations.
Back to top AGOA.info 2009 AGOA Forum dates
It has been provisionally confirmed that this year's US-Africa AGOA Forum will take place in Nairobi on 4-6 August. Further details and programme to follow on AGOA.info. Full year 2008 AGOA data published
Individual country profiles were recently updated on AGOA.info with full year 2009 data, allowing some reflections on beneficiary countries’ preferential exports under the Act (aggregate data to January 2009 data was published on 13 March). Overall, exports have grown significantly over the previous year, with the top 5 exporters each showing large increases (Nigeria +17% , Angola +48% , South Africa +71%, Chad +50% and the Republic of Congo +64%). Overall exports are up 30%. For the Southern African region the picture is not that rosy, especially with those countries reliant on a single export sector. Lesotho, the largest exporter of clothing under AGOA has recorded 11% lower exports, as has Swaziland , while Botswana and Namibia have declined 50% and 89% respectively.
New AGOA trade data to January 2009
Trade data published a few days ago reveals a sharp year-on-year decline in AGOA-eligible exports to the US. This decline of 56% calculated for January 2009 compared to the same period in 2008 is due to substantially lower oil exports from Nigeria, which fell from $ 2.9 billion in January 2008 to $ 645million in January 2009. For the first time since AGOA's inception, Angola is the leading exporter under the Act, with exports in January worth $845million. South Africa's exports have also declined by 11% in January 2009 compared to last year. Others in the region, for example Lesotho, Kenya and Madagascar, have all recorded year-on-year increases.
Other updated AGOA data sections include disaggregated bilateral trade profiles for each AGOA country individually (as well as within various regional configurations) , aggregate bilateral trade , preferential trade under AGOA / GSP and sectoral data from AGOA-eligible countries by value and as a proportion of US imports, as well as sectoral “new AGOA” and “GSP AGOA” data. Textile data, which is categorised by rules-of-origin category (for example, it distinguishes garments made from local or third country fabric), is available both by value and by volume . Full year data for 2008 is reflective of difficult trading conditions in this sector: Aggregate garment exports under AGOA are down 11% for the year, with the sub-category requiring local fabric (applicable mainly to South Africa) recording a 29% year-on-year drop.
The current quota period commenced in October 2008 with the latest available quota utilisation rates for the period October-January showing an overall uptake of 7.07%, and 13.67% under the 3rd country sub-quota. The total allowable quota for the October 2008-September 2009 period has been set at 1,711,900,006 square meter equivalents (SME), which for the first time is lower than the quota allocated to a previous year (2007/8: 1,746,798,542).
Follow these links to diagrams showing clothing exports under AGOA, and quota utilisation during the current quota period.
Trade acronyms and terminology
Visit AGOA.info's alphabetically-ordered database of trade-related acronyms and terminology
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