While agricultural protection has been declining in recent years, several sectors remain heavily protected in many countries. These sectors include sugar, rice and dairy, and this paper will concentrate upon the first of these, namely sugar. Sugar is in some ways a scenario of two different sectors coming together with one product. These sectors are the sugar-beet industry in the EU in particular and the sugar-cane sector in many less developed countries. In general, the former is more heavily protected while global trade (excluding intra-EU trade) features cane sugar to a greater extent. It used to be that the production costs of sugar from beet were significantly higher than cane, but that situation is changing.

Despite being heavily protected and global sugar trading in a series of complex regimes that include high tariffs, quotas and preferential access, sugar trading represents a significant share of total agricultural exports globally. An analysis of global agricultural trade reveals that sugar (as defined by HS 1701 that includes both beet and cane sugar) had a trade value of $27.9 billion during 2014. This value ranked sugar as the 13th most traded agricultural product at the detailed HS 4 level, and gave it a 1.75 % share of agricultural exports. These numbers were down from the 2011 sugar price spike when sugar was the fourth most traded sector by value with exports of $40 billion that constituted 2.68% of agricultural trade and placed it in third place behind wheat, soya beans and palm oils.

It is against this global background that the objective of this paper is to provide an analysis of the African sugar sector, with an emphasis on South Africa, Swaziland and Kenya. The trade data is generally from the ITC with the production data downloaded from the Food and Agricultural Organisation (FAO). The paper begins with a global profile for the production and trade of sugar and then moves on to examine the country profiles.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The objective of this working paper is to provide some background to the South African trade and investment profile in recent years, with a special emphasis on the trade relations with the African continent. We explore the merchandise trading relationship before putting South Africa’s investment position with Africa in perspective and finally examining the SACU revenue-sharing formula and options.

South Africa’s exports to Africa have been stable at around 15% of total exports through to around 2008 and they then increased to a figure of nearer 30%. However, this increase has largely been driven by the inclusion of the BLNS (Botswana, Lesotho, Namibia and Swaziland) data in a comprehensive manner as netting out BLNS trade sees an increase to just under 20% in 2014. Botswana and Namibia are the main destinations, followed by Mozambique and Zambia. Fuels are the main export by product.

Imports from Africa are a lower percentage of the South African total, although they have risen steadily from just under 3% (sans BLNS data) to around 13% including BLNS imports, and around 11% without these BLNS imports. Nigeria and Angola are the main sources, and mineral fuels dominate by product with a share that has risen from around 45% of the total from Africa to around 65% or higher in recent years.

For South African agricultural exports new data shows that Africa is significantly more important than the EU as a destination, while the aggregate BRICs (Brazil, Russia, India and China) are more important than the first single destinations of Hong Kong, United Arab Emirates and the United States of America. Furthermore, for South African destinations within Africa the feature is that immediate or very close neighbours dominate the list. By product South Africa exported R105.5 billion worth of agricultural exports in 2014, which constitutes 10.8% of the country’s overall total exports for the year.

The EU is the main source of South African imports, and this share is increasing: from 25.7% in 2010 through to 32.4% in 2014. Similarly, the import share from BRICs is also increasing, while the aggregate share from each of Africa, ASEAN and BLNS declined over the period. Argentina was the top single non-EU import source, followed by Indonesia. The two BLNS countries of Swaziland and Namibia head the list of imports from Africa, followed by Zimbabwe and Zambia.

Collectively, Africa accounted for some 40% to 50% of South Africa’s exports of manufactured goods in 2013, with the close neighbours the most important destinations. General and electrical machinery and vehicles are the main exports. South Africa also dominates intra-Southern African Development Community (SADC) merchandise trade.

Examining the South African foreign investment profile we find that Africa has a modest (4% to 6%) share of liabilities (owed by South Africa), but a higher share of South African investment assets held abroad are invested in Africa. The latter has steadily been increasing from around 4% of South Africa’s investments abroad in the early years from 1997 to nearly 10% by 2012. Namibia has the most invested in South Africa, while South Africa has the most invested in Mauritius.

The final section explores intra-SACU merchandise trade and the way in which the SACU revenue-pool formula impacts upon the tariff revenue-pool shares. Given the high percentages of total BLNS government revenues that these tariff pool distributions make up this formula is critical to the BLNS. The formula and these revenues are set against a background of increasing unease about their continuation and the resulting implications of changes for the future.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The objective of this paper is to firstly set the background for a discussion and analysis of Kenya and its merchandise trading background before presenting a more detailed analysis of this trade and possible implications for Kenya of wider trade and economic integration. Kenya is different from most medium to larger African economies in that it has significant intra-African trade and, conversely, while China is growing as an import source, China does not figure as an export destination.

Kenya’s exports to the rest of the world grew on average by 13% on a year-to-year basis, from $1.8 billion in 2001 to $6.1 billion in 2014. Traditionally, Kenya mainly exports to the European Union (EU), although its 25% share of exports during 2014 declined from 43.8% in 2001. The majority of Kenya’s top 20 exported products primarily featured agricultural and related products (38% of the total). Kenya’s imports from the rest of the world grew at an average year-on-year rate of 17%, from $2.8 billion in 2001 to $19.7 billion in 2014. While imports from its traditional partners (the EU and the US) increased over the period, their shares in Kenya’s imports from the world decreased. Meanwhile, imports from China increased rapidly to register as the biggest import source in 2014.  Petroleum is the largest single import.

The main trading partners in the Tripartite Free Trade Agreement (TFTA) were South Africa, Tanzania, Uganda, Egypt and Rwanda, who collectively supplied 91.12% of the total import values from TFTA in 2014, with South Africa and Tanzania collectively providing 60%. Some 45% of Kenya’s global exports were destined for its TFTA counterparts, with Zambia as the largest export destination. The top three products exported to TFTA were petroleum oils, tea and silicates.

The paper reports on intra-Regional Economic Communities (REC) trading in East Africa and how this is confused by the overlapping membership issue. Within the East African Community (EAC) Kenya is the largest intra-EAC exporter with a share that varies around one-half while Uganda, Rwanda and Tanzania have similar shares of around 15% to 20%. For intra-EAC imports, Uganda, Tanzania, Rwanda and Kenya are all importing around half a billion dollars locally and only Burundi is lagging. By percentage shares of individual imports, Burundi and Rwanda are sourcing around one-quarter locally while Tanzania and Kenya in particular are importing only very modestly from the region. Within the EAC only Tanzania’s intra-EAC exports stay the same if we assume that Kenya, Uganda, Rwanda and Burundi would be able to trade under Common Market for Eastern and Southern Africa (COMESA) and/or Southern African Development Community (SADC) preferences. An annex is provided with details of this intra-EAC trade.

The paper reports on tralac computer simulation work on African trade liberalisation and reforms. The results for tariff elimination on intra-African trade are promising, but the real news is in confirming that these barriers are not as significant as the various trade-related barriers outside of tariffs. Especially impressive results were forecast by simulating a modest 20% reduction in the costs associated with the particular African problem of transit-time delays at customs, terminals and internal land transportation. These gains are significantly above both just intra-African tariff elimination and what may be thought of as the more traditional non-tariff barriers (NTBs). The overall results from time in transit costs especially support the current emphasis on projects such as the WTO infrastructural supports to Africa. The policy implications are clear: while cooperation will enhance the gains, much of the benefits will result from unilateral actions and regional cooperation that would not need the long and drawn-out processes associated with FTA negotiations.

Kenya has much to gain from all three areas of intra-African tariff elimination and reductions in NTBs along with reductions in the time of goods in transit. Importantly, many of these gains can be realised by Kenya through unilateral action that does not require negotiations with partners. Most of Kenya’s gains from tariff elimination across Africa result from gains in the Kenyan sugar sector. This is because tariff elimination forces a reduction in the inefficient sugar sector resulting in resources being used elsewhere in the economy and leading to cheaper sugar for consumers. This result from the sugar sector is not unexpected, as Kenya’s sugar industry has long been highly protected; the paper examines the sector in detail. There are, however, significant tariff losses to both Kenya and Tanzania from trade liberalisation within Africa.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The objective of this paper* is to examine the West and Central African (WCA) trade profile, with some reference to the trading relationship with China and the agricultural trade profile of the region. We start by giving a ‘health warning’ about the data, however. This data is sourced exclusively from the International Trade Centre (ITC) but we emphasise that despite this warning the ITC is the best available data source.

The European Union (EU) was consistently the main destination of WCA exports, albeit with fluctuations in the export share. The BRIC countries (Brazil, Russia, India and China) and Africa increased in importance, while the United States of America (US) share declined dramatically. Within Africa, Gabon was the main export destination, followed by South Africa (increasing) and Côte d’Ivoire (consistent). By product, exports were dominated by crude petroleum and, combined with the related products of petroleum gases and refined petroleum, mineral fuels had a market share of just on three-quarters of the total exports during 2014. Nigeria was the dominant exporter followed by Côte d’Ivoire and Equatorial Guinea.

Again the most significant partner for regional imports was the EU, although its importance declined over time in the face of relentless competition from China. The percentage shares of most other trading partners were remarkably consistent over the period. The main import was refined petroleum oil and this was followed by commodities not elsewhere specified and crude petroleum oils. Nigeria was responsible for around one-third of the total imports; Ghana and Liberia were the next main regional importers.

The region is somewhat unusual in that while exports to BRICs roughly doubled over the period from 2001 to 2014 as a percentage share of total exports China was not the main BRIC destination; this position belongs to India. Conversely, China as an import source increased dramatically from 4.2% of the WCA imports in 2001 to 20.9% in 2014 and this increase is showing no signs of abating. Further to the data ‘health warning’ given earlier we are somewhat cautious in the interpretation of the data, although it can be stated that mineral fuels were the main export, followed by ores and logs and wood-related products.

Agricultural exports from WCA were again mainly destined for the EU while Africa was the second most important destination with over $2 billion in exports for the last four years of the review. The US was the main individual country destination, followed by India and Malaysia. Burkina Faso, Ghana and Nigeria were the three main African destinations for 2014. Côte d’Ivoire was the main regional exporter of agricultural products followed by Ghana and Nigeria. Cocoa and cocoa-related products were the main agricultural export followed by edible fruit and nuts, oil seeds and animal and vegetable fats and oils.

The EU has long been the main source of WCA imports, but BRICs headed by India and Brazil caught up and indeed surpassed the EU during 2012. Africa was next, headed by Côte d’Ivoire and then South Africa. Nigeria was the leading importer, followed by Ghana and Benin. The cereal products of rice and wheat were the main agricultural imports, followed by sugar and milk powders.

* This paper was prepared during a tralac ‘Geek Week’ data training workshop during the week of October 5 to 9, 2015.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The objective of this paper is to provide a background to Lesotho’s economic and trade policies with a particular emphasis on future directions for the Mountain Kingdom. For this it relies heavily on several recent published documents.

Lesotho is a relatively poor country, with many of the human development outcomes that are below the norms for a country of Lesotho’s income level. It is close to a poverty trap and, worryingly, this persistence of poverty and rising inequality has happened in an economy that grew at annual rates of 4% per capita over the past decade. Problems that Lesotho faces include the need for the public sector to be modernised and for private-sector jobs to increase. Moreover, declines in Southern African Customs Union (SACU) tariff revenues that provide over half of Lesotho’s public-sector finances, are a reality.

The World Bank considers that Lesotho’s poverty stagnation could be partially attributed to a decline in remittances and a still large dependence on subsistence farming among many households. Lesotho will require broad-based job creation, greater productivity, and a structural shift from an unhealthy dependence on the public sector to a strong and competitive private sector. Lesotho’s economy remains dependent on subsistence agriculture, a sector where most of these people are engaged in small-scale farming and herding; labour productivity is low and is losing competitiveness. Problems in the agricultural sector focus on the land quality and the traditional land tenure systems that discourage investment in land improvements. Lesotho must find the optimal package of policy reforms, institutional changes, and supporting investments to drive technological changes in this sector.

Manufacturing and in particular the textiles and clothing sector is the main contributor to the growth of Lesotho’s formal Gross Domestic Product (GDP), but this sector is stagnating in the face of competition from low-cost Asian producers and rising labour costs. Access to the US market under the Africa Growth and Opportunity Act (AGOA) means that Lesotho is vulnerable to increased competitive pressures from Asia and the United States of America (US). Mining, the fastest growing sector in Lesotho, is the one bright spot in Lesotho’s economy, and water is an important renewable asset as the export of water to South Africa contributes about 3% of GDP. Tourism is important for economic diversification but, again, there are problems with productivity as well as infrastructural constraints.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

This paper uses the Global Trade Analysis Project (GTAP) computer database and takes the full suite of African agricultural sectors and African countries/regions in order to assess the benefits of intra-African tariff liberalisation in agricultural merchandise across the continent.

We start by examining recent intra-African agricultural trade flows by partners and commodities. We find that South Africa is the main trader and tobacco and sugar are the main commodities traded. However, it must be noted that this data is different from the 2011 data used by the GTAP and we caution about data accuracy in Africa in particular. Before undertaking our simulations we incorporate the EU sugar reforms into the data and assess the benefits of liberalisation as they are measured at the end year of 2025.

As is usually the case, South Africa is the leading beneficiary, with the economy at 2015 being some $1,840 million better off than it would otherwise have been. Kenya is the next largest African gainer, followed by Senegal and Côte d’Ivoire. Zimbabwe is the big loser, and outside of Africa all countries/regions show a loss. For South Africa, the largest contribution ($753 million) is from changes in the capital investment situation as investment is attracted into the country, and this is followed by improved terms of trade (as measured by the model).

The key agricultural sectors are vegetables, fruits and nuts; crops (other); meat of cattle, sheep, goats and horses; vegetable oils and fats; dairy products; refined sugar and associated products; food products not classified elsewhere; and beverages and tobacco. By country, the key ones were South Africa, Kenya, Tanzania, Uganda, Zimbabwe and Cote d’Ivoire. Overall, the largest impact is felt in the vegetable oils and fats sector, with Côte d’Ivoire and Kenya the African gainers.

The more interesting outcome, however, is in the sugar sector, where South African gains through better access into Kenya, which in turn makes significant gains as it reduced its sugar production significantly and transferred resources out of a sector which had been heavily protected but technically inefficient. This is a classic example of how regional integration can benefit a country through efficiency gains. Changes in other sectors are often dominated by South Africa.

We find that Kenya, Tanzania, Zimbabwe and the rest of Africa lose significant tariff revenues that in the real world has to be adjusted for in some way, and that Senegal, Kenya and Côte d’Ivoire all report an enhancement in labour market remuneration of around 0.2% or more. Overall, Zimbabwe is the big loser in Africa from this liberalisation, and only Tanzania has a similarly meaningful loss.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

In recent times tralac has published extensively on African trade, with an emphasis on southern and eastern Africa as the Tripartite FTA developed. There has not been a commensurate emphasis on the analysis of trade in the western half of the continent, and the objective for this paper is to remedy that situation and in particular examine the intra-western African trade and the intra East-West African trade.*

There are 23 countries in our definition of west and central Africa (WCA), most of which are members of either or both of the Economic Community of West African States (ECOWAS), the Economic Community of Central African States (ECCAS) and the Community of Sahel-Saharan (CEN SAD).

The European Union (EU) has consistently been the main destination for WCA exports, albeit with fluctuations in the export share. Both the BRICs and Africa as a whole (including intra-WCA trade) have been increasing, while the US share has declined dramatically. During 2014 exports from WCA to Africa accounted for some 17.5% of total WCA exports, while the comparable share for WCA imports from Africa was a lower 12.6%. Within this data for WCA trade with Africa we found that the share of Intra-WCA imports in WCA imports from Africa was 75.82% in 2014. West Africa therefore imported more from within its own region than from other outside regions in Africa.

Examining the profile for WCA exports to the world we found that the share of intra-west African export in West African exports to Africa is 72.7% in 2014. This means that again WCA exported more to African countries from within its regions than to other African countries outside WCA. The importance of these intra-WCA exports are variable but have been in the range of 11% to 15% of total exports in recent years. The leading export is, as expected, mineral fuels with a 69.2% of the total intra-West Africa export, followed by ships and related structures. These mineral fuels are exported mainly by Gabon and Nigeria.

A reconciliation exercise gives a somewhat confusing pattern. For 2013 and 2014 overall imports are only 62% and 60% of the comparable import data. Much of this difference can be found in the mineral fuels data, although the category of ships and related vessels leaves much of the data unexplained.

* This paper was prepared during a tralac ‘Geek Week’ data training workshop during the week of October 5 to 9, 2015.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

This paper examines the Free Trade Agreement (FTA) between Australia and China (ChAFTA) that was signed on 17 July 2015. The examination provides an emphasis on the implications for South Africa. It concentrates on an analysis of Australia’s merchandise exports to China, with these exports set in a perspective that enables us to assess access concessions against South Africa’s (and to a lesser extent New Zealand’s) exports. South African imports from China face significantly different access issues than do the comparable Australian imports. Accordingly, we feel that there is little to be gained by dwelling on the tariff concessions that Australia has made to China.

During 2014 China imported goods worth some $44.6 billion from South Africa, a figure just under half of the Australian imports of $98 billion. We warn, however, that the data for these imports from South African does not match the reported exports from South Africa to China. It is made even more complex by the Chinese use of a ‘Special’ import line that is undisclosed and comprises imports from South Africa to about one half of its significant value. Much of this trade may be gold, and as South Africa does not disclose its gold export destinations it is difficult to assess the real values of this trade.

There have been some changes to the investment regimes in both countries, but these seem to be relatively minor. The exceptions are that concessions have been granted with respect to movement of people to support investments and some liberalisation of the services sectors. The usual endeavours to cooperate more comprehensively on the general non-tariff measures (NTMs) are incorporated into the agreement. This is so as the rules of origin (RoO) procedures seem to be standard and the parties have agreed that neither member will introduce or maintain export subsidies on goods destined for the territory of the other.

In the final analysis there are few implications for South Africa from ChAFTA. Australia gains some advantages in the Chinese resources market, but while these are important they are not massive. In general, the tariffs are low and there is limited South Africa-Australia head-to-head competition in most lines. Australia gains some advantages in agriculture, but these are mainly in commodities where South Africa does not compete – except for perhaps wine. There are no changes to the important sugar market, and in other merchandise trade sectors there are few advantages to Australia over South African competitors in China. Crucially, on Chinese imports Australia has negotiated its already low tariffs on clothing to go to zero very quickly. This is something that South Africa could not contemplate under the existing trade regime. Elsewhere in the trade remedies, services, and investment chapters, there appears to be few pointers for South Africa to muse over.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

The objective of this paper is to analyse the Southern African Customs Union’s (SACU) agricultural trading relationship with particular focus on South Africa’s dominant trading position vis-à-vis the rest of SACU member states, namely Botswana, Lesotho, Namibia and Swaziland (BLNS). Aggregate trade data for the first section of the paper was sourced from the International Trade Centre (ITC), while for the second section of the paper, the trade data that was used was sourced both from the ITC and from the SACU Secretariat. All data is expressed in rand (millions) and relative market shares.

South Africa’s aggregate exports to the SACU region steadily increased from R80.6 billion in 2010 to R131.3 billion in 2014 and recording a 62.9% growth over the period. Its aggregate imports from SACU similarly increased from R18.3 billion in 2010 to R29.6 billion in 2014, recording a 61.5% growth over the period. The agricultural products in the top 25 listing of exports to SACU were maize, sugar, wheat, cigarettes and juices, with maize, sugar and wheat accounting for 6.5%, 5.3% and 4.4% respectively in 2014.

South Africa’s top three imports from SACU were odoriferous mixtures, diamonds and chemical industry products, totalling R3.5 billion, R2.4 billion and R2.0 billion respectively in 2014. Within the top 25 there were the agricultural products of sugar, beer, beef, sugar confectionery, live cattle, and sheep and goat meat. Total agricultural imports from SACU increased from R5.1 billion in 2010 to R6.5 billion in 2014, representing a 28% growth over the period. Sugar ranked the highest followed by beer and beef.

Intra-BLNS agricultural trade is extremely limited. Namibia exports some beer to both Botswana and Lesotho and imports some beef from Botswana. Lesotho has virtually zero exports to the other BLNS partners but imports cotton from Botswana. Botswana imports various products in minor amounts from Namibia, while Swaziland is not actively involved with the BLNS partners. 

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.

This paper analyses trade between the three Regional Economic Communities (RECs) of the Common Market for Eastern and Southern Africa (COMESA), the African Economic Community (EAC), and the Southern African Development Community (SADC) using trade data from the International Trade Centre (ITC). The data is generally ranked by 2013 as that is the most consistently and seemingly comprehensive reporting available.

Examining each REC in turn we find that both Rwanda and Uganda export around half of their totals to COMESA, with DRC and Burundi around 20%, Zambia and Malawi around 15% and the rest below this figure. Libya with less than 0.5% is the outlier. Within the EAC, Kenya is the largest intra-EAC exporter with a share that varies around one-half while Uganda, Rwanda and Tanzania have similar shares of around 15% to 20%. Rwanda reports that some 72% of its exports were destined for EAC during 2013, but the data for other years varies significantly. As expected, South Africa dominates the intra-SADC exports with a share around 50% to 60%.

Next is a group of eight members with shares that are all generally grouped between 3% and 8%. By shares of exports destined for SADC, Zimbabwe reports that over 90% of its exports are in this category, and both Swaziland and Namibia report around 50% to 60%. Angola, like fellow oil exporter Libya in COMESA, has a very low share of around 3% only destined for SADC.

Overlapping memberships are a major feature of the RECs, and we must be careful to assess the overall impact of these to avoid double-counting intra-REC trade. We have taken two subcategories of each REC: (a) ‘pure’ trade entails intra-REC trade that excludes trade counted as intra-regional trade in another REC as both partners are members in common of another REC, whereas (b) ‘geographical’ trade entails all REC members which are arbitrarily assigned to their logical geographical regions. Pure trade is a subset of the full data while geographical trade in turn is a subset of pure trade.

There are, of course, several issues related to these definitions that suggest that we are taking an almost naive approach but this approach does highlight the overlapping issue. We have only assessed exports under these definitions, and ‘pure’ entails only intra-REC trade.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.