News Archive July 2016

tralac’s Daily News Selection

The selection: Friday, 29 July 2016

South Africa’s June trade balance figures will be released today. The Bloomberg consensus is for a narrowing of the trade surplus to R7.2bn in June, from R18.7bn in May.

Featured African trade policy process: ECOWAS moves to develop a regional services trade policy

ECOWAS has commenced a three day workshop aimed at developing a Regional Services Policy, strengthen policy formulation, and identify best-fit regulatory and institutional frameworks and negotiation capacity on trade in services. The ECOWAS Director of Trade, Dr Gbenga Obideyi said participants will also focus on issues concerning the formulation of an ECOWAS Common Trade Policy in services as well as the Continental Free Trade Area under the auspices of the African Union and the Economic Partnership Agreement services negotiations between the region and the EU. The ECOWAS Regional Services Policy Review will be formally launched as part of the Workshop.

President Mkapa: ‘EPA has never made much sense for Tanzania’ (Daily News)

Statistics show that in fact, for the EAC region, the African market is the primary market for its manufactured exports. In contrast, 91% of its current trade with the EU is made up of primary commodity exports (agricultural products such as coffee, tea, spices, fruit and vegetables, fish, tobacco, hides and skins etc). Only a minuscule 6% or about $200,000 of EAC exports to the EU is composed of manufactured goods.In contrast, of the total EAC exports to Africa, almost 50% is made up of manufactured exports - about $2.5 billion - according to 2013 – 2015 data. Of this, $1.5 billion are EAC country exports to other EAC countries. These figures tell two stories: [Brexit: scapegoat for EAC countries to back out of the EPA? (tralac)]

Kenya overtakes SA as biggest investor in African countries (Business Daily)

Kenya overtook South Africa to become the biggest investor in other African countries in terms of the number of projects in 2015. Kenya invested in 36 projects last year in other parts of the continent against South Africa’s 33, a new study by financial consulting firm Ernst & Young shows. It noted that most of Kenya’s intra-Africa investments went into countries within the EAC. The study said Kenya’s global ranking as a source of FDI to the African continent also improved strongly to the seventh position in 2015 from 13th in 2014. South Africa however beat Kenya in terms of the worth of the projects as it had Sh200 billion compared to Kenya’s Sh100bn.

South Africa: Davies awaits next move from Harare (Business Day)

Trade and Industry Minister Rob Davies is awaiting a response from his Zimbabwean counterpart for a meeting to resolve a dispute over Harare’s ban of certain imports from SA as a trade delegation from that country cancelled a visit to SA until "further notice". Davies — who conceded that the ban had taken him by surprise because it came amid trade negotiations centred on surcharges — on Wednesday said any trade mission visit between the countries would not be "fruitful" in light of the talks over Zimbabwe imposing a ban on South African goods.

COMESA: ‘Engage Zimbabwe on import ban’ (NewsDay)

The Common Market for Eastern and Southern Africa says it will not intervene in resolving the impasse created by an “import ban” imposed by Zimbabwe, urging member states to engage on bilateral grounds. Speaking at the third sensitisation workshop for business reporters in Livingstone yesterday, Comesa Competition Commission director and chief executive officer George Lipimile said Zimbabwe was a peculiar country and SI 64 was a remedy to the recovery of the economy. “It’s being looked at as a trade matter, it’s an issue of respecting the economic model of each country. Zimbabwe has its own peculiar situation that they are dealing with so that is one way of remedying their economy. I tend to think it’s unlikely that Comesa will get involved. It’s an internal matter so most countries will deal with it bilaterally,” he said.

Namibia: Economic Outlook July 2016 (pdf, Bank of Namibia)

Namibia’s real GDP growth is projected at 4.4% and 5.4% for 2016 and 2017, respectively. The projected growth for 2016 represents a slowdown from the preliminary national account estimates of 5.7% for 2015. The expected slowdown in 2016 is mainly attributed to the decline in growth of the construction sector, as well as, the diamond mining sub-sector. There are notable improvements in the uranium mining sub-sector and a lesser contraction in the agriculture sector; however, these developments may not be sufficient to avoid a slowdown in overall growth for 2016. Over the medium-term, growth will be supported by increased mining output from new and existing mines, and sustained growth in wholesale & retail trade.

Dangote signals slower pace of African cement expansion (Bloomberg)

Dangote Cement Plc signaled it may ease the pace of adding new capacity amid foreign exchange constraints in its home market of Nigeria, as Africa’s largest producer of the building material reported a decline in first-half profit. While the company remains committed to its ambitious growth plans, “we are taking a more measured approach to the roll-out of new capacity across Africa,” Chief Executive Officer Onne van der Weijde said.

Roger Williamson: 'Made in Africa: learning to compete in industry' (UNU-WIDER)

This book [the new UNU-WIDER and Brookings book Made in Africa] is a valuable resource with a distinctive message and realistic tone. Even though much can be done, the authors do not expect a replication of the East Asian take-off. There is a chance for Africa to “break in” as East Asia did in the 1980s, becoming the “world’s factory.” Changes in Asia such as rising labour costs and increasing demand for goods in Asia are among factors which provide the opportunity for Africa initially to pick up some of the basic manufacturing jobs and progressively to move up the value chain in manufacturing, agro-industry and services. The authors temper this optimism somewhat: “We would be very surprised if the most successful African economy in 2030 looked like Vietnam today”.

Building tax capacity in developing countries: IMF submission to G20 finance ministers (IMF)

An indispensable prerequisite to improving tax capacity is enthusiastic country commitment. While such political commitment must arise within the country and its government and cannot be created by external support, the report assesses ways in which such support can encourage and reinforce that necessary commitment. Given such commitment, the report points to several key enablers to building tax capacity: (i) a coherent revenue strategy as part of a development financing plan, (ii) strong coordination among well-informed and results-oriented providers, (iii) a strong knowledge and evidence base, (iv) strong regional cooperation and support, (v) strengthened participation of developing countries in international rule setting. [Jim Brumby: How can we build tax capacity in developing countries?]

Chinese, African companies ink $17bn deals (Xinhua)

The deals, involving financial institutions and enterprises, were signed on the eve of a meeting on delivering the outcomes of the Johannesburg Summit of FOCAC. More than 400 participants from government agencies, financial institutions, business associations and enterprises attended the Seminar on China-Africa Business Cooperation and Signing Ceremony in Beijing on Thursday. The seminar was hosted by the China Council for the Promotion of International Trade. [Malawi-China business forum bearing fruits as it has roped in 11 investors (Maravi Post)]

Peacebuilding in Africa: UNSC open debate, Presidential Statement (UN)

Smail Chergui, the AU’s Commissioner for Peace and Security, discussed lessons learned from recent relapses of post-conflict countries into violence. There needed to be a greater focus on coordination among all actors and integrating planning and operations. If properly calibrated, post-conflict reconstruction and development interventions would be critical to African Union conflict-prevention strategies, he said, calling for institutionalized annual meetings between the United Nations and African Union to share lessons learned. Among donor countries, the US representative said national ownership of peacebuilding processes must not be pretext for inaction on the part of the Council or the international community. Too often, she said, that was the case. Political leaders needed to be held to account to halt violence and uphold the rule of law, she added. The EU’s representative said regional integration initiatives had been undermined by the fact that States often belonged to regional groups with identical or overlapping mandates. Another challenge was that regions’ political ambitions were not sufficiently underpinned with operational capacity and resources, which, in turn, limited their absorption of aid. [IGAD: update on regional strategy on preventing and countering violent extremism]

Gender budgeting and gender equality database: study of 14 SSA national experiences (pdf, IMF)

Our review of gender budgeting in sub-Saharan African found that Rwanda, Uganda, and South Africa have achieved some successes with gender budgeting, chiefly through changes in fiscal policies or budget-making procedures. However, it is difficult to link gender budgeting directly to these changes, given the complex environment for fiscal decision-making in these and other countries. We found that, in the countries where gender budgeting seems to be most effective, Ministries of Finance are taking the lead. For example, Ministries of Finance in Rwanda and Uganda have mandated that other ministries or levels of government responsible for social welfare or women’s development try to address gender gaps and women’s needs in their budgets. Parliamentarians also played a catalytic role in these countries. [Access the full set of companion IMF studies]

Pradeep S. Mehta, Smriti Bahety: 'India-US trade: give some, take some' (LiveMint)

The reason for the slowdown in the negotiation momentum can be attributed to two factors. First, India and the US have had fallouts at the WTO pertaining to poultry imports, solar panels and more recently on visa fee hikes by the US. The second reason is attributable to the significant differences in India’s new model BIT and the US’ 2012 model BIT.

UK lagging behind ‘Digital Tiger’ economies (Barclays)

The Barclays Digital Development Index benchmarks 10 countries around the world on their readiness to compete in the digital economy. The study, which attributes an overarching ‘digital empowerment’ score to each nation, found that the UK came in just fourth place behind new and emerging ‘digital tiger’ economies Estonia, South Korea and Sweden. When it comes to individuals’ assessment of their own digital skills and confidence, the UK trails major economic rivals India, China and the USA. The findings are based on a survey of almost 10,000 working adults combined with analysis of policy frameworks and support for the development of digital skills in each country.

Greater Mekong Subregion Economic Corridors Forum (4 August, ADB)


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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 350 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome.

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tralac’s Daily News Selection

29 Jul 2016
The selection: Friday, 29 July 2016 South Africa’s June trade balance figures will be released today . The Bloomberg consensus is for a narrowing of the trade surplus to R7.2bn in June, from R18.7bn in May. Featured African...
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Kenya overtakes SA as biggest investor in African countries

Kenya overtook South Africa to become the biggest investor in other African countries in terms of the number of projects in 2015.

Kenya invested in 36 projects last year in other parts of the continent against South Africa’s 33, a new study by financial consulting firm Ernst & Young shows.

It noted that most of Kenya’s intra-Africa investments went into countries within the East African Community (EAC).

The study said Kenya’s global ranking as a source of foreign direct investment (FDI) to the African continent also improved strongly to the seventh position in 2015 from 13th in 2014.

“Activity was largely concentrated in services, with financial and business services together accounting for nearly 78 per cent of FDI projects originating from Kenya,” said the report released Monday.

“Many Kenyan companies are playing the role initially adopted by South Africa’s corporate sector, who were the first to venture outside their home markets,” it adds.

South Africa however beat Kenya in terms of the worth of the projects as it had Sh200 billion compared to Kenya’s Sh100 billion.

In the past decade, Kenyan banks and retail businesses, for example, have ventured into the region including in the volatile South Sudan and Somalia.

“East Africa is the primary destination for Kenyan investors, in line with overall sub-regional integration plans,” said the study.

It further shows that Africa attracted FDI from a diverse and growing group of investors.

In 2015, the US retained its position as the largest investor in the continent, despite a four-per cent fall in FDI projects. Historical investors, including the UK, France, the UAE and India, expressed renewed interest in Africa.

Other notable investors in Africa were Italy and Luxembourg, which became among the largest 15 investors in 2015. Overall, intra-African FDI projects rose 2.8 per cent in 2015, with capital investment up 6.2 per cent.

In terms of inward FDI in 2015, the study shows that Kenya, touted as East Africa’s anchor economy, posted a resurgence with projects standing at 95 compared to 62 the previous year, an increase of 53.2 per cent.

At the same time South Africa had more inward FDI projects numbering 130 in 2015 compared to 120 projects in 2014 , an 8.3-per cent increase.

“Kenya and East Africa is shining bright and even brighter in the comparison with its peers. Kenya is very much the leader in this region and because of a good component of diversification, is maintaining a strong rate of GDP expansion,” Rich Management CEO Aly Khan Satchu said of the report’s findings.

The report however warned that potential investors are wary of downside risks to growth forecasts.

“For example, in Kenya’s case, a large current account deficit and growing debt levels provide the government with less flexibility to fund longer-term growth,” it said.

Across the whole continent on the other hand, inward FDI project numbers increased by seven per cent year on year, from 722 projects in 2014 to 771 projects in 2015.

But the capital value of those projects was down year-on-year to $71.3 billion in 2015 from $88.5 billion in 2014. Even after falling, the 2015 figure was still higher than the average of $68 billion between 2010 to 2014.

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Kenya overtakes SA as biggest investor in African countries

29 Jul 2016
Kenya overtook South Africa to become the biggest investor in other African countries in terms of the number of projects in 2015. Kenya invested in 36 projects last year in other parts of the continent against South Africa’s 33,...
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Staying the course, despite a relative economic slow down

According to EY’s Africa attractiveness program 2016: Staying the course, despite a relative slow down, Sub-Saharan Africa remains one of the fastest growing regions in the world. This is reflected in the foreign direct investment (FDI) levels in 2015, where FDI project numbers increased by seven percent.

Although, the capital value of projects was down year-on-year – from US$88.5b in 2014 to US$71.3b in 2015 – this was still higher than the 2010-2014 average of US$68b. Similarly, jobs created were down year-on-year, but, again ahead of the average for 2010-2014.

Ajen Sita, Africa Chief Executive Officer at EY, comments, “Over the past year, global markets have experienced unprecedented volatility. We’ve witnessed the collapse of commodity prices and a number of currencies across Africa, and with reference to the two largest markets, starting with South Africa, we saw GDP growth decline sharply to below one percent and the country averting a credit ratings downgrade; in Nigeria, the slowdown in that economy was impacted further by the decline in the oil price and currency devaluation pressure.”

Sita adds, “The reality is that economic growth across the region is likely to remain slower in coming years than it has been over the past 10 to 15 years, and the main reasons for a relative slowdown are not unique to Africa. In fact, Africa was one of the only two regions in the world in which there was growth in FDI project levels over the past year.”

East Africa closes the FDI gap, with Kenya a big gainer

EY Africa attractiveness East Africa closes gap July 2016

In 2015, East Africa recorded its highest share of FDI across Africa, achieving 26.3% of total projects. Southern Africa remained the largest investment region on the continent, although projects were down 11.6% from 2014 levels. The West Africa region saw a rebound in FDI projects by 16.2%, and interestingly in 2015, the region became the leading recipient of capital investment on the continent, outpacing Southern Africa.

North Africa experienced 8.5% year-on-year growth in FDI projects. Furthermore, while projects are increasing in North Africa, they are increasing at a much faster rate in Sub-Saharan Africa.

Michael Lalor, EY’s Africa Business Center Leader, adds, “In a context of heightened concerns about economic and political risk across the continent, FDI flows remain robust, and in line with levels we have seen over the past five years. A key factor here is the structural shift in FDI – from a high concentration of source countries and destination markets and sectors, to a far more diverse FDI landscape. As a result, risks and opportunities are being spread much wider, and there is no longer an overdependence on a limited group of investors or sectors to drive FDI performance.”

Historical investors gain strength, new investors emerge

EY Africa attractiveness FDI projects by country July 2016

The US retained its position in 2015, as the largest investor in the continent, with 96 investment projects valued at US$6.9b. During 2015, traditional investors such as the UK and France, as well as the UAE and India, also showed renewed interest in Africa.

Investors diversify focus across sectors

Over the past decade, there has been a shift in sector focus in FDI from extractive to consumer-facing industries. Mining and metals, coal, oil and natural gas, which were previously the key sectors attracting major FDI flows, have given way to consumer products and retail (CPR), financial services and technology, media and telecommunications (TMT), accounting for 44.7% of FDI projects in 2015. In 2015, further evidence of sector diversification came through, with business services, automotive, cleantech and life sciences all rising in significance and becoming the likely “next wave” for investors.

Striking a balance between growth, profitability and managing risk

Sita concludes, “Given the growth potential in and relative underdevelopment of many African markets, the primary focus for many companies over the past few years has been on entering new markets, capturing market share and driving revenue growth. A combination of factors – including tightening economic conditions, increasingly well-informed consumers and citizens, intensifying competition, a heightened sense of global geopolitical uncertainty, and shifting priorities from global or regional HQ – is now driving a change in focus toward striking a greater balance between growth, profitability and risk management.”

» Download: Africa Attractiveness Program 2016: Staying the course (PDF, 6.44 MB)

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Staying the course, despite a relative economic slow down

29 Jul 2016
According to EY’s Africa attractiveness program 2016: Staying the course , despite a relative slow down, Sub-Saharan Africa remains one of the fastest growing regions in the world. This is reflected in the foreign direct...
1 ~ 612

ECOWAS moves to develop a regional services trade policy

The Economic Community of West African States (ECOWAS) has commenced a three day workshop aimed at developing a Regional Services Policy, strengthen policy formulation, and identify best-fit regulatory and institutional frameworks and negotiation capacity on trade in services.

The workshop is also to ensure that the Trade sector plays it role in supporting ECOWAS to meet its development objectives.

In his opening remarks of the workshop on 27th July 2016 in Abuja, the ECOWAS Commissioner for Trade, Customs and Free Movement, Mr. Laouali Chaibou emphasized the need for an effective Regional Services Policy, which is necessary for the attainment of the ECOWAS mandate of economic integration.

Over the years, ECOWAS has committed itself to trade in services at various levels as it is important for the growth of different aspects of the economies of Member States, he said.

Furthermore, Commissioner Chaibou cited the workshop as an opportunity for building the capacity of Member States by sharing of experiences of experts in the trade sector in the region.

He stated that the objective of the training is to build capacity in the ECOWAS region with the aim of providing a pool of regional experts as a resource for policy-making and negotiations on trade in services.

The ECOWAS Director of Trade, Dr.Gbenga Obideyi disclosed that participants of the workshop will also focus on issues concerning the formulation of an ECOWAS Common Trade Policy (CTP) in services as well as the Continental Free Trade Area (CFTA) under the auspices of the African Union and the Economic Partnership Agreement (EPA) services negotiations between the region and the European Union (EU).

The ECOWAS Regional Services Policy Review (SPR) will be formally launched as part of the Workshop.

The representative of UNCTAD stressed the commitment of its Secretary General, Dr. Mukhisa Kituyi, to support African integration and pledged his support going forward.

The training, which is attended by representatives of Member States and the various Directorates of the Commission, is organised  in the context of a partnership between UNCTAD and the ECOWAS Commission with support from GIZ.

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ECOWAS moves to develop a regional services trade policy

29 Jul 2016
The Economic Community of West African States (ECOWAS) has commenced a three day workshop aimed at developing a Regional Services Policy, strengthen policy formulation, and identify best-fit regulatory and institutional...
1 ~ 612