News Archive April 2017

tralac’s Daily News Selection

New tralac publications: The EAC Mode 4: trade data (by Viola Sawere), Africa’s trading relationship with Japan (by Ron Sandrey), WTO: Agricultural Issues for Africa (by Ron Sandrey, Moses Lubinga, et al.)

South Africa’s March trade statistics: trade surplus jumps (SARS)

The South African Revenue Service has released trade statistics for March 2017 recording a trade balance surplus of R11.44bn. The year-to-date trade balance surplus (1 January to 31 March 2017) of R4.98bn is an improvement on the deficit for the comparable period in 2016 of R24.27bn. The trade balance surplus is attributable to exports of R101.23bn and imports of R89.79 billion. Exports increased from February 2017 to March 2017 by R13.96bn (16.0%) and imports increased from February 2017 to March 2017 by R7.32bn (8.9%). Africa zone: Exports of R27 007 million – an increase of R3 360 million from February 2017. Imports of R9 785 million – a decrease of R 547 million from February 2017. Trade balance surplus: R17 222 million – this is a 29.3% increase in comparison to the R13 315m surplus recorded in February 2017.

SA plans emergency steel tariff from July – WTO (Reuters)

South Africa is proposing to put emergency “safeguard” tariffs on imports of certain flat hot-rolled steel products from July, it said in a filing published by the World Trade Organization on Thursday. The tariff would be in place for three years, and fall from 12% in the first year to 10% in the second year and 8% in the third, it said. South Africa said the proposal was based on a final determination by its International Trade Administration Commission that domestic production had suffered serious damage from an unforeseen surge in imports.

India export subsidies may have to be phased out soon (Mint)

India may soon have to phase out its export subsidy regime in the current form as WTO rules bar it from offering export incentives to any sector, including textiles, when it reaches certain thresholds that it is nearing. The deadline for ending direct subsidies to textile companies is December 2018. Under the special and differential provisions in the WTO’s Agreement on Subsidies and Countervailing Measures, least developed countries and developing countries whose GNI per capita is below $1,000 per annum at the 1990 exchange rate, are allowed to provide export incentives to any sector that has a share of below 3.25% in global exports.

Brazil minister backs tariff to curb US ethanol imports (Reuters)

Agriculture Minister Blairo Maggi has asked Brazil’s foreign trade council to impose tariffs on ethanol imports following a surge in shipments from the United States, an official said on Thursday, a move that could stir trade tensions with the Trump administration. Ethanol imports from the United States increased fivefold to a record 720 million litres in the first quarter - worth some $363m, according to official trade data. Most of that went to ports in north eastern Brazil, where ethanol producers are leading calls for the imposition of a 20% tariff.

Structural change, fundamentals, and growth: a framework and case studies (World Bank)

This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes Brazil, India, Vietnam and four African countries (Botswana, Ghana, Nigeria, Zambia) all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework that draws a distinction between the “structural transformation” and “fundamentals” challenges in growth. Out of the seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam. [The analysts: Margaret McMillan, Dani Rodrik, Claudia Paz Sepulveda] [Morten Jerven: Africa Growing? Past, present and future]

EAC to fully rollout Single Customs Territory (Daily News)

The EAC Committee on Customs has agreed on full implementation of Single Customs Territory system effective 31 July, this year, to enable faster clearance of goods and reduce the cost of doing business in the region. Through this, the respective governments look forward to cutting time and resources used in collecting custom taxes at various borders. The agreement was reached in Dar es Salaam, yesterday, by respective Commissioner Generals of Revenue Authorities from Tanzania, Kenya, Uganda, Rwanda, Burundi and South Sudan. Chairperson of the Committee, Dicksons Kateshumbwa, said the EAC was also exploring the possibility of entering into mutual recognition agreement with the rest of the world, to allow traders enjoy benefits when trading with other regions of the world. However, he said that will depend on refining operationalisation of the Authorised Economic Operator (AEO) programme with the EAC.

Region in joint effort against tax fraud (New Times)

Commissioners of tax investigation and enforcement from Rwanda, Tanzania, Kenya and Uganda say information sharing as well as deeper collaboration will be decisive in tackling tax fraud. They emphasised this, yesterday, at the opening of a two-day session of the sixth East African Regional Meeting for Commissioners of Tax Investigation and Enforcement in Kigali. The tax collectors’ last meeting, in November last year in Nairobi, Kenya, established two technical committees; one mandated to deal with the establishment of a harmonised tax investigators capacity building framework and the other to work out a technical guide on legal and administrative operational framework. The Kigali session is, among others, reviewing and validating these frameworks.

Social protection in East Africa: harnessing the future (OECD)

This strategic foresight report assesses the interaction between demographics, economic development, climate change and social protection in six countries in East Africa between now and 2065: Ethiopia, Kenya, Mozambique, Tanzania, Uganda and Zambia. The report combines population projections with trends in health, urbanisation, migration and climate change and identifies the implications for economic development and poverty. It concludes by identifying policies to address seven grand challenges for social protection planners in national governments and donor agencies which emerge from the projections.

Mozambique: New World Bank Group strategy seeks growth diversification (World Bank)

The World Bank Group Board has endorsed a new Country Partnership Framework with Mozambique for the fiscal years 2017-2021. The CPF focuses on a set of objectives reflecting the Government of Mozambique’s five-year program (Plano Quinquenal do Governo); development priorities identified in the WBG’s own diagnostic; and the institution’s comparative advantages. In line with these principles, the CPF objectives are organized into three focus areas: promoting diversified growth; investing in human capital; and enhancing sustainability. This strategy’s indicative financing envelope is $1.7bn from IDA.

Angola: AfDB 2017-2021 strategy focuses on agricultural transformation and infrastructure development (AfDB)

The Board of Directors of the African Development Bank Group has approved the Bank’s Angola Country Strategy Paper to guide its interventions in the country in the next five years. The strategy’s first pillar involves interventions in agro poles and agro industries aligned to the Bank’s High 5s priorities to Feed Africa and Industrialize Africa that would help transform the economy. Pillar II will focus on power transmission lines, renewable energy projects, transport infrastructure all of which will contribute to the achievement of the light-up and power Africa, Industrialize Africa and Integrate Africa priorities. The strategy also places greater emphasis on gender mainstreaming through women’s empowerment in agricultural cooperatives; climate change and green growth agenda through investments in renewable energy projects; and co-financing mechanisms with key development partners to leverage resources.

Sango Ntsaluba: Rating agencies did not conspire against the government or ANC (Business Day)

These challenges have manifested themselves in an increasing fiscal burden and a widening current account deficit as the government grapples with competing needs. At one point, the government projected a deficit of R149bn, translating to 3.1% of GDP. Against a backdrop of underperforming tax revenue receipts, the government has had to rely on the debt market to raise financing. With a growth rate that has averaged 0.7% over the past three years, the downgrades have increased the possibility of recession and a larger fiscal deficit. It may well be argued that at least in the short to medium term SA cannot finance its budget commitments out of its revenue collections. [The author is a co-founder of SizweNtsalubaGobodo, is now chairman of NMT Capital and WZ Capital]

Tafadzwa Chibanguza: SA has missed the rates boat but opportunities can still be seized (Business Day)

This assessment and its implication could not be any truer than for the metals and engineering sector. The sector exports about R216bn, of which 40% (R86bn) is exported into Africa. Of the exports into Africa, 85%, or R73bn, is exported into SADC. The economic prospects of the SADC are on the rise as a function of the recent surge in commodity prices and an improving global economic environment. On a weighted average, the SADC is expected to grow 2.3% in 2017 and 2.7% in 2018. If we exclude SA, the region is expected to expand by 3.6% in 2017 and 3.8% in 2018. Although they are smaller economies, the countries have the potential to increase the scale of South African firms. For context, the 14 SADC economies (excluding SA) combined are the same size as SA’s. [The author is senior economist at the Steel and Engineering Industries Federation of Southern Africa]

Barclays takes £884m hit on African operation (Business Day)

UK banking group Barclays booked an £884m goodwill write-down of its investment in JSE-listed Barclays Africa Group in its first-quarter results released on Friday morning. Barclays said this was primarily due to the 17% drop in Barclays Africa Group’s share price over the quarter. Following the £884m impairment, Barclays valued its remaining stake in Absa’s JSE-listed owner at £8.1bn as at March 31.

Turkey inks agriculture deals with six African countries (Anadolu)

Friday was the last day of Turkey-Africa First Agriculture Ministers Meeting and Agribusiness Forum. Organized by the Turkish Ministry of Food, Agriculture and Livestock, the event hosted more than 300 participants, including ministers, from 54 African countries. The deals were signed with Congo, Ivory Coast, Djibouti, Guinea, Rwanda and Gambia. [Rwanda: Agri-exporters to benefit from Export Growth Fund]

Zimbabwe: MDC backs rand adoption (Daily News)

Morgan Tsvangirai’s MDC has said it backs the adoption of the South African rand as the primary currency. In an interview with the Daily News yesterday, MDC shadow finance minister Tapiwa Mashakada said since 50% to 60% of Zimbabwe’s total trade is with South Africa, the most advantageous foreign currency to adopt is the rand.

Tanzania: Flagship projects rule the roost (Daily News)

The Ministry of Works, Transport and Communication has unveiled a massive 4.5trl/- budget, which among other things, will cover flagship infrastructure development in the 2017/2018 fiscal year. This means, the government will be spending almost 45% of its budget as development expenditure in infrastructure. However, the figure represents a drop of almost 400bn/- compared to the 2016/2017 budget, in which 4.9trl/- was set aside for the same purpose. Presenting the budget estimates yesterday, the Minister, Prof Makame Mbarawa, said that out of the amount, the transport sector will take a huge chunk, totalling 2.5trl/-, while 1.9trl/- is for works sector and the remaining 18bn/- is reserved for communication sector.

Akinwumi A. Adesina: speech to the Committee for Economic Cooperation and Development, German Parliament (pdf, AfDB)

We are focusing on co-financing more than ever before. We have corralled Japan to commit to the High 5s with $10bn over the next ten years; Korea committed to $10bn over the next five 4 years, all aligned to the High 5s; China’s Africa Growing Together Fund has committed $2bn, while we’ve signed a co-financing of Euro 1.5bn with France (AFD). We’ve rolled out Africa 50, an investment vehicle for developing and financing infrastructure, which has raised $830m and plans to attract $3bn in the medium term. And later this year we will launch the Africa Investment Forum – a totally transactional Forum – to leverage global and African pension and sovereign wealth funds to invest in Africa. That’s the way it should be: taxpayers’ money should leverage private resources.

Africa urged to tap local funds to finance mega infrastructure (Business Daily)

Two European development agencies have urged African governments to find ways to help pension schemes and local private equity firms to finance mega infrastructure. European Investment Bank and German Technical Assistance said African governments can promote use of locally available funds through Special Purpose Vehicles (SPV) at the bourse. GIZ advisor Timo Bollerhey said this could be fast-tracked via formulation of a legal framework that promote alternative infrastructural investments by pension funds, away from the restrictive regime currently governing their operations.

China opens African investment office in Johannesburg (IOL)

The China Overseas Infrastructure Development and Investment Corporation (COIDIC) this week opened its first African headquarters in Johannesburg, marking an important milestone in China-Africa relations. COIDIC director Zhou Chao said the corporation recognised the challenges of building infrastructure in Africa. “We will develop in a very short time and provide mature projects in Africa, thereby attracting more funds to invest in African infrastructure.” He said COIDIC would focus on incubation of overseas infrastructure projects in order to implement the Chinese government’s “The Belt and Road” strategy to improve Chinese enterprises’ capacity of infrastructure development in Africa and around the world, and to boost development of the projects.

African nations endorse simple trade documentation procedures at seaports (TVC News)

Heads of African Maritime Administration from 34 nations in Africa have identified the need for member countries to adopt simple trade documentation procedures at the seaports. The action, they believe, would fast track cargo clearance and enhance delivery to warehouses. This resolution was against the backdrop of worries expressed by delegates at the third Association of African Maritime Administrations annual conference that held in Abuja. [Related: 32 African countries move against dumping of nuclear, toxic wastes, Ship owners back Dakuku to lead African maritime revival]

South Asia’s ports: expensive and slow (World Bank)

The report Competitiveness of South Asia’s Container Ports (pdf) provides the first comprehensive look at the 14 largest container ports in South Asia, which handle 98% of the region’s container traffic. It focuses on port performance, drivers, and costs. Although South Asia reduced the performance gap with East Asia, persistent inefficiencies meant that it still cost about twice as much to import a container as in competitor countries in East Asia. Average ship turnaround time for the region, at more than two days, was more than four times that of Singapore, one of the best performing ports in the world.

Promoting investment in the digital economy (UNCTAD)

Many countries and economies have adopted digital development strategies. An UNCTAD survey of the investment dimension in more than 100 digital development strategies shows that almost all such strategies acknowledge the need for investment. However, hardly any strategy contains a specific ‘investment chapter’ and less than half of digital development strategies explicitly consider foreign investment as a source of finance. Investment promotion agencies mostly do not feature in the plans. [Download: Promoting investment in the digital economy, pdf; At UNCTAD’s E-commerce week: Dr Kituyi, Jack Ma highlight e-commerce opportunities for the developing world]

Please note: The next selection will be circulated on Tuesday, 2 May.

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tralac’s Daily News Selection

28 Apr 2017
New tralac publications: The EAC Mode 4: trade data (by Viola Sawere), Africa’s trading relationship with Japan (by Ron Sandrey), WTO: Agricultural Issues for Africa (by Ron Sandrey, Moses Lubinga, et al.) South Africa’s March...
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tralac’s Daily News Selection

World Economic Forum on Africa: Achieving inclusive growth (3-5 May, Durban). Profiled points for discussion (pdf): Connecting markets, Revitalizing manufacturing, Integrating innovation

According to the International Air Transport Association, if 12 African economies liberalize access to their skies for each other, an additional 155,000 jobs could be created and $1.3bn added to GDP. How can the continent fast-track the establishment of a single African air transport market together with continental visa openness?

Almost 90% of Africa’s international trade is conducted by sea, yet port delays account for about 10% of import costs. How can investment in regional shipping hubs boost trade efficiency?

Investors cite the lack of harmonized regional rules and regulations as a barrier for deepening and expanding financial services. How can Africa advance regional financial integration?

Infrastructure investments and growth in African retail markets are transforming the logistics industry in Africa. How can new technologies, like drones, drive high growth in the continent’s logistics industry?

Building on the success of mobile money and the emergence of new technologies like blockchain, fintech is fast banking the unbanked in Africa. How can regionalization accelerate the establishment of universal digital financial services?

Globally, efforts to strengthen intellectual property rights are gaining momentum. While patents can be filed in the Africa, global IP systems are difficult to enforce. How can regional IP regimes be strengthened to fast-track African innovators?

Mozambique’s Trade Policy Review takes place next week (3,5 May in Geneva)

Inaugural meeting of the Tanzania National Business Council (6 May, Dar es Salaam): Tanzania’s first National Business Council is set for inauguration next week amid growing concerns over an increasingly unfavourable environment for the country’s private sector to thrive. The 6 May inauguration, to be graced by President John Magufuli as chief guest, will also see the launch of a report compiled by a special committee under the Ministry of Trade, Industries and Investments on challenges facing local business in general. Tanzania Private Sector Foundation executive secretary Godfrey Simbeye described the TNBC as the highest public-private sector dialogue organ. “The council is made up of 40 members; 20 from the private sector ranging from business owners or leaders, and 20 from the government, including cabinet ministers, the central bank governor and the attorney general,” Simbeye explained.

Friends of eCommerce for Development: seminar on e-payments and financial inclusion (13 March, WTO). Extract from Roberto Azevêdo’s address: In conversations here at the WTO, Members have been raising many of these issues, but it is clear that there are still divergent views on how to advance the e-commerce discussion. And there are concerns that the digital divide and the knowledge gap would limit some Members’ participation in the talks. These concerns need to be addressed to ensure that a meaningful and inclusive debate can take place. I think there is broad agreement that the development dimension of e-commerce needs to be part and parcel of our continuing conversations. This will be fundamental to allow all WTO Members to engage constructively and to ensure that e‑commerce works for inclusive growth and development. However, it is also important to recognize that the challenges posed by e-commerce are many and complex – and not all of them are trade-related. [The Friends of eCommerce for Development (Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay): (i) download the presentations, (ii) Mapping e-trade for all development objectives into a WTO Framework for E-Commerce (pdf)]

Reaffirming Development – MC11: submission by the G-33 to the WTO Committee on Agriculture

The following submission, dated 25 April, is circulated at the request of the delegation of Indonesia, on behalf of the G-33: The time is short. Hence G-33 requests Members to constructively and meaningfully engage on the two most important issues of SSM and PSH with a view to deliver them in MC11 so that developing Members are equipped with these tools to counterbalance some of the inequities built into the WTO rules in favour of the developed Members.

How much labour do South African exports contain? (World Bank)

Like many emerging economies, South Africa has identified exports as an engine for more inclusive, job-intensive growth. However, employment growth did not follow the substantial export growth that South Africa experienced in the 2000s. This paper uses a newly developed World Bank database -- the Labor Content of Exports -- to show that the composition of South Africa’s export growth helps to understand the weak relationship between export and employment growth. Minerals exports, which propelled export as well as wage growth, are not job intensive and as a result supported far less job growth. Minerals have also increasingly become an enclave sector with few backward linkages to the domestic economy. In contrast, manufacturing exports support jobs and wages primarily in input-providing sectors, where indirect manufacturing employment is nearly 4.5 times greater than direct manufacturing employment. The paper also documents a shift in the labor content of global value chain–intensive manufacturing sectors away from direct manufacturing to indirect services. Such a shift has been biased toward skilled labor. As a results of these trends, labor in services sectors has been the main beneficiary of South Africa’s export growth, absorbing more than half of the growth in wage income from exports over the 2000s, primarily by supplying inputs to other sectors’ exports. [The analysts: Massimiliano AuthorCali, Claire Honore Hollweg]

Evaluation of the AfDB’s South Africa Country Strategy and Programme 2004-2015 (IDEv)

What do we get for $5bn investment? The IDEV of the AfDB has just published a report evaluating more than a decade of engagement in South Africa, principally in the finance and energy sectors. According to AfDB Evaluator General Rakesh Nangia, “The report offers a thorough analysis of Bank performance and also of the limitations of the AfDB’s positioning in the South African context. Across its work in finance and infrastructure, stakeholders in South Africa saw the AfDB as a financier, rather than adding value as a knowledge provider or supporter of their capacity. The AfDB must think carefully about its comparative advantage and innovatively about funding instruments for the future.”

Extract from executive summary (pdf): The evaluation found a Bank that is learning to adapt to the developed, competitive South African market. It highlighted the fact that while the scope and scale of Bank operations cannot make a significant national impact, they are nevertheless important for the Bank. The findings showed that the Bank was moving in a relevant direction given its objectives, but that gaps exist in key areas and that ambitions were ill matched to available resources, instruments and demand. The evaluation raised concerns about efficiency (timeliness and processes) and effectiveness (in relation to Bank targets). The findings and conclusions indicate that current policies and practices are inadequate if the Bank wants to remain relevant and grow its portfolio in South Africa. A more tailored approach, appropriate resourcing of the team and a broader menu of innovative funding facilities, are required.

Michel Arrion: Some important clarifications about the EPA and EU trade policy (The Guardian)

These are, in short, the advantages the EPA provides. I will now address some provocative questions I often hear about the EPA. A first question is why Nigeria should sign the EPA if it is currently unable to export any product other than oil. My answer is simple. Everybody knows that Nigeria needs to diversify its exports. However, diversifying exports does not take place over night. It requires the adoption and implementation of several coordinated policies, aiming at increasing Nigeria’s capacity to satisfy both local and foreign demand. The conclusion of international trade agreements must be necessarily part of this strategy. No country in the world has been able to dramatically increase and diversify exports without entering into trade agreements. A second question I often hear is “why should Nigeria sign now a trade agreement with the EU, rather than waiting for the opportunity to sign possibly better agreements with other countries”? The reasons are manifold.

But the most important question I often hear is “What benefits will the EU obtain from the EPA”? Let me be also very clear on this. The EU will not obtain many economic or commercial benefits in the short or medium term. As explained, the market opening of West Africa will be gradual and very slow, and will only concern capital goods, i.e. inputs and machinery. According to the EPA, West Africa will still maintain high import duties on most finished and consumer goods imported from Europe. Under these circumstances, only few EU suppliers would, over a medium and long term, be able to increase sales to West Africa as a result of the EPA. [The author is the EU Ambassador to Nigeria and ECOWAS]

China’s Belt and Road Initiative a golden opportunity for Africa: Ethiopian special envoy (Xinhua)

The Belt and Road Initiative is a golden opportunity to bring about regional integration and sustainable economic growth for Africa, said Berhane Gebre-Christos, special envoy of the Ethiopian Prime Minister, on Tuesday. The special envoy made the remarks at the opening of a seminar organized on the B&R Initiative in Ethiopia’s capital Addis Ababa. La Yifan, Chinese ambassador to Ethiopia, said the seminar was organized as part of preparation for an upcoming B&R Initiative forum scheduled for mid-May in Beijing, China.

IGAD to develop a regional medicines assessment, registration guidelines

This five-day meeting, underway in Entebbe, brings together experts and officials from IGAD Member States in charge of their respective National Medicine Regulatory Authority whose mandate is to guarantee populations’ access to essential quality, safe, and efficacious medicines. The long term goal of the Working Group is to develop a draft policy towards harmonization of registration and evaluation of medicines, while the overall objective of this First Meeting of Experts is to develop an IGAD reference list of registered products, conduct pilot joint review of essential priority medicines, and determine avenues for collaboration between IGAD-NMRAs.

ECOWAS high-level ministerial mission to Guinea Bissau: statement

Rwanda, DRC agree to enhance bilateral trade ties (New Times)

This was one of the outcomes from a weekend meeting between François Kanimba, the Minister for Trade, Industry and East African Community Affairs, and Aimé Boji Sangara Bamanyirwe, DR Congo’s Minister for Commerce. The two ministers committed to instruct relevant institutions to refrain from creating tariffs and non-tariff barriers for trade between the two countries, according to a communiqué issued at the end of the meeting. The statement indicates that the Congolese minister “clearly stated” that no other institutions should introduce trade barriers on the Congolese side without due consultations. Such decisions, he noted, should only be taken by central government in Kinshasa. An action plan to implement the decisions and trade facilitation between the two countries was adopted and approved by the two ministers.

Today’s Quick Links:

Africa tourism trends: presentation to UNWTO Commission for Africa (pdf)

Emirates extends agreement with Mauritius and Seychelles

African Diaspora urged to help drive intra-African trade

World Bank: Performance of water utilities in Africa

OECD’s Working Party on Agricultural Policies and Markets: Managing food insecurity in ASEAN (pdf)

WFP/ECLAC: Latin America’s double burden of under-nutrition and obesity


tralac’s Daily News Selection

26 Apr 2017
World Economic Forum on Africa: Achieving inclusive growth (3-5 May, Durban). Profiled points for discussion (pdf): Connecting markets, Revitalizing manufacturing, Integrating innovation According to the International Air...
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DG Azevêdo: E-commerce can help to improve livelihoods and boost development

Speaking at the first Ministerial Meeting of the “Friends of E-Commerce for Development” on 25 April, Director-General Roberto Azevêdo said that many members want to set a path forward for discussions on e-commerce, with a view to ensuring that e-commerce supports growth and development in the years to come. “Engagement is high,” he said, but if members want to make progress, they will have to turn that engagement into “real proposals”.

Friends of E-commerce for Development ministerial meeting

Remarks by DG Azevêdo

Good morning. I am pleased to join you at this first Ministerial Meeting of the ‘Friends of E-Commerce for Development’[1].

I had the chance to address a meeting of the group at Ambassador-level in December last year. I’m glad to see this excellent initiative evolving today.

Your presence here in Geneva highlights your commitment to this conversation. It shows your desire to ensure that e-commerce contributes to further growth and development in your countries – and across the world.

And I think that this is a very timely debate.

E-commerce is changing the economic landscape – and the way we trade and live.

Research from PWC on purchasing habits in 25 countries, both developed and developing, showed that 54% of respondents already buy products online weekly or monthly.[2] In fact the numbers were even higher in some developing countries.

And the market is growing rapidly.

Between 2013 and 2015, the value of global online trade jumped from 16 trillion to 22 trillion dollars.[3]

This is significant because of the opportunities that it represents, especially for the smaller players.

For small and medium-sized enterprises, e-commerce can significantly lower the costs of doing business across borders.

It also provides a platform that allows producers to access the global marketplace, reach a broader network of buyers and, potentially, to participate in global value chains.

For consumers, it means access to a broader selection of products, from a wider range of suppliers, and at more competitive prices.

In this way, e-commerce can help to improve livelihoods, promote further inclusivity in the trading system, and boost development.

It is very positive that you are looking at how to make the most out of these opportunities.

However, there is still a long way to ensure that everyone can partake in these digital flows. In many places e-commerce is not yet a reality.

Four billion people in the developing world remain offline today.

This is an immediate challenge to us all.

And we should seek to put a particular focus where the need is the greatest. For example, only one in four people in Africa use the internet – and only one in seven people in LDCs.

E-commerce should not be something that widens the development gap. It should be a means of closing it.

And while being connected is a necessary condition, it is not enough.

E-commerce is not only about the clicks. It is also about the bricks. And that means infrastructure.

We need to ensure that the right infrastructure is in place, as well as appropriate policy, regulatory and payment systems to provide the trust which is essential in any transaction.

Any international initiative to unlock the potential of e-commerce for development will have to tackle these issues. It will have to help with providing support to improve capacity and infrastructure in those countries that need it the most.

We have a strong record of helping the most vulnerable to join trade flows.

Programs like the WTO Aid for Trade Initiative already do very important work to help build trade capacity in developing and least developed countries. UNCTAD’s ‘eTrade for All’ initiative is another positive example here – and we’ll be hearing much more about this over the next few days.

Reforms to the trading system can also make a big difference.

The WTO’s Trade Facilitation Agreement, the first global trade deal of the 21st century, will be particularly important. Under this agreement, trade costs could be reduced by 14.3% on average, and by significantly more in many developing countries. And the agreement provides for the necessary practical support to help members with their implementation. We are working with a range of donor members and partners to mobilise that support. 

Working together, we can find creative solutions to bridge gaps and help more people access the opportunities and benefits of e-commerce.

That’s why today’s meeting is so welcome.

This has to be a collective effort.

Many members – and not only the Friends of e-Commerce for Development – want to set a path forward for discussions on e-commerce, with a view to ensuring that e-commerce supports growth and development in the years to come.

Engagement is high. Many ideas have been put forward – by WTO members, by the private sector and by other stakeholders.

If we are going to advance, we have to turn that engagement into real proposals. We need to focus on specifics.

This week is an excellent opportunity to have discussions with the full range of stakeholders. But of course progress requires routine engagement.

We need to continue this work throughout the year. The WTO acts as a platform to have these discussions among all members that want to do so.

I will be there to help and facilitate this as much as I can – but, as always, it is for members to set the direction and the pace. It is up to you to drive this work forward, put proposals on the table, and build convergence behind them.

So there is a lot of work to do! I wish you a very successful event today.

Thank you.

[1] ‘Friends of E-Commerce for Development’ consists of Argentina, Chile, Colombia, Costa Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka and Uruguay



“Financial inclusion” key to delivering full development potential of e-commerce

Speaking at a 13 March seminar on digital payments and financial inclusion, Director-General Roberto Azevêdo said underdeveloped financial and payment systems are hindering the use of electronic commerce as a tool for growth and development. With more than 200 million small firms in emerging economies worldwide lacking access to basic financial services, “e-commerce will not deliver its full potential if many are still financially excluded.” Extracts from his speech are available below:

This is another important initiative in your efforts to deepen members’ understanding of e-commerce issues.

And it is obvious that these issues are of interest to many Members, regardless of their level of development. There may be different challenges, opportunities or perspectives but it is clear to me that many of you want to better understand this phenomenon.

Of course this is not surprising. E-commerce presents significant opportunities for growth, development and job creation. It has already helped to lower trade barriers for businesses and consumers alike.

By reducing the costs associated with distance, e-commerce provides businesses with access to new market opportunities and global value chains. This is particularly important for small businesses, those located in rural areas, as well as land-locked and other geographically challenged countries.

And for consumers, it means access to a wider range of products and services suppliers – and at more competitive prices.

However, with 4 billion people still offline, the opportunities offered by e-commerce are still out of reach for many and its benefits remain unevenly distributed. While some countries have made significant headway in recent years, others are struggling to keep up.

If we want e-commerce to be an engine for inclusive growth and development, we must understand its challenges and address them in a way that ensures better access and better opportunities, particularly for those who are behind.

Underdeveloped financial and payment systems are one of these challenges. It is clear that traditional banking and payment methods are often ill-suited to the digital environment.

E-commerce will not deliver its full potential if many are still financially excluded. And while there has been progress toward financial inclusion, significant challenges remain. As you will know, an estimated 2 billion adults worldwide don’t have a basic bank account.

Financial exclusion affects not only individuals but businesses, and therefore trade, as well.

The World Bank has estimated that more than 200 million formal and informal micro, small and medium-sized enterprises in emerging economies lack access to basic financial services to thrive and grow. No wonder therefore that financial inclusion is becoming a priority for policymakers, regulators and development agencies globally. In fact it is identified as an enabler for 7 of the 17 Sustainable Development Goals.

Digital payments are actually an entry point for financial inclusion. Integrating digital payments into the economies of developing nations is crucial for broad economic growth and individual financial empowerment.

Technological advances, especially in mobile technology, have provided alternative solutions – and they have been advancing at a tremendous speed.

We have all heard of M-PESA, which became a world leader in mobile-money. It showed the potential of these solutions – and the potential of developing countries to leapfrog forward in their use of technology.

A couple of years ago it was easier to pay for a taxi with your phone in Nairobi than in New York – or Geneva. Now the developed world has caught up. Mobile money is everywhere.

New ideas and new solutions will continue to spread at a frenetic pace – and there’s no reason why developing countries can’t be at the forefront.

But we should be conscious as well that payment facilities are not credit facilities – and this is particularly important where cross-border transactions are concerned.

Traditionally in a trade transaction, the exporter is paid upon shipping and the importer only pays when the merchandise is delivered and its integrity is verified. It is the job of trade finance to bridge the gap between the two.

In contrast, with e-commerce, the importer pays cash in advance and then simply has to wait and trust that the goods will arrive in a timely fashion and function as expected.

Clearly, for many SMEs, this poses significant problems. With low cash flow and tight margins, such a financial arrangement is costly when inputs come from foreign suppliers. Moreover, consumers tend to opt for better known traditional suppliers, to the detriment of SMEs, even when their price is competitive. So, SMEs face significant challenges both as buyers and as suppliers.

Some e-platforms are providing solutions to deal with this – but that can come with strings attached, such as exclusivity to sell on that platform. The emerging “FinTech” sector is also stepping into this arena. But so far they only work for the top end of SMEs – those which have certified accounts, are registered, and so on. These are positive steps, but more could be done.

Awareness among smaller companies is also an issue. A recent survey by the Asian Development Bank found that 70% of SMEs were not aware of digital finance.

So, again, the challenge is to ensure that these evolving technologies work both to tackle financial inclusion and to close the digital divide – not widen it even further.

And this brings us to the broader and even more fundamental issue of connectivity.

Many economies face challenges from a lack of reliable infrastructure, poor internet access and affordability, and a wide range of other economic and regulatory barriers. These include weak legal and regulatory frameworks, inadequate privacy and consumer protection, low consumer trust, poor IT skills – and the list goes on. [...]

I think there is broad agreement that the development dimension of e-commerce needs to be part and parcel of our continuing conversations. This will be fundamental to allow all WTO Members to engage constructively and to ensure that e‑commerce works for inclusive growth and development.

However, it is also important to recognize that the challenges posed by e-commerce are many and complex – and not all of them are trade-related. Addressing them will require dialogue and cooperation amongst different actors as the issues involved cut across different areas of expertise.

Presentations from the FED Seminar on ePayments and Financial Inclusion are available here.

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World Economic Forum on Africa 2017: Achieving Inclusive Growth

Achieving Inclusive Growth

Durban, South Africa, 3-5 May 2017

Africa is facing a mixed outlook for growth. The economic growth forecast for the continent over the coming year is expected to be lower than the 5% average of the past decade. This is largely due to the dip in commodity prices and the economic slowdown in China. That said, a number of countries are growing above 6% per annum and foreign direct investment inflows continue to rise. Overall, the divergence of Africa’s economies makes it imperative to address the challenges posed by a growing unemployed youth population and climate change, among others.

The impact of the headwinds for commodity-dependent countries has refocused attention on the urgency of economic diversification, revitalization of manufacturing and harnessing of human innovation in order to weather the economic storm. The Fourth Industrial Revolution offers new opportunities to achieve inclusive and sustainable growth by fast-tracking market integration in Africa through industrial corridors.

Events in Africa and across the world have demonstrated a need for leaders to be responsive to the demands of the people who have entrusted them to lead, and to also provide a vision and a way forward. In partnership with the Government of the Republic of South Africa, the World Economic Forum on Africa will be held in Durban, South Africa, on 3-5 May 2017. The meeting will convene regional and global leaders from business, government and civil society to agree priorities that will help Africa achieve inclusive growth.

The host country – the only African G20 economy – is championing reforms to eradicate extreme poverty and promote shared growth nationally, regionally and globally. The host city, Durban, which has the busiest industrial port in sub-Saharan Africa, offers insight into how trade in regionally manufactured goods can strengthen economic resilience and create jobs.

Programme overview

Under the theme Achieving Inclusive Growth, the meeting will convene regional and global leaders from business, government and civil society to explore solutions to create economic opportunities for all.

Participants will explore challenges and opportunities, deepen insights and foster coalitions around instruments that could be used to achieve inclusive and sustainable growth. For example, the Fourth Industrial Revolution offers new opportunities to fast-track market integration in Africa through industrial corridors by connecting markets, revitalizing manufacturing and integrating innovation. In this context, the 27th World Economic Forum on Africa will address the following topics that underpin the programme:

Connecting Markets

The increased prioritization of investment in infrastructure over the past decade has boosted trade in Africa. Transport corridors are an increasingly common approach to accelerating cross-border investments. Nonetheless, the infrastructure financing gap is daunting, particularly for transnational projects. Further, in order to boost the development impact, it is necessary to take a holistic approach that ensures that regional arteries connect rural communities and local industries to markets.

African nations have adopted sub-regional economic blocs as a stepping stone towards a unified continent, but levels of market integration vary significantly. Drawing lessons from other regional groups like the EU, the Pacific Alliance and ASEAN, how can alternative approaches fast-track economic unification in Africa?

According to the UNECA, transport costs for 12 landlocked countries in sub-Saharan Africa account for more than 70% of the value of goods exports. Transnational transport corridors have proven to be successful at lowering such costs, but funding remains a challenge. How can blended finance accelerate investments in transport corridors?

Africa’s expansive geography makes it challenging to reach scattered rural communities cost-effectively and affordably. How can broadband access by satellite close the continental digital divide?

According to the International Air Transport Association, if 12 African economies liberalize access to their skies for each other, an additional 155,000 jobs could be created and $1.3 billion added to GDP. How can the continent fast-track the establishment of a single African air transport market together with continental visa openness?

Almost 90% of Africa’s international trade is conducted by sea, yet port delays account for about 10% of import costs. How can investment in regional shipping hubs boost trade efficiency?

Investors cite the lack of harmonized regional rules and regulations as a barrier for deepening and expanding financial services. How can Africa advance regional financial integration?

Regional electricity markets have been cited as a means of attracting higher investment in generation by creating larger pools of demand. How can the continent fast-track the implementation of cross-border power pools?

The African e-commerce market is creating new opportunities for small and medium-sized businesses. Yet, according to the World Bank, varying trade requirements make intra-Africa trade costs almost 50% higher than in East Asia. How can African countries reduce payment, shipping and customs costs?

Map of Trans African Highways

Image source: Rexparry sydney, CC BY-SA 3.0

Revitalizing Manufacturing

According to the African Development Bank, the continent’s manufacturing exports doubled between 2005 and 2014 to more than $100 billion, with the share of intra-African trade rising from 20% to 34% over the same period. However, Africa’s share of global manufacturing exports remains less than 1%, compared with over 16% for East Asia. Fortunately, regional demand is growing and has resulted in manufacturing production growth at 3.5% annually in real terms – faster than the global growth rate – over the past decade.

With the region lagging as the least-competitive globally, concerted steps need to be taken to boost productivity. Fortunately, there are regional clusters of global manufacturing excellence. How can regional value chains foster more African value addition in global supply chains?

Despite the growing potential of renewable energy to electrify Africa, currency mismatch is emerging as a barrier to investment in countries with underdeveloped financial markets. How can countries create regional investment risk-mitigation vehicles?

Infrastructure investments and growth in African retail markets are transforming the logistics industry in Africa. How can new technologies, like drones, drive high growth in the continent’s logistics industry?

Building on the success of mobile money and the emergence of new technologies like blockchain, fintech is fast banking the unbanked in Africa. How can regionalization accelerate the establishment of universal digital financial services?

In January 2016, the African Space Policy and Strategy was adopted in Addis Ababa as a stepping stone to the attainment of the African Outer Space Programme. How can Africa’s leaders fast-track the development of a globally competitive nano-satellite industry?

Pharmaceutical manufacturing is expanding rapidly across the continent, building on the continental Pharmaceutical Manufacturing Plan for Africa. How can regional safety and marketing regulations advance the industry?

It is estimated that Africa’s current net food-import bill is $35 billion per annum. With Africa’s fast-growing youth population, how can regional food manufacturing transform to meet rising consumer needs regionally and globally?

According to the African Development Bank, textile and clothing is the second-largest sector in the developing world after agriculture, and estimated to be worth $1.3 trillion in Africa. How can buyer-driven commodity chains upgrade the fashion and textile industries?

Integrating Innovation

Technological innovation is rapidly evolving under the Fourth Industrial Revolution. As such, significant investment is required to strengthen the continent’s skills base, particularly in applied sciences and engineering. Currently in Africa, the overall shortage of engineers is estimated at above 1 million. In addition, more efforts are required to reverse the widening gender digital divide.

Human-centred design is crucial in inspiring innovative solutions that are relevant to African consumers, the majority of whom are poor and engaged in the informal sector. How can Africa’s leaders scale the impact of social innovations on poverty?

Globally, efforts to strengthen intellectual property rights are gaining momentum. While patents can be filed in the Africa, global IP systems are difficult to enforce. How can regional IP regimes be strengthened to fast-track African innovators?

The continent currently contributes less than 1% of the world’s scientific papers. Dedicated long-term funding is needed to support the training of world-class scientists and researchers, and research environments. How can regional and global collaboration finance Africa’s science agenda?

Women are increasingly underrepresented in technology-based industries. This widening gap is due to a variety of reasons, ranging from cultural stigmas against girls learning mathematics and sciences to hostile work environments for women in science, technology, engineering and mathematics (STEM). How can Africa’s leaders reduce gender barriers while promoting the pursuit of careers in STEM for all?

To fully integrate into the global digital economy, Africa needs to significantly expand its e-skills agenda by closing the deficit of ICT skills. How can the continent’s educational institutions reinvent their systems to transform regional learning?

Establishing world-class training centres of excellence requires heavy investment and takes time. Artificial intelligence and gamification are rapidly transforming education delivery. How can Africa leverage education technology to deliver marketable skills regionally?

The World Bank estimates that there are 117 technology hubs across the continent, although the turnover rate is relatively high. These technology hubs face substantial challenges in transitioning from start-up to sustainable businesses. How can government and business leaders foster viable pan-African innovation ecosystems?

Several African start-ups are on the verge of attaining the global distinction of being “unicorns” with a $1 billion valuation mark. Accordingly, venture capital investments are taking off across the continent, particularly in Kenya, Nigeria and South Africa. How can Africa excel at commercializing innovation?

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