News Archive September 2017

tralac’s Daily News Selection

Today, in Lusaka: Zambia’s Minister of Finance, Felix Mutati, delivers the 2018 national budget

Yesterday, in Maseru: The first sitting of the Lesotho Coordinating Committee on Trade. The LCCT serves as an advisory body to the Government on trade and trade related policies, and function as a key facilitator for negotiations as well as implementation of trade agreements.

Earlier this week in Dakar: The first meeting of the steering committee and experts of the Continental High Speed Rail Network project. The first session was devoted to presentations on the experiences of Senegal, South Africa and Morocco, the latter two countries considered to be the most advanced in this field, which can inspire other countries on the continent.

Africa’s changing place in the global criminal economy (pdf, Global Initiative)

In patterns that are both old and new, Africa is becoming more enmeshed in a global web of illicit economic networks. Today, the continent is regularly featured in media reports on worldwide criminal markets and organised crime. Such coverage often focuses on what might be called organised corruption; the so-called ‘migrant crisis’ enabled by human smuggling from North Africa and the Sahel; or the poaching of animal species, such as rhinos and elephants in Southern Africa; the growth of different types of financial fraud; or the illegal trade in commodities or drugs across the continent. Indeed, one of the marked features of Africa’s criminal economy is its diversity.

How do we analyse the recent growth of these illicit markets and the organised-crime networks associated with them in Africa? And how do we understand and measure their impact on indicators such as governance, economic development, poverty reduction, human security and quality of life? What impact do they have on Africa’s long-standing (and increasing) conflicts and on violence? And how can we do so in a way that is useful across the plethora of criminal challenges Africa now faces? [The author: Mark Shaw]

President Museveni, EU boss Jean-Claude Juncker discuss EPA (State House, Uganda)

President Yoweri Museveni has met the EU Commission President Jean-Claude Juncker and presented a raft of concerns raised by EAC member states on the Economic Partnership Agreements. Leading a delegation of EAC trade ministers to the meeting at the EU headquarters in Brussels on Thursday, President Museveni, who is also Chairperson of the EAC, noted that the bloc sought several clarifications before making a final decision on the EPA. On the team was Uganda’s trade minister Amelia Kyambadde and her colleagues Adan Mohamad (Kenya), Prof Palamagamba Kabudi (Tanzania) and Alain Nyamitwe, the Burundian Minister for External Relations. Rwanda and South Sudan sent high-level government bureaucrats. Key among the concerns is the question of strategic industrial development, the denunciation process, development agenda, the rendezvous, joint declaration and domestic support.

UNCTAD toolbox helps governments ensure trade empowers women

The Trade and Gender Toolbox is the first attempt to provide a systematic framework to evaluate the impact of trade reforms on women and gender inequalities prior to implementation of those reforms. The methodology is applied to a specific trade agreement – the EPA between the EU and the EAC (pdf) – and is used to assess the likely impact of the EPA on the well-being and gender equality of women in Kenya, an EAC partner state, mainly through employment. The same methodology can be used to assess the gender impacts of any other trade agreement or trade reform in any other country. The toolbox methodology is used to estimate the impact of implementation of the EPA (and particularly the tariff reduction on European Union exports to Kenya) on Kenya’s GDP and exports; on the country’s labour demand by sector; and on the Kenyan female labour force. The methodology is based on a Computable General Equilibrium (CGE) model. Specifically, it makes use of the Global Trade Analysis Project (GTAP) based on a static, multi-country, multi-sector CGE model.

According to the calculations, the impact of implementation of the EPA (as compared to the GSP scenario) is positive on Kenyan GDP, exports, and household income, but to a very small extent (0.02 per cent or less). Overall, the results of the estimation indicate a net welfare benefit, implying that the benefits for consumers (lower prices of imported goods) and producers (increased export opportunities) altogether outweigh the losses faced by import-competing producers, reduced employment, and diminished tariff revenues. Conversely, the results show an overall negative effect of the EPA, compared to the GSP scenario, on the employment of both skilled and unskilled labour. There are no significant differences between the expected variation in demand for skilled and unskilled labour across most sectors. However, in all sectors the expected impact on labour demand is small in magnitude, as the estimated variation is generally less than 1%. The most negatively affected labour force is in that of the chemical sector, where demand for skilled and unskilled labour is expected to decrease by 1.14 per cent and 0.54 per cent, respectively. Notable exceptions to the overall negative impact of the EPA on labour demand arise in the other crops, leather, and heavy manufacturing sectors, where demand for both skilled and unskilled labour is expected to increase.

A selection of Zimbabwe trade, business updates:

(i) Zim-SA trade deficit shrinks by 32% (NewsDay). The trade deficit between Zimbabwe and South Africa narrowed by 32% to $98 million in the first eight months of the year, after exports increased by 15%, latest trade data from the Zimbabwe Statistical Agency shows. Data gathered from ZimStat shows that Zimbabwe exported goods worth $1,4 billion to South Africa between January and August against imports of $1,5bn, giving a trade deficit of $98m. During the same period last year, the trade deficit between the two countries was $145m, with imports at $1,3bn against exports of $1,2bn.

(ii) Cross-border truck drivers threaten to shun Zim routes (NewsDay). Zimbabwe is likely to lose millions of dollars in potential revenue as cross-border truck drivers, particularly those in transit to other regional countries, have threatened to shun local routes in protest over the recently-introduced electronic cargo tracking system, which they say is too slow and costly. The drivers met on the South African side of the Beitbridge Border Post on Wednesday, where they resolved to shun Zimbabwean routes and use the longer, but “stress-free” Botswana route unless the government reviews the new law. At least 10 000 foreign-registered trucks pass through Zimbabwe en-route to the Democratic Republic of Congo, Zambia, Malawi and parts of Mozambique.

(iii) New law against cash vending (The Herald). In an Extraordinary Gazette published yesterday, President Mugabe issued Statutory Instrument 122A of 2017 — Exchange Control (Amendment) Regulations 2017 (No 5) — to deal with the widespread cash vending on the streets. This comes after Government’s realisation that cash vending had become a catalytic agent to the price madness obtaining in the country. President Mugabe amended the Exchange Control Regulations of 1996, published in Statutory Instrument 109 of 1996, in particular section 2 of the principal regulations.

(iv) Reforms needed to ensure recovery (Zimbabwe Independent). Despite President Robert Mugabe’s meeting with the business sector at State House last week, the first time such an engagement has been held in a decade, doubts remain over the veteran leader’s commitment to reforms demanded by business leaders. In a 17-page document, prepared at the meeting, captains of industry implored the government to embrace far-reaching reforms, among them improving the investment climate, fiscal sustainability and financial sector stability, state enterprise restructuring and stamping out corruption in both the public and private sectors. [Adopting the rand was a better economic option]

COMESA queries AkzoNobel on local firm purchase plans (Daily Monitor)

The Common Market for Eastern and Southern Africa Competition Commission has written to AkzoNobel Coatings asking them to respond to a notification of Sales, Manufacturing and Distribution Agreements with local paint manufacturers in Uganda. The Competition Commission faults the Dutch manufacturer for allegedly failing to notify it about their planned acquisition of a local paints manufacturer in the region. The 19 September letter, by Mr George K Lipimile, the director and chief executive officer Competition Commission, asked AkzoNobel to respond their position on the matter not later than Monday September25, 2017. [EAC urged to embrace arbitration in commercial dispute resolution]

Uganda: National Household Survey 2016/17 shows 3,4m more slip into poverty (Daily Monitor)

More Ugandans are slipping into poverty with the number of poor people increasing from 6.6 million in 2012/13 to 10 million in 2016/17, according to the Uganda National Household Survey 2016/17 report released yesterday by the Uganda Bureau of Statistics. The above development translates into income poverty levels rising from 19.7% to 27%. At the sub-regional level, the survey cites the worst hit regions as Karamoja, with 61% of the people categorised as income poor, followed by Bukedi with 48% and Busoga with 42%. [Download: National Household Survey 2016/17]

Angolan Atlantic Ventures to construct Barro do Dande port

The Angolan Ministry of Finance is set to issue a $1.5bn sovereign guarantee to ensure the financing of the construction of the Barro do Dande port, located on the country’s northwest coast. The guarantee was published in Angola’s official gazette under a presidential decree, and will grant the contract for the port’s construction to a partnership of Atlantic Ventures and the management company of the port of Luanda.

Advancing Mozambique’s green-blue economy agenda: EOI from AfDB

Under the national green-blue economy agenda and directly supporting the roll-out of the national Natural Capital Program - co-led by the Ministry of Economy and Finance with the Ministry of Land, Environment and Rural Development - the scope of work includes two interlinked complementary objectives: (i) Update, expand, strengthen and finalize the components of the national Natural Capital Program’s current draft Implementation Framework in consultation with all national stakeholders: (a) enabling environment policy reforms, (b) private sector interventions and (c) built infrastructure regional master plan’s alignment with resilient ecological infrastructure at national and provincial level; (ii) Design and develop Provincial Action Plans in consultation with all provincial actors in the Northern provinces of Niassa and Cabo Delgado to support the mobilization of funding and execution of the Natural Capital Program Implementation Framework.

WTO Public Forum: Role of trade key in achieving UN Sustainable Development Goals

The SDGs put significant emphasis on the role that trade can play in promoting sustainable development. There are direct references to WTO activities in many of the SDGs, ranging from ensuring food security and sustainable agriculture to conserving marine resources and promoting inclusive and sustainable economic growth. Agriculture’s role in meeting the SDGs was the centre of discussion at a Public Forum session on 27 September organized by the Geneva Office of the African, Caribbean and Pacific Group, the FAO and UNIDO. Speakers noted that several of the SDGs directly relate to agriculture and that modernizing agricultural production will be key to achieving this. WTO members have already agreed to eliminate export subsidies for agriculture, one of the SDG targets, at their 2015 Nairobi Ministerial Conference.


Today’s Quick Links:

Global Economic Governance Africa programme papers: (i) Informing the approach of multilateral development banks to use of country systems; (ii) The New Development Bank as an advocate of country systems

Witney Schneidman, Moyombuya Ngubula: Post-AGOA - moving to a reciprocal US-Africa trade arrangement

ATAF Abuja conference updates: (i) Logan Wort: Building a prosperous future Africa from a solid base; (ii) FG calls for robust, effective tax regimes in Africa

Kenya tourist arrivals in 2017 to drop over political uncertainty

Tanzania: Over 50 multinationals bid for construction of Stiegler’s Gorge hydropower dam

Namibia: Metal fabrication takes centre stage

Zimbabwe: Regulations criminalising cash vending gazetted

Government has gazetted regulations that criminalise cash vending without permission from the exchange control authority and empowered police to arrest money peddlers and seize whatever currency involved. In an Extraordinary Government Gazette published yesterday, President Mugabe issued Statutory Instrument 122A of 2017 – Exchange Control (Amendment) Regulations 2017 (No 5) – to deal with widespread cash vending on the streets.

This comes after Government realisation that cash vending had become a catalytic agent to price madness. President Mugabe amended the Exchange Control Regulations of 1996, published in Statutory Instrument 109 of 1996, in particular section 2 of the principal regulations. The amendment was done in terms of Section 2 of the Exchange Control Act (Chapter 22:05). According to the changes, Section 40 (Orders) of the principal regulations was amended by the insertion of subsection (2c) after subsection (2b).

The inserted subsection relates to dealing in currency and provides that: “an authorised officer or a police officer acting to enforce any order – (2c) (a) may, for the purpose of holding the currency as exhibit in subsequent prosecution, seize any currency upon a reasonable suspicion that the possessor thereof is dealing in it unlawfully, that is, in contravention of any order or any provision of the Act or these regulations by virtue of which the order is made.”

The regulations further stipulate under (2c) (b) that during investigations, any offence occasioned by breach of an order concerning the unlawful dealing in currency, a warrant for the seizure of property may be obtained under the Criminal Procedure and Evidence Act to freeze any banking account of a possessor of currency therein credited, if there is reasonable suspicion that it was or had been dealt in unlawfully. According to subsection (2d), a warrant referred to in subsection (2c)(b) operates for a period not exceeding six month or until prosecution of the offence relating to dealing in foreign currency is concluded or abandoned.

Subsection (2e) provides that for purposes of enforcing any order – “(a) it is declared, for avoidance of doubt, that any dealing in currency or foreign currency for which any licence, permit or other authority or permission is required by or under these regulations shall, if such dealing is done without such licence, permit or other authority or permission, constitute an offence against section 5(1) (a) (ii) of the Act.

According to (2e)(b), any person dealing in currency and is unable to produce to an authorised officer or police officer a valid licence, permit or other written authority permitting such dealing under the regulations, shall be deemed to have contravened any order or provisions of the Act or regulations. The regulations come on the back of Government announcement on Wednesday that it has approved a raft of measures to arrest artificial shortages of basic commodities and the price madness triggered by economic saboteurs through social media.

Finance and Economic Development Minister Patrick Chinamasa also pulled the trigger on traders who prefer selling their commodities in United States dollar notes and hike prices for those using bank swipe, bond notes or Ecocash.

At a joint state-of-the-economy address in Harare yesterday, Minister Chinamasa, his Industry and Commerce counterpart Mike Bimha and Information, Media and Broadcasting Services Minister Dr Christopher Mushohwe said the crisis was artificial and there was no need to panic. The ministers said Government was seriously considering counter-measures to safeguard the economy against social media abusers, including speeding up the enactment of cyber-crime laws.

Government, the ministers said, was also working on improving the availability of foreign currency to ensure consistent production and supply of cooking oil and other basic commodities. Minister Chinamasa said illegal cash vending was rampant on the streets, contributing to economic challenges the nation was facing, hence the need to arrest the vendors and seize their money.

He said measures would be put in place to end the four-tier pricing system where prices for one commodity differ depending on the mode of payment. “The four-tier pricing system where traders would charge a price for cash US dollars, a different price for cash bond notes, one for RTGS and another for Ecocash should also come to an end,” he said. Cabinet, said Minister Chinamasa, had since drafted and approved drastic measures to sanitise business and the measures were now being crafted into a Bill at the Attorney-General’s Office.

President Museveni, EU Commission boss, discuss EPAs

President Yoweri Museveni has met the European Union (EU) Commission President Jean-Claude Juncker and presented a raft of concerns raised by East African Community member states on the Economic Partnership Agreements (EPAs).

Leading a delegation of EA trade ministers to the meeting at the EU headquarters in Brussels, President Museveni, who is also Chairperson of the EAC, noted that the bloc sought several clarifications before making a final decision on the EPAs. Key among the concerns is the question of strategic industrial development, the denunciation process, development agenda, the rendezvous, joint declaration and domestic support.

On strategic industrial development, President Museveni noted that once the trade pact is signed, up-to 65% of imports (mainly machinery and raw materials for industrialization) from the EU to EAC will come in at zero rate, which is similar to a current policy position East Africa already has with the EU. “What happens when EAC partner states start producing these items and now need to protect them after signing the EPAs?” President Museveni asked.

Another concern for East Africa, noted President Museveni, is the fact that the EPAs does not allow individual countries to exit. “The denunciation clause should allow individual signatory states to withdraw from the agreement,” said President Museveni.

As far as the development agenda is concerned, President Museveni said the EPAs clauses on the European Union supporting structural and infrastructural development in East Africa are non-binding yet these are crucial for leveling the ground for equitable trade.

EAC states also raised issue with the fact that the EPAs direct that negotiations must be concluded within five years after entry into force of the agreement. This rendezvous clause, said President Museveni, imposes unlimited pressure on negotiators “rather than paying attention to substance of the negotiations.”

On joint declaration, the EAC wants clarification on an annex that obliges the community to negotiate with countries that the EU has Free Trade Agreements with. “This is far beyond what is politically tenable in the EAC and should be removed,” President Museveni told Mr Juncker.

Also of concern to EAC, said Mr Museveni, is the clause that commits the EU to remove export subsidies on EAC-destined exports only but does not address other forms of domestic support that equally distort the market.

“This makes EU products competitive in the EAC market,” said President Museveni. “But EAC products cannot be competitive in the EU market due to other domestic support provided by the EU.” He added: “Moreover, with regard to these export subsidies, the prohibition is not permanent and will be reviewed after 48 months.”

The President also made the case that Kenya, which had already signed these pacts, should not be disadvantaged in terms of trade, “nor should EU stampede EAC into hurried conclusions which would result into dissensions and possibly split the EAC”.

Mr Juncker, who warmly welcomed President Museveni and his East African delegation to Brussels, promised to review all issues raised by the EAC and offer a comprehensive response.

On the team was Uganda’s trade minister Amelia Kyambadde and her colleagues Adan Mohamad (Kenya), Prof Palamagamba Kabudi (Tanzania) and Alain Nyamitwe, the Burundian Minister for External Relations. Rwanda and South Sudan sent high-level government bureaucrats.

In May, as President Museveni assumed the EAC chair in Dar es Salaam, Tanzania from President John Pombe Magufuli, the other heads of state tasked him to lead a team to Brussels to resolve the sticking issues in the EPAs.

After Thursday’s meeting and upon receipt of a response from the EU, President Museveni will again convene the meeting of the trade ministers to trash out the key issues before preparing a final document for the EAC heads of state.

The EAC heads of state summit will then take a final and binding position on the EPAs whose text was first initialed in 2014.

Role of trade key in achieving UN Sustainable Development Goals

Trade will play a key role in achieving the United Nations’ 2030 Sustainable Development Goals (SDGs), and both governments and the private sector need to be more active in ensuring trade’s full potential in contributing to these goals, speakers at the WTO’s annual Public Forum said.

The SDGs were the focus of discussion during a number of sessions at the three-day Public Forum from 26 to 28 September, the WTO’s flagship outreach event. The Forum provided a unique platform for senior officials, leading global businesspeople, academics and civil society representatives to come together and discuss some of the major trade and development issues of the day.

The SDGs put significant emphasis on the role that trade can play in promoting sustainable development. There are direct references to WTO activities in many of the SDGs, ranging from ensuring food security and sustainable agriculture to conserving marine resources and promoting inclusive and sustainable economic growth.

Agriculture’s role in meeting the SDGs was the centre of discussion at a Public Forum session on 27 September organized by the Geneva Office of the African, Caribbean and Pacific Group, the Food and Agriculture Organization (FAO) and the United Nations Industrial Development Organization (UNIDO). Speakers noted that several of the SDGs directly relate to agriculture and that modernizing agricultural production will be key to achieving this. WTO members have already agreed to eliminate export subsidies for agriculture, one of the SDG targets, at their 2015 Nairobi Ministerial Conference.

Mohammad Pervaiz Malik, Pakistan’s Minister for Commerce and Textiles, said agricultural trade can contribute a lot towards achieving the SDGs, considering its share in the global economy, but that a “paradigm shift” was needed to make agriculture a dynamic and key contributor to GDP in developing countries.

“Value addition and integration into national, regional and global value chains has now become extremely essential,” he declared. “Agribusiness needs an enabling infrastructure which … can be best performed with the partnership of the private sector which can bring much needed investment, and access to knowledge and technology.” Carolyn Rodrigues Birkett, Director of the FAO’s UN Liaison Office in Geneva, said agriculture is changing in “unprecedented ways”, with growing demand for reliable and consistent food products and corresponding attention paid to sustainable development issues related to this production.

Frank Hartwich, Industrial Development Officer with UNIDO, noted the “stark” increase in trade for high-end processed foods despite market distortions in this sector. The question is how to link small farmers to these global food value chains, he said, adding that farmers need to consider more cooperative arrangements in order to increase production and quality in a sustainable manner.

How sustainable development can be achieved through the adoption of clean technologies, and the role trade can play in facilitating it, was the focus of another Public Forum session on 27 September organized by the World Trade Centre Mumbai and the All India Association of Industries.

John Danilovich, Secretary General of the International Chamber of Commerce (ICC), said the SDGs should also be seen as the BDGs – Business Development Goals. “We clearly see more and more companies committed to placing the UN’s SDGs at the heart of their global corporate strategies,” he said. “But for business to play their role, governments must do their part in establishing the right policy environment.”

The ICC chief said that one immediate contribution would be the successful conclusion of the Environmental Goods Agreement, an initiative launched in 2014 with the aim of eliminating tariffs on hundreds of environment-related products. “Concluding this agreement must be a first order priority for policymakers,” he said, adding that a push should be made to clinch a deal by the WTO’s 11th Ministerial Conference next December.

Viviana Muñoz Tellez, Coordinator of the Development, Innovation and Intellectual Property Programme for the South Centre, said that trade may serve as a channel for clean technology transfer but that many market failures need to be addressed first. This includes stepping up government support to promote clean technology development and providing greater flexibility in trade agreements to facilitate this support.

Efforts to turn the SDGs into reality and create new business opportunities globally was the focus of a 28 September session organized by the World Bank Group, the WTO Trade and Environment Division and the Organisation for Economic Cooperation and Development (OECD).

Aik Hoe Lim, Director of the WTO Trade and Environment Division, said that a growing number of companies, large and small, are tapping into those opportunities by innovating in sustainable goods, services, processes and business models.

However, the impact of business action on the SDGs has not been large enough, nor has it been felt evenly around the world. There is a real risk that some countries may be left behind. Mahmoud Mohieldin, Senior Vice President for the 2030 Development Agenda, United Nations Relations and Partnerships at the World Bank Group, said people have different perceptions of trade and have become suspicious about trade in general, in part due to the lack of policies and supportive measures to minimize negative impact on income distribution and to empower communities.

Bérangère Magarinos-Ruchat, Global Head of Sustainability at the Swiss company Firmenich, said that pioneering business solutions are needed to fulfil the SDGs and their promise of leaving no one behind. She said SDGs have already succeeded in creating a common narrative on the way companies engage with customers and suppliers, taking into account issues related to human rights and climate change. However, greater partnering between governments, international institutions, the private sector and civil society is needed to deliver further results that contribute to effectively achieving the SDGs.

Brendan Edgerton, Circular Economy Manager at the World Business Council for Sustainable Development said sustainability is a good business and it has been so for some time now – a business worth $13 trillion and 380 million jobs by 2030. That is why companies are increasingly focusing on innovation, retaining talent and captivating customers and investors through more SDG-friendly strategies.

Dominic Kailash, Head of Public-Private Partnership and Member of the Executive Committee at the World Economic Forum, mentioned the example of the palm oil industry, where 70 per cent of production is already under sustainable schemes. Producers know that a sustainable approach increases fourfold the productivity of palm oil per-hectare. It is not only about environmental protection and climate change, it also about production, profit and survival, he said.