News Archive February 2019

tralac’s Daily News Selection

AfCFTA ratification update, @AUC_MoussaFaki:

“Egypt’s parliament approves ratification of the AfCFTA, bringing total parliamentary approvals to 19, of which 15 have already deposited the formal instruments. Only 3 ratifications needed for the world’s largest free trade area to enter into force. #TheAfricaWeWant.”

tralac Infographic: Status of AfCFTA Ratification

Zimbabwe trade updates:

  1. “We can’t supply you with dollars anymore,” SA banks tell Zimbabwe. Zimbabwe is in a Catch-22 situation as South African banks are de-risking from supplying the troubled southern African country with US dollar notes, an official with the central bank told miners on Tuesday. Speaking at a post 2019 Monetary Policy Statement review meeting with small-scale miners, Reserve Bank of Zimbabwe deputy director for Financial Markets William Manhimanzi said the central bank was struggling to pay miners in hard cash as it was failing to import notes via South Africa. Zimbabwe pays its gold miners in cash, but has been failing to do so of late as the usual suppliers, South African banks, have been cutting ties amid fears of being fined by the United States’ Office of Foreign Assets Control. Zimbabwe is under US sanctions and unless otherwise authorised or exempt, transactions involving the greenback are penalised if they involve an entity or individual listed on the Specially Designated Nationals List (a list of individuals and entities under US sanctions). The nature of the regulations, however, makes it difficult for foreign banks to know whether they are dealing with Specially Designated Nationals or not, hence the decision by most South African banks to de-risk from dealing with Zimbabwean institutions. [Zimbabwe to manage volatility of new RTGS currency – finmin]

  2. Gold lost through informal channels: Minister. Zimbabwe is producing close to 100 tonnes of gold, but the bulk of that is being lost to the black market as small-scale miners, who are the main producers in the country, shun official channels, a government official has said. Mines deputy minister Polite Kambamura told leaders of the Zimbabwe Miners Federation at a meeting in Harare yesterday that a lot of gold was being lost through informal channels. Last year, deliveries to the sole buyer of gold, Fidelity Printers and Refinery, amounted to 33,4 tonnes. “The bad news is that for February, after the Reserve Bank of Zimbabwe announced the monetary policy, we have received only 20kg, which means there is a problem there. What we want is to mobilise and redirect gold to small-scale miners. We feel with the current challenges, we are losing gold to other markets. I am very convinced that we are already at 100 tonnes, but we are losing more gold to under-declaration and smuggling. We are losing gold to the other market due to some grievances,” Kambamura said.

  3. Zim sliding back to 2008: ZCBTA’s Zivhu. ZANU PF legislator and Zimbabwe Cross-Border Traders’ Association chairperson, Killer Zivhu has slammed the move by the Reserve Bank of Zimbabwe to introduce bureau de changes, saying this will encourage parallel market activities and take the country back to the 2008 era. According to the monetary policy, bureau de changes would change a maximum of $10 000 per day. Zivhu said the daily limit was not sufficient for cross-border traders, considering the high unemployment rate in the country, which has forced many into the informal market for survival. [The Herald: Call for packages for cross border traders]

  4. Botswana government denies offering $600m loan to Zimbabwe. In a statement to Business Day on Wednesday, Botswana’s permanent secretary Carter Morupisi denied that Botswana would provide the loan to Harare. “The office of the president wishes to inform members of the public that the government of Republic of Botswana and the government of the Republic of Zimbabwe are currently holding discussions under the framework of the binational commission which covers a wide range of issues which are mutually beneficial to the people’s of the two countries. As such, media reports that are currently circulating about the line of credit worth $600m that the government of Botswana has committed itself to extend to the Republic of Zimbabwe are unfounded,” Morupisi said. [See also: tweet by Botswana’s Minister of Investment, Trade & Industry, Ms Bogolo Kenewendo]


Profiled, new AfDB workings papers:

  1. Improving the poultry value chain in Mozambique. This paper examines the poultry industry in Mozambique and makes recommendations about how to improve the value chain in two provinces - Niassa and Zambézia. Understanding the structure and challenges of the poultry value chain is important for the revitalization of the sector and identifying issues that should be tackled through government actions and policy. Extract (pdf):

    Despite these potential opportunities, the industry faces two perennial challenges. The most important, as mentioned, is limited access to finance, which hinders access to key inputs such as feed for chicken producers, seeds and fertilizer for grain producers, and machinery for chicken processors, among others. By way of illustration, only about 20% of all adults on average, and 10% in rural areas, have access to banking and financial services. Second, the poor quality of infrastructure increases the costs of service producers, including for financial institutions, as well as the provision of extension services.

    In addition to these persistent obstacles to business, the sector faces more specific challenges in Mozambique. In particular, imports from neighboring countries such as South Africa, Zambia, and Zimbabwe, and as far away as Brazil, compete with local producers. Domestic production of poultry products falls well short of demand, so imports are inevitable. But the pressure created by imports on local producers is acute given how developed the industries are in these competing countries. Most Mozambican producers are small scale (falling under the micro classification in Table 1). They face high unit costs of production while more sophisticated operations in neighboring countries enjoy the benefits of economies of scale that outweigh shipping costs.

    The government has tried to help the sector through a number of steps, some more dramatic than others. In 2017, the government banned poultry imports. While the ban covered many countries (including South Africa and Zimbabwe), the main target was Brazil, which was believed to be flooding the market and inhibiting the growth of the local industry. The ban was later relaxed for chicken imported from South Africa. It seems to have driven up local poultry prices, not only because of lower imports but also due to higher costs since the ban forced domestic suppliers to import eggs from Europe instead of neighboring countries. The unintended effects of the ban suggest that less dramatic and more long-term policy interventions such as facilitating access to credit, increasing formalization, and extending veterinary services are needed to help boost local production in a sustainable way. [The authors: El-hadj Bah, Ousman Gajigo]

  2. The diaspora and economic development in Africa. Our results have two major implications. The first is related to the political sense given to the interpretation of these results. Indeed, they should not be interpreted as an incentive for brain drain. By helping to significantly improve the level of income in Africa, the Diaspora reduces the incentive to emigrate because the latter increases when income levels are low in the country of origin. The second area relates to policy measures that could further enhance the impact of the Diaspora on economic development in Africa. Two main virtuous measures could be considered (pdf). The first is the institution of the annual African Diaspora Summer School as a vector for the transmission of development drivers (knowledge, technology, experiences in all fields, etc.). The second is the establishment of a Diaspora savings account in banks in developed countries with the aim of alleviating the constraints of financing for development in Africa. Furthermore, our findings lead to additional implications: [The authors: Blaise Gnimassoun, John C. Anyanwu. The full set of new working papers can be accessed here]

Profiled new AfDB EOIs: For a trade and regional integration expert to work on, inter alia, the Visa Openness Index 2019 and other flagship publications; For an industrial policy support programme that will focus on Morocco, Ethiopia, Senegal


EIF strategic plan 2019-2022 seeks to help least developed countries gain more from trade (WTO)

Officially presented for the first time on 19 February in Kampala, Uganda, the new 2019-2022 Strategic Plan is designed to better position LDCs in the global economy at a time of growing concerns about trade. Drawing from past e-commerce research in a handful of countries, new targets will involve supporting the use and uptake of technology in LDCs that draws from evidence-based trade studies. Extracts (pdf):

Foreign Direct Investment and AfT flows to the LDCs. While investments to boost LDC trade are more pressing than ever, FDI flows directed to the LDCs dropped by 17.1% in 2017. Nearly two-thirds of FDI flows to the LDCs have been going to just five countries, namely Bangladesh, Cambodia, Ethiopia, Mozambique and Myanmar. In addition, despite some fluctuations in the AfT flows to the LDCs over the recent past, the relative share of the LDCs in AfT flows has remained stable overall. In light of the above, supporting the LDCs to revisit investment promotion regulations and to leverage more domestic resources is even more important. This can be achieved by supporting the private sector and particularly MSMEs to thrive, and empowering economic actors, particularly women and youth, to more effectively participate in economic activities.

As of 2017, 37 countries have integrated trade into their NPDs, thereby recognizing trade as an important pillar of development. This paves the way for further integration of trade into sector strategies. For example, in Cambodia and Malawi, trade sector-wide approaches have been adopted, providing a platform to channel resources to national trade priorities. By 2017, trade ministries in more than 15 countries demonstrated a capacity to develop and drive trade development agendas. Thirty-seven countries have established quality, functioning public-private coordination mechanisms, which has improved government engagement with the private sector and led to fruitful partnerships. For example, a Memorandum of Understanding was signed between the Government of Guinea and a Malian private company to export mangoes to Europe using Guinea’s airport.

Somalia and the IMF: First review under the staff-monitored programme (IMF)

Somalia’s economy is recovering but further efforts are needed to secure economic resilience and reduce poverty. Since 2017, growth has rebounded, inflation has slowed, and the trade deficit has narrowed. For 2018, real GDP growth is projected at 3.1% and end-year inflation at 3.5%. The exchange rate has remained stable. The authorities’ efforts to improve domestic revenue mobilization has strengthened revenue performance. This reflects efforts to broaden the tax base, and to develop the tax policy framework and administrative capacity to collect taxes. Data through November 2018 show that domestic revenue reached $161m (31% higher than the same period in 2017), and the overall cash fiscal position was in surplus by $8m.

IGAD Council of Ministers: communiqué (MFA Ethiopia)

The meeting underlined the importance of expediting the endorsement of the proposed treaty and structure to reform IGAD; and decided that there is need for enriched and continued discussion on the organizational structure and treaty of IGAD until the next ordinary sessions of the policy organs. It also underscored the need for a collective approach to challenges in the Red Sea and the Gulf of Aden by strengthening regional cooperation, and establishing a regional platform for #IGAD Member States with a view to promote dialogue with other stakeholders including the AU and other international partners. [EU-Arab Summit declaration]
 
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tralac’s Daily News Selection

27 Feb 2019
AfCFTA ratification update, @AUC_MoussaFaki : “Egypt’s parliament approves ratification of the AfCFTA, bringing total parliamentary approvals to 19, of which 15 have already deposited the formal instruments. Only 3 ratifications...
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tralac’s Daily News Selection

The new head of Afreximbank’s Southern Africa Regional Office: Humphrey Nwugo

The AfDB has posted an EOI for a trade and regional integration expert to work on, inter alia, the Visa Openness Index 2019 and other flagship publications

AUDA-NEPAD High Speed Rail Detailed Scoping Study: update from CPCS Consultants

Hugh Lamarque: Night drivers of the Northern Corridor (ABORNE)

I heard someone say there are three qualities to a good transporter: experience, liquidity, and what they called hustle – keeping things moving against the odds. Kamau has all of them, and a reputation for rapid deliveries that justifies his steep price tag. Even so, uncertainty hangs over every shipment. Will the roads be empty and the printers work? Or will the container flag up red with a revenue authority and need verification? Nothing is guaranteed and almost everything costs time.

eSwatini joins competition to host AfCFTA HQ (APA News)

In a bid to host the AfCFTA Secretariat head office, eSwatini hastily ratified the 56-year-old Vienna Convention on Consular Relations on Friday. Other countries vying for this opportunity are Egypt and Ghana. eSwatini was the only SADC member that had not signed and ratified the convention, which was eventually debated and acceded to within three hours by members of both houses of Parliament who had held a joint sitting on Friday afternoon. Motivating the motion that was moved by Thuli Dlamini, the Minister of Foreign Affairs and International Cooperation, Prime Minister Ambrose Dlamini said he would back the accession of the policy because of the benefits that come with hosting the AfCFTA Secretariat. “When we applied to host the offices we ticked all the boxes except for the convention, so it is crucial that we consider that,” he said a few minutes before the house acceded. The premier said having the AfCFTA Secretariat offices built in the country would render eSwatini the trade capital of Africa.

Namibia-Ghana Joint Permanent Commission of Cooperation: Namibia encouraged to ratify AfCFTA (New Era)

Ghanaian Deputy Minister of Foreign Affairs and Regional Integration, Charles Owiredu, has encouraged Namibia to ratify the AfCFTA. Last year, Namibia finally signed the trillion-dollar AfCFTA, which requires members to remove tariffs from 90% of goods to allow free access to commodities, goods and services across the continent. However, Namibia did not yet ratify the agreement, which trade minister Tjekero Tweya is expected to table in the National Assembly for its adoption and ratification. [Alexander Bay border post: NCCI Oranjemund worried over border restrictions]


Malawi updates

Malawi Country Strategy Paper 2018-2022 (AfDB)

The business environment is improving yet competitiveness is stagnating. The 2018 World Bank Doing Business report ranked Malawi 110 out of 190 countries, a big improvement from 157 in 2013. Good progress was made in the past two years with the introduction of one-stop service centres, collateral registry and simplification of business registration processes. However, improvement in the ease of doing business is yet to be translated into a competitive business environment. The 2018 Global Competitiveness Index ranked Malawi 132 out of 137 countries with a score of 3.1 out of 7, a decline from the 2014 when the country was ranked 136 out of 148 countries and scored 3.3.

Malawi has a large micro, small and medium enterprises sector, with 987,000 enterprises providing employment to 1.1 million people. However, the country has a very low rate of formal job creation with only 11% of the employed in formal jobs. The main reason is the low rate of private investment, estimated at 6.7% of GDP in 2017, which is well below the 20-25% of GDP needed for sustained, rapid growth.

Because Malawi relies on its neighbouring coastal countries to access global markets for both imports and exports; greater infrastructural connectivity is paramount. According to the 2018 World Bank Doing Business Index, trading across borders has improved by 2.0 percentage points, however still low compared to global rankings with 117 out of 190 countries. In order for Malawi to be able to leverage its membership to the various regional bodies, more attention should be paid to supporting trade facilitation especially in line with infrastructure development along major transport corridors. Malawi stands to benefit greatly from participation in regional value chains on agro-processing in both COMESA and SADC.

Greater commodity and market diversifications are required. In 2017, the country’s main exports were tobacco (59.8%), tea (8.5%), food residues (7.2%), oil seeds (4.7%) and sugar (3.9%), while its main imports were fuel (9.8%), machinery (9.6%), electrical equipment (9.1%), books (8.0%), and pharmaceuticals (6.8%). Its main export trading partners were Belgium 22%, South Africa 8%, Tanzania 8%, Germany 6% and Egypt 6%, while import trading partners were South Africa 18%, China 15%, India 11%, Zambia 7% and UK 5%.

Malawi, Egypt to establish Investment and Trade Council (Malawi News Agency)

New Egyptian Ambassador to Malawi, Hassam Shawky, says Malawi and Egypt are working towards establishing an investment council to promote, among others, trade, investment and agriculture between the two countries. He made the remarks during a press briefing after presenting his letters of credence to President Prof. Peter Mutharika on Thursday. “We are devising a new development programme which includes courses and Egyptian experts coming to Malawi which is completely tailored for the developmental needs of the country. We are interested in the agriculture sector. We are looking at establishing an Egyptian model farm in Malawi.” [Commercial Indian hemp investors dump Malawi]

Malawi Country Environmental Analysis (World Bank)

The Malawi Country Environmental Analysis compiles and reviews existing analyses on Malawi’s environment and natural resources and explores what this evidence means for poverty and economic development. The CEA also identifies 10 strategic recommendations to address the degradation of natural resources and the environment and to promote improved environmental management, investment, and expenditure practices.


Safeguarding of transboundary heritage sites for sustainable development and peace in Africa (UNESCO)

The first regional meeting on “Transboundary Cooperation for effective management of World Heritage Sites in Africa” was held 11-15 February, in the city of Man (Côte d’Ivoire), located at 100 km from the Mount Nimba Strict Nature Reserve, the first African transboundary property inscribed on the World Heritage List. Funded by the Netherlands Funds-in-Trust, the main objective of this activity was to exchange knowledge and share experience on the management of various transboundary and transnational World Heritage sites in Africa, including the use of traditional knowledge. During this workshop, 29 working papers were presented in the presence of about 60 experts, site managers, technical and financial partners, academics, and representatives of the private sector from 20 African countries. 40 institutions involved in African heritage management were represented.

West African states press ahead with solar corridor (PV Tech)

The delivery of gigawatts-worth of solar generation across West Africa lies one step closer to reality after calls were put forward for experts to lay the foundations of a major project that was first envisaged in 2016. Nigeria, Mali, Ghana and the remaining members of ECOWAS are looking to hire two consultants – a renewable specialist and a power system planning expert – to help steer the set-up of a solar corridor in the region. Between April and June this year, the experts will produce a strategic plan on how to deliver the scheme, which aims to push solar capacity up to 2GW (2020) and 10GW (2030) across a vast swath of West Africa from Senegal to Nigeria. The call for consultants comes just a few weeks after ECOWAS states put forward a new, unified energy policy framework.

Indian Ocean Commission: Extraordinary Council Meeting convened in Seychelles (GoM)

The hosting of the second edition of the Ministerial Conference on Maritime Security and the 22nd session of the Contact Group on Piracy off the Coast of Somalia in collaboration with the Indian Ocean Commission’s General Secretariat and the EU, were the main issues discussed during the Extraordinary Council Meeting of the IOC on Saturday 23 February 2019, in Seychelles. The Ministerial Conference was convened to define a regional maritime security and safety policy in the South West Indian Ocean region.

An interview with Mansur Ahmed, President of the Manufacturers Association of Nigeria (Daily Trust)

We are exporting cement to many of our neighbouring countries and we see that part of the challenge is that infrastructure for trade is still also very weak. If you are taking cement from Lagos to Ghana, you will be amazed at the hurdles that you have to go through even though we have the West African Economic Community Agreement, which allows these goods to move freely. We argue with various agencies, both domestically and at the ECOWAS region that there is need to make this agreement actually work, particularly now that we are going into a wider agreement at the continental level. I’m sure you are aware of that there are efforts to expand intra-African trade through the execution of the AfCFTA and when this comes through, it means that we’ll now have the entire African market open to every manufacturer and every producer in the country and in any other country in Africa. It means that this is an opportunity and also a challenge. We also have to meet the requirements of our export market or even our neighbouring countries’ in order to compete with those coming from other regions. This is why we intensify efforts to strengthen the value chain in our market to strengthen the manufacturing sector and increase its contribution to the economy, GDP in particular. This is a continuing effort.

Cedi falls to record low as foreign investors shun Ghana bonds (GhanaWeb)

Ghana’s currency slumped to a record against the dollar after a dovish tilt by the nation’s central bank reduced the appeal of fixed-income assets, sapping foreign-investor demand for the country’s bonds. The cedi has weakened 11% this year, the most among more than 140 currencies tracked by Bloomberg after the central bank unexpectedly cut its benchmark rate in January and signalled more easing may be in store. Out of the GHc2.1 billion ($393m) of two-year and longer-dated maturities sold by the government through 31 January this year, foreign investors bought just 6.3%, according to data from the Central Securities Depository Ghana Ltd. That compares with more than 30% in 2018.

Ghana: Cargo traffic keeps steady growth in 2018; tipped to grow by 10% this year (GhanaWeb)

The country’s two seaports handled combined cargo traffic of over 23million metric tonnes last year, representing an 8% increase over the 21 million metric tonnes recorded in 2017, the Ghana Shippers’ Authority has said. The Port of Tema handled 15.50 million metric tonnes of the total traffic, representing 67% of the total seaborne trade, while the Port of Takoradi recorded 7.62 million metric tonnes, representing 33% of the total seaborne trade. Transit volume from the three landlocked countries of Burkina Faso, Mali and Niger however saw a 3.2% decline, with a total of 996,969 metric tonnes in the year under review. This comprised imports of 879,935 metric tonnes and exports of 87,034 metric tonnes for 2018.

Shoprite has first half-year profit drop in more than a decade (Reuters)

Shoprite Holdings, Africa’s largest supermarket group, reported its first half-year earnings decline (pdf) in more than 10 years, due to currency devaluation in Angola and supply constraints in its home market South Africa. Shoprite, which owns more than 2,800 outlets across Africa, said diluted headline earnings per share for the 26-weeks to 30 December fell to 398.5 cents from 525.6 cents in the comparable period. In the group’s Rest of Africa business, profitability suffered mainly as a result of the Angolan operation, where an 85.1% currency devaluation against the dollar since the beginning of 2018 caused affordability challenges. Rest of Africa reported a trading loss of R61.8m versus a trading profit of R552.7m.

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tralac’s Daily News Selection

26 Feb 2019
The new head of Afreximbank’s Southern Africa Regional Office: Humphrey Nwugo The AfDB has posted an EOI for a trade and regional integration expert to work on, inter alia, the Visa Openness Index 2019 and other flagship...
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tralac’s Daily News Selection

African trade events to diarise:

  1. South Africa’s Portfolio Committee on Trade and Industry will, on Wednesday, be briefed by the Department of Trade and Industry on ongoing negotiations, and implementation, of existing international and regional trade agreements.

  2. 3rd SADC-Japan Business and Investment Forum, in preparation for TICAD VII, takes place in Osaka, Japan, on Thursday.

  3. The AU’s STC on Transport, Infrastructure, Intercontinental and Inter-regional Infrastructure, Energy and Tourism holds its second session, 14-18 April, in Cairo

Ethiopia’s Abiy Ahmed: Africa’s new talisman (Financial Times, Irish Times)

Describing himself as “capitalist”, he nevertheless cites Meles as saying it is the government’s job to correct market failures. “The economy will grow naturally, but you have to lead it in a guided manner.” Still, unlike Meles, Abiy is less wedded to the idea that the state must control the economy’s commanding heights. He is moving swiftly towards privatisation of the telecoms sector in an exercise that should raise billions of dollars, as well as modernising a network that has fallen badly behind African peers. Here too there are risks. “I need to realise the privatisation with zero corruption,” he says, adding that people who have stashed money abroad want to launder it back into the country. [The authors: David Pilling, Lionel Barber]

SADC-IISD Investment Facilitation Workshop: report of the August 2018 meeting (pdf, IISD)

Workshop participants concluded that, at the SADC regional level, facilitation measures should focus on information sharing, intra-regional cooperation, use and strengthening of SADC institutions, and capacity building and technical assistance. In particular, they indicated 41 options for possible facilitation measures at the regional level (as set out in Appendix B, Section B.3.2). Participants recognized the important role that already-existing regional Internet platforms on national investment laws can play as a central feature of regional support. This should be built on best-practice standards in such tools, and experience at the national and regional levels should be used to provide such best-practice standards.

The ability of SADC to develop regional best practices and standards - for example, for ensuring responsible corporate behaviour through the investment-making process - was seen as important and likely to generate more relevant standards for countries from the region. While legally binding approaches were not supported, SADC was seen as the most appropriate level for developing, on an incremental basis, standards for service delivery by governments in facilitating investment, and for incorporating standards for maximizing the sustainable development benefits in the investment-making process. Maximizing the value of regional opportunities through such types of measures was seen as a priority for participants. The ability to generate regional best practices from experience and collective research was an important element of this. There was a strong direction among participants that SADC could assist with technical assistance that supports sustainable development goals related to attracting FDI. Participants noted, for example, the absence of technical support to evaluate and assess investment proposals, to set standards for the economic development aspects of proposals and to identify pipelines of positive proposals. A related issue was the capacity to identify and attract high-level investors with a commitment to being partners in development, as opposed to investors who may have track records that are less supportive of such goals. Conversely, the ability to ensure strong anti-corruption and money laundering was also seen as important.

Bitter aftertaste? Food companies could face costly disputes over land in Africa (Reuters)

Food companies doing business in Africa risk becoming bogged down in decades-long legal disputes over land that could cost tens of millions of dollars, according to a report released on Monday. From sugar to coffee and palm oil, agribusiness firms could find that the land they are using is already claimed or occupied by local people, researchers said. Such disputes, already common, can tie up businesses for years and halt trade - and could cause up to $101m in losses over the next 25 years, said the report from the Overseas Development Institute and TMP Systems. The report, which collected data from nearly 80 firms, is part of a wider initiative to encourage responsible investment in African agriculture and develop trust between companies and communities. Almost half of all land disputes between sugar companies and local communities in Africa lasted more than 10 years, the report found.

AFDB extends funding to Tripartite Capacity Building Programme (COMESA)

The AfDB has provided $2.9m supplementary funding for the Tripartite Capacity Building Programme. The funds will be used to complete critical activities that are essential to the smooth operationisation of the TFTA. Among them is the completion of the industrial and Non-Tariff Measures databases, training of border staff and women traders in risk based sanitary and phytosanitary measures, finalization of the manual on use of Tripartite Rules of Origin and implementation of the Value Chain action plans that are outstanding. AFDB President, Akinwumi Adesina, confirmed the extra funding when he met Secretary General of COMESA Ms Chileshe Kapwepwe in Abidjan on 4 February 2019. The two discussed the TCBP and other areas of regional integration that the Tripartite Task Force needs to pursue.

SADC, Germany identify areas of continued cooperation (SADC)

The purpose of the consultations (19-20 February) was, amongst others, to agree on areas of cooperation in preparation for the next bilateral negotiations between the SADC Secretariat and the Government of the Federal Republic of Germany, to be held in November 2019.

Kenya in spat with Iran over Sh4bn tea exports (Business Daily)

Kenya has protested against a price cap that the Iranian government has imposed on tea exports to the country, putting the Sh4 billion market at the centre of a diplomatic tiff with Tehran. Iran has instructed Kenya to set the maximum price per kilo of tea that it sells to the Asian country at $3 (about Sh300), with anything above the amount attracting a punitive tax. The move has seen Kenya’s Ministry of Foreign Affairs write to the envoy in Tehran, asking him to seek clarification and lobby for easing of the new requirement. Kenya’s tea gets to Iran at about Sh400 per kilo, making it pricier than other teas sold in the country, mainly from India and Sri-Lanka. The quality of Kenyan tea is however superior compared to the others, which makes it highly sought after by the Iranians. Mr Muriithi said market factors make it difficult to sell at Sh300 per kilo in Iran. [Kenya: Exporters hold tea to beat low auction prices]

Controller of Budget says Kenya in debt crisis as loans gobble up Sh1.1trn tax (Business Daily)

The Controller of Budget has raised the red flag on Kenya’s ballooning public debt, warning that the country stands to spend more than Sh61 billion out of every Sh100 billion collected by the taxman for debt repayment this financial year. The Treasury has projected expenditure of Sh1.1 trillion on debt repayment in the 2019/20 financial year which starts in July, an equivalent of 61 percent of the total projected tax collection of Sh1.87 trillion. The Treasury says the public debt will only become unsustainable if it hits 70% of GDP. In the 2019 medium-term debt management strategy, Mr Rotich however proposed a cutback on foreign loans to ease the repayment fears.

Lacina Koné: Safeguarding Africa’s cyberspace (New Times)

Orange Cyber defense estimates that the African market for cybersecurity itself will expand from $1.7bn in 2017 to more than $2.5bn in 2020. Clearly, the opportunities are vast. Safeguarding Africa’s digital prosperity requires everyone to understand the role they play in cybersecurity – from a father using Mpesa (a mobile phone-based money transfer) to pay his child’s school fees to a Chief Technology Officer at a multinational corporation deciding on his/her company’s budget priorities. Governments can support this process by introducing strict laws through reforms, putting in place robust regulatory and legal frameworks and cooperating across borders through clusters of regional CERT (Cyber Emergency Response Team) agencies to identify threats and respond in real time. Cybercriminals move fast, but by working together and giving cybersecurity the attention it deserves, Africa can counter any attack and reap the benefits of the digital economy. [The author is Director General of Smart Africa]

India: E-commerce policy for data protection may further annoy US (Mint)

The stringent norms for data protection and online trade, proposed under the draft e-commerce policy released on Saturday, may further annoy the US, which has raised concerns over growing trade barriers in India. The proposed policy seeks to treat anonymized data collected in the country as a “national asset”, suggesting that such data generated by Indian users on e-commerce platforms, social media and search engines needs to be kept within the country. A business entity, which collects or processes any sensitive data in India and stores it abroad, needs to share such data with Indian authorities when required. Besides, such data must not be shared with a third party, including a foreign government, even with consumer consent. However, there is no restriction on cross-border flow of data among commercial entities if the data has not been collected in India. To break the data monopoly of a few technology giants that creates barriers for new entrants, the policy also proposes that startups be given access to their anonymized data. [Download: India’s draft national e-commerce policy]

Exports to jobs: boosting the gains from trade in South Asia (World Bank)

South Asia’s economy has grown rapidly, and the region has made a significant reduction in poverty. However, the available jobs for the growing working population remain limited. Policy makers are contending with lingering concerns about jobless growth and poor job quality. Exports to Jobs: Boosting the Gains from Trade in South Asia posits that exports, could bring higher wages and better jobs to South Asia. We use a new methodology to estimate the potential impact from higher South Asian exports per worker on wages and employment. We find that increasing exports per worker would result in higher wages, mostly for the better-off groups - like the better-educated workers, men, and the more-experienced workers - although the less-skilled and rural workers would benefit from new job opportunities outside of the informal sector.

Today’s Quick Links:

Anzetse Were: Africa should target FDI from emerging markets

China’s Xiaomi unveils $680 5G smartphone, sees growth in Africa

Attention shifts to ICJ as Kenya stands ground on Somalia border dispute

World Finance: Top 5 countries with the highest trade tariffs

Debt build-up in frontier Low-Income Developing Countries since 2012: global or country-specific factors and way forward?

Eastern Caribbean Currency Union: discussion on common policies of member countries; Selected Issues Paper

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tralac’s Daily News Selection

25 Feb 2019
African trade events to diarise: South Africa’s Portfolio Committee on Trade and Industry will, on Wednesday , be briefed by the Department of Trade and Industry on ongoing negotiations, and implementation, of existing...
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tralac’s Daily News Selection

Marking two years since the TFA entered into force: An Update on the WTO Trade Facilitation Agreement and African countries

This tralac Trade Brief gives an account of the current ratification and implementation status of the TFA by African countries, and highlights potential benefits to African countries if they fully implement the TFA. [Author: Talkmore Chidede]

Note: The incoming Chair of the African Group at the WTO is Benin’s Ambassador Eloi Laourou

The WTO’s Dispute Settlement Body meets on Monday: the agenda items (pdf)

Air Cargo Africa: More integration and air cargo cooperation needed for intra-Africa trade to succeed (The Load Star)

Dick Murianki, general manager of cargo for Kenya Airways, told The Loadstar on the sidelines of Air Cargo Africa that one of his biggest frustrations was the lack of regional trade, which accounted for just 4% of the carrier’s revenues. “We send freighters within Africa, leaving Nairobi full, and they come back empty; we have to fill them with ballast. Nothing is coming back. It makes it very expensive to operate when we have to cost-in the return journey.” Chief executive of Kenya Airways Jan de Vegt pointed out: “The EU, US and China are big land masses with little or no Customs. Here, there are 54 countries all with different rules. It makes it very difficult.” These differing rules have hampered nations’ abilities to trade with each other, said Mr Murianki. “It makes regional trade almost impossible.” [Related Engineering News reports: Single air transport market essential for African air cargo sector, UAVs, e-commerce, set to transform air cargo]

US, others oppose EU’s listing of Nigeria, others on dirty money black list (Premium Times)

Some members of the Global Financial Action Task Force have condemned the EU’s decision to blacklist Nigeria and 22 other countries in an expanded list of countries released last week. The EU Commission said the blacklist would affect countries who have failed to take steps to strengthen their anti-money laundering and terrorism financing regimes. Insiders at the ongoing meeting of the powerful global body told Premium Times that non-EU states took turns to lampoon the decision, with the U.S. describing it as “out of order and confusing”. FATF’s president, Billingslea Marshall, announced the US government’s directive to all US banks to ignore the EU listing of the 23 countries. Countries like Japan, Argentina and others from Africa and the Middle-East agreed with the US’s position on the blacklist. Most members at the meeting faulted the EU’s position which, they said, was taken outside the known global mechanism for tackling illegal monies such as the FATF, Egmont Group and the UNODC.

South Africa: Brazilian chicken ban call ‘opportunistic’ (IOL)

The South African Poultry Association has called for a ban on Brazilian chicken imports following a salmonella scare that led to a recall of 500 tons of product globally. Broiler organisation SA Poultry Association’s general manager Izaak Breitenbach has written to the Minister of Agriculture Forestry and Fisheries Senzeni Zokwana, on behalf of the local poultry industry “requesting action” against Brazilian imports. However, consumer groups and meat importers have lambasted the move as an “opportunistic” bid to protect the interests of local producers. Association of Meat Importers and Exporters’ Paul Matthews said the call for the ban was not necessary and came at a convenient time for Sapa, which had just filed a request with the International Trade Administration Commission for an increase in duty on Brazilian and US chicken imports of 82%. [South Africa: Foot-and-mouth disease hampers hide and skin exports]

South Korea’s Hyundai opens assembly plant in Ethiopia (Reuters)

South Korea’s Hyundai Motor Co opened a 10,000-a-year vehicle capacity assembly plant in the Ethiopian capital Addis Ababa on Thursday, its first factory in East Africa. While second-hand vehicles dominate sales in the Horn of Africa country, Hyundai hopes locally-assembled cars could prove attractive given the cost of imports due to high taxes. Some of the cars will be exported to the region, Haile Gebrselassie said. “This plant is big enough (to assemble) for Kenya, Ethiopia, Somalia, Djibouti, Eritrea and Sudan,” he said. Ethiopia produces around 10,000 commercial and other vehicles a year for its home market. It imported more than 40,000 cars in 2017, automobile traders say. [VW South Africa targets record output despite headwinds]

Zimbabwe’s currency reality check puts plaster on deep wound (Reuters)

“The fact that officials finally came to their senses and ditched the notion that Zimbabwe’s quasi currency was at par with the US dollar, is comforting,” said Jee-A Van Der Linde, analyst at NKC African Economics. “With consumer prices soaring, significant amounts of multilateral debt arrears, virtually no foreign reserves, and confidence at rock-bottom, Zimbabwe’s problems are still far from over – nor is the road ahead any clearer.” [Related updates: US$ remains the base currency for trading - Zimcodd; Bloomberg: Zim says exchange rate to strengthen, thanks to ‘new currency’; Reuters: Zimbabwe’s new currency expected to trade at 2.5 vs U.S. dollar – cbank]

Uganda’s social media tax has led to a drop in internet and mobile money users (Quartz Africa)

In the three months following the introduction of the levy in July 2018, there was a noted decline in the number of internet users, total revenues collected, as well as mobile money transactions. In a series of tweets, the Uganda Communications Commission noted internet subscription declined by more than 2.5 million users, while the sum of taxpayers from over-the-top media services decreased by more than 1.2 million users. The value of mobile money transactions also fell by 4.5 trillion Ugandan shillings ($1.2m). “The decline in the amount of business could partly be explained by the introduction of mobile money tax,” the regulator said. [Perseus Mlambo: Africa’s Digital Generation Gap]

Nigeria hits oil majors with billions in back taxes (Reuters)

Nigeria has ordered foreign oil and gas companies to pay nearly $20bn in taxes it says are owed to local states, industry and government sources said, in a move that could deter investment in Africa’s largest economy. In a letter sent to the companies earlier this year via a debt-collection arm of the government, Nigerian National Petroleum Corp cited what it called outstanding royalties and taxes for oil and gas production. Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor were each asked to pay the central government between $2.5bn and $5bn, said the sources, who saw or were briefed on the letters.

Côte d’Ivoire Economic Outlook: Understanding the challenges of urbanization in height charts (World Bank)

For the seventh consecutive year, economic growth in Côte d’Ivoire was projected to exceed 7% and reach 7.4% in 2018, despite the country’s vulnerability to external shocks and political uncertainty in the run up to the presidential elections in 2020. This was the verdict of the Eighth Economic Update for Côte d’Ivoire published by the World Bank. The country, therefore, continues to have one of the most dynamic economies in the world, boasting the highest growth rates in the West African Economic and Monetary Union, despite a slight drop of 0.3% in relation to its performance in 2017 (7.7%).

Given that by 2050, nearly two out of three Ivorians will be living in an urban center, over 10 million of whom will settle in Abidjan, urban mobility challenges will intensify if no action is taken, and solutions will become increasingly difficult to implement. The report analyzes the daily mobility constraints faced by commuters and proposes several avenues for improving urban transport and ensuring the success of the Greater Abidjan project adopted in 2016. “There are approximately 10 million trips taken every day in Abidjan and each household spends close to CFAF 1075 (about $1.80) and loses over three hours a day in commuting time,” explains Anne Cecile Souhaid, Senior Transport Specialist and co-author of the report. “That is equivalent to nearly 5% of the national GDP in 2017. However, a 20% improvement in urban mobility in Abidjan could generate gains of almost 1% of annual GDP growth.” [Jacques Morisset: The challenge of urban mobility in Abidjan]

Carlos Lopes: How African countries can ‘leapfrog’ the fossil-fuel based growth strategies of developed countries (Global Commission on the Economy and Climate)

Over the next 10-15 years we expect to invest about $90 trillion in infrastructure (more than the total current stock) and the global South will account for roughly two-thirds of this. To add to the urgency, these investment decisions will be taken in the next 2-3 years. Whether or not this infrastructure is sustainable will be a critical determinant of future growth and prosperity. We must act quickly and the following three pillars for action can guide next steps in Africa: green industrialisation, smart urban development and sustainable agriculture.

Will the African Union let climate change derail its development plans? Or will member states seize the opportunities that the low-carbon, climate resilient revolution offers for more inclusive and sustainable economies? African countries are already helping to lead this revolution. In 2016, Uganda published a comprehensive agenda for green growth, incorporating climate action into the country’s five-year national development plan. To those heads of state seeking strategies to ensure their countries’ growth and sustainable development well into the future, I encourage you to act on climate change today.

Nigerian government to screen foreigners for work permit (Premium Times)

The Federal Government will soon begin the enforcement of available immigration laws that allow only foreigners with the requisite residency and work permits to live and work in the country. The Minster of Power, Works and Housing, Babatunde Fashola, disclosed this in Lagos on Thursday in a special event, “BRF GABFEST” organised in his honour. The Minister said the government is currently undertaking the audit of foreigners working at various work sites and businesses across the country to determine the population of foreigners working in the without a valid work permit. “Every foreigner who has the work permit to come to Nigeria legally is welcome. But, if you don’t have the relevant papers, we will take you out,” Mr Fashola said.

Obasanjo, experts meet on population in Africa (The News)

Former President, Chief Olusegun Obasanjo and 18 global experts in population on Tuesday, met to fashion out how to make Africa’s population an asset rather than a liability. At the Africa Progress Group (APG) organized international round table session, held at the Olusegun Obasanjo Presidential Library, the experts, with South African philanthropist and businessman, Jonathan Oppenheimer as special guest, presented diverse papers on population issues, which they noted is a course for concern. “To ensure that Africa’s population is an asset to development, after careful consideration of successful practices in managing populations across the world, participants recommended to African leaders as follows:...”

Take no-deal Brexit off the table, says International Chamber of Commerce (ICC)

A failure to deliver a deal on the UK’s withdrawal from the EU will add more barriers to global trade and risk thousands of UK jobs, said the Secretary General of the world’s largest business organisation. Noting the UK’s historic role as a champion for global trade, ICC Secretary General John W.H. Denton warned that a “no-deal” Brexit will dangerously add additional barriers to trade and investment at a time when protectionist measures worldwide are already approaching alarming levels. With regard to Brexit, ICC has continually called on the UK to seek the closest possible trading relationship with the EU to keep cross-border trade as frictionless as possible. [UK Department of International Trade: update on existing trade agreements if UK leaves EU without a deal; Ngaire Woods: Brexit’s Lost World]

Mohamed A. El-Erian: The dialectic of global trade policy (Project Syndicate)

It is often said that with risk comes opportunity. What initially was viewed as an unfortunate US shift to protectionism may in fact have opened a window to improve the functioning of the global economy and world trade. The next few months will be critical.

Today’s Quick Links:

WTO trade indicator points to slower trade growth into first quarter of 2019

Ivory Coast hosts third regional trade policy course

Brexit a hot topic for SA fruit exporters

CBL Gov. Patray stresses collaboration among ECOWAS central banks

ITC guide to Chinese private investment in Africa: insights from SME competitiveness surveys (in Chinese)

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tralac’s Daily News Selection

22 Feb 2019
Marking two years since the TFA entered into force: An Update on the WTO Trade Facilitation Agreement and African countries This tralac Trade Brief gives an account of the current ratification and implementation status of the...
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