News Archive March 2019

tralac’s Daily News Selection

A suite of AfCFTA updates:

  1. Professor Benedict Oramah, Afreximbank President: 2019 Bullion Lecture, delivered earlier this week in Lagos on  pdf Leveraging the AfCFTA to Boost Nigeria’s Economic Development (1.18 MB) . Nigeria will need to overcome a number of constraints and concerns in order to be able to reap the benefits the AfCFTA offers. The good news is that as we shall see hereunder these constraints need not be deal-breakers. I highlight the major concerns and the remedies here under:

    Current macroeconomic policies may need to be tweaked towards supporting increased regional trade. An environment of low tariffs, and significant reduction in non-tariff barriers envisaged under the AfCFTA, will require maintaining the real exchange rate of the Naira at an appropriate level. This will mean appropriate management of the nominal exchange rate of the Naira, implementation of policies that promote improved productivity, appropriate monetary policies and so on.

    At the sectoral level, there will be a need to introduce policies that encourage FDI flows to sectors that have the highest potential for regional trade, namely light manufacturing and agriculture. The Government needs to investigate why most FDIs that come into Nigeria flow to the oil and gas sector and do something to expand the recipient sectors. The interventions could include introducing more friendly investment policies that will reduce investment risks; strengthening the Investment Promotion Agency so that it is able to provide useful information to investors; and strengthening Nigerian Export Promotion Council so that it can contribute effectively to reducing the cost of exporting to near markets.

    Some complain that government officials negotiate international trade treaties and make trade and investment policies without consulting those (the private sector) whom those treaties and policies are supposed to serve. Because this concern is Africa-wide and explains why there is usually limited support for trade policies negotiated by African Governments, compared to other regions, Afreximbank and the AU have launched the Pan-African Trade and Investment Policy Committee to serve as a platform for engaging the African private sector in trade policy formulation and trade negotiations.

    Some Nigerian manufacturers worry that the AfCFTA will create an opportunity for certain goods produced outside of Africa to enter the Nigerian market from smaller African countries. While this is a valid concern, it does not present an insurmountable problem for various reasons, particularly because: stringent rule of origin is an important component of the AfCFTA and is currently under negotiation; the AfCFTA is expected to have a strong dispute settlement mechanism that will allow any grievances to be settled; and Nigerian companies must also realize that to compete effectively in Africa, they must be ready to compete globally. This will involve retooling their factories to convert them from import substitution to export promotion.

  2. Francis Mangeni, COMESA’s Director of Trade and Customs: The African Continental Free Trade Area to enter into force. The African Continental Free Trade Area is here and will formally be launched at the next summit of the AU this July in Niamey in Niger. This is one of the biggest achievements and landmarks of all time to come out of Africa.

    Another sine qua non for AfCFTA to become functional, is that the countries must add in their Tariff Books, the customs duty rates that will be charged on goods originating from other Tripartite countries. For countries that wish to maintain and extend to others, subject of course to reciprocity, their current trading terms under the full FTAs they belong to, for instance COMESA, EAC, ECOWAS and SADC, modification of the Tariff Books will be very easy, a clerical exercise of a mere hours. Also, countries that have eliminated or significantly reduced their general or Most Favoured Nation duties, such as Libya, Mauritius, and Seychelles, should not face challenges in making tariff modifications for AFTA. However, a bit of work and further negotiations will be required among those who will limit their trade liberalisation in line with the AfCFTA modalities. Ninety percent of product lines will be liberalized over transition periods of 5, 10, 13 or 15 years. Seven percent will be sensitive products, and three percent will be excluded from AFTA altogether. Sorting out which products to put under these various categories, as a pre-requisite exercise, can end up being a pitfall, if proactive hands-on technical and financial support is not quickly rolled out throughout the continent.

    A third pre-requisite for trade to happen under the AfCFTA is the necessary customs, standards and trade facilitation documents. These need to be quickly produced by the governments and availed to economic operators for use. Without them, trade cannot happen on AfCFTA terms. There is need for an AfCFTA Customs Declaration, an AfCFTA Certificate of Origin, AfCFTA transit documents, in addition to the five universal documents as well as product specific requirements especially in the agricultural sector. Should all these pre-requisites begin to pose challenges, an easy way forward to put the AfCFTA face to trade on the continent, would be to scale up the on-going Trade Facilitation Programs, such as building one-stop-border-posts, digitisation of customs and other regulatory processes, orientation of existing surface and air corridors into development corridors, adoption of continent-wide payment systems, operationalisation of market-intelligence facilities, and establishment of online and SMS-based mechanisms for addressing non-tariff barriers and some other trade disputes. These are low hanging fruits, so to speak.

  3. Carlos Ahenkorah, Ghana’s Deputy Minister for Trade and Industry: Adhere to standardized goods, services to facilitate AfCFTA. Ghana’s Deputy Minister for Trade and Industry, Carlos Ahenkorah, has called on ECOWAS countries to adhere to the outlined standards for goods and services to facilitate speedy implementation of the African Continental Free Trade Area. According to him, the African Continental Free Trade Area could be derailed if the issue of standardization of goods and services are not addressed in all countries. “If trade between African countries will work out, standardization comes into play. I say this because if Ghana or any other country should hike up their standards and other countries are unable to keep pace then the process will be hindered. If this is not looked at then the ACFTA might not work properly. We might encounter serious challenges.”

  4. NANTS backs Buhari over trade agreement. The National Association of Nigerian Traders has thrown its weight behind President Muhammadu Buhari’s refusal to sign and ratify the AfCFTA. President of the NANTS, Mr Ken Ukaoha, disclosed this on Thursday in Abuja at the national validation workshop on the study on Nigeria’s agricultural trade strategies for the AfCFTA negotiations. “There is no doubt that the AfCFTA has potentials to handhold Africans and particularly, MSMEs in our constituency out of the poverty bracket. Economic pundits have noted that with 1.2 billion inhabitants and a GDP of about $3trn, the AfCFTA has the capacity to increase access to markets that are larger than the colonially imposed national boundaries and demarcations,” Ukaoha said. He added: “However good and attractive as all of these pontifications of potentials may sound, this good news cannot come the way of any country at all without the effective, adequate and strategic preparations for the negotiations. Negotiators of AfCFTA must therefore be prepared to navigate into the country’s future only through evidence-based instruments.”

  5. Assessing inclusion and human rights implications of digital trade. Mr David Luke, ATPC Coordinator, said the AfCFTA offers a platform for African countries to collaborate on the digital economy, which could also help to inform a common African position on e-commerce at the multilateral level. In this regard, ECA has recently established a Digital Identity, Trade and Economy Centre of Excellence which pools various types of expertise, including trade, statistics, technology, project management, policy, and investment, dedicated to working on Africa’s digital agenda.

Gender considerations in trade agreements: perspectives from yesterday’s WTO discussion

Trade and trade agreements can be a useful mechanism to support women’s economic empowerment and thus boost economic growth and poverty reduction around the world, DG Roberto Azevêdo said during the workshop on gender considerations in trade agreements. ”Since 2016, a new trend has emerged with the inclusion of stand-alone chapters on trade and gender in the RTAs negotiated by Canada and Chile. Several others, including the EU and New Zealand, have indicated their intention to address more explicitly the role of women in their new trade agreements. Of course, these efforts are bolstered by the Buenos Aires declaration. But it is not an easy task to mainstream gender into trade policies and into development projects. It is one thing to set an objective in favour of women’s empowerment, it is another to design concrete policies and programmes to implement that objective. We are seeing a range of steps being taken. Some countries have launched processes to translate their gender equality objectives into concrete trade policies and programmes. Some are evaluating the impact of their Aid for Trade strategies to better reach women. Others are organising national consultations to better understand how to integrate gender into their trade policies. And some are thinking about how to design new types of trade agreements, building on the work that has been done so far. We are all still somewhere on the learning curve.”

Isabelle Durant, Deputy Secretary-General of UNCTAD: “Although trade policies should be used to help empower women, this is not a panacea because policy makers cannot address all gender issues through trade. This brings us back to the importance of national policies that must be undertaken with regards to education, women and girls’ access to education, digitization, information, economic opportunities and so forth.”

Sefatlhego Matebekwane, Agricultural Attachée of Botswana: “We need events such as this seminar today to deepen our understanding, share experiences and lessons learned in terms of women’s empowerment. We know that there is not a one-size-fits-all solution. Therefore, we have to come up with policies that affect different societies differently. The seminar today allows us to analyze the steps taken so far and to ensure that we have enough knowledge and data to design inclusive trade policies that leave no one behind.” [50 Million African Women Speak digital platform: training for users as launch nears]

South Africa’s trade statistics for February 2019 (SARS)

SARS has, today, released trade statistics for February 2019 recording a trade surplus of R3.99bn. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia. The year-to-date (1 January - 28 February 2019) trade deficit of R9.08bn is an improvement on the deficit for the comparable period in 2018 of R27.97bn. Exports year-on-year increased by 9.3% whilst imports for the same period showed an increase of 3.9%.

Pinelopi Goldberg: Moonshot Africa and jobs (World Bank)

Concerns about robots and algorithms replacing human labor increasingly dominate the public debate not only in advanced economies, but also in emerging and developing economies. Against this background, it is natural to ask how these two views are compatible. To be more specific: How will Moonshot Africa create jobs on a continent where job creation is needed more than anywhere else in the world with Africa’s working-age population projected to rise by 70% in the next twenty years? To date, there has been little work on this question. But, a recent paper by Jonas Hjort and Jonas Poulsen, “The arrival of fast internet and employment in Africa,” published in the American Economic Review in March 2019, takes up this exact question and gives technology optimists reason for hope. In the 2000s, consortia consisting of private investors, African governments and multilateral organizations gradually built, over the course of several years, ten submarine fiber optic internet cables connecting landing-point cities along Africa’s coast with other continents. These cables greatly increased data transmission speeds and capacity on African internet networks and reduced the cost to individuals and firms to access the internet. Hjort and Poulsen use this gradual improvement in connectivity to assess how faster internet access affected jobs in Africa. Using household survey data from 12 African countries with a combined population of roughly half a billion people, the authors document a large positive effect on employment - an increase of 3.1% in South Africa and 6.9 - 13.2% in other countries in the samples – that is primarily driven by increased employment in higher-skill occupations. [Related commentary, by Akihiko Nishio: The jobs challenge is bigger than ever in the poorest countries]

Germany’s new Africa policy (DW)

“The [new] guidelines signal the growing significance of Africa and the increasing engagement of Germany,” says Foreign Minister Heiko Maas. Discussions between various German ministries took a year. Now the cabinet has approved a new Africa plan which should put an end to the chaos. Previously, rather than working with each other, the departments responsible for Africa policy worked alongside each other: the finance ministry with the Compact with Africa, the development ministry with the Marshall Plan for Africa and the economics ministry with Pro!Afrika. These are just the most important plans. “In the last three years, eight papers were put forward by various ministries,” says Robert Kappel, a development economist at the University of Leipzig. Even the education ministry now has its own Africa strategy. “What was missing was a common conceptual umbrella and a clear set of priorities,” according to Foreign Minister Maas. Does the new strategy paper make a quantum leap? “We need to develop our policy coherently. One of the goals of the guidelines is to establish this coherence,” says Robert Dölger, the Africa representative at the foreign ministry. On the surface at least, the paper helps by bundling German engagement into five key areas: peacebuilding, development, migration, working with African partners, more cooperation with civil society.

tralac’s Daily News Selection

Diarise: SWIFT’s African Regional Conference (18-20 June, Accra) on the theme Enabling the Digital Economy

South Africa’s February 2019 trade balance will be released tomorrow, Friday

At CoM2019: Seeking the one pending AfCFTA ratification

EACJ rules that Uganda’s excise duty imposed over goods imported within East Africa is a violation of the Treaty (EACJ)

The court further ordered that implementation of the provisions of Sec 2(a) and (b) of the Excise Duty (Amendment) Act No.11 of 2017 by misconstruction and wrongful re-classification of the British American Tobacco Ltd Uganda’s Cigarettes as ‘imported goods”, contravene and infringe on Articles 1 and 75 (6) of the Treaty as well as Articles 1 (1) and 15 (1) (a) and (2) of the Customs Union Protocol and Article 6 (1) of the Common Market Protocol. The Court further ordered that the government’s misapplication of the provisions of the said Act by issuance of the payment registration slips for additional taxes in the sum of Ug shs 325,208,000 for the BAT’s 1,170 packages of soft cap cigarettes is illegal, null and void and the court ordered the government, with immediate effect, to rescind and withdraw the payment registration slips.

In addition the court ordered the government to ensure the interpretation and application of Excise Duty Act with due regard and in compliance with applicable Community Law and to align the Ugandan tax laws with Community Law applicable to goods from EAC Partner States. The court exercising its discretion ordered each party to bear its own costs on the basis that this case has canvassed matters of grave importance to the advancement of Community law and EAC intra-regional trade, which would be of significant public interest to across section of stakeholders within and beyond the EAC regional bloc. [Kenya, Uganda to continue on the integration path]

Earnings from East African ports improve (The EastAfrican)

The operation of East African ports to GDP grew between 2013 and 2017, as their Southern African competitors registered a drop, a new report shows. Dynamar’s East and Southern Africa Container Trades 2019 Report says East African ports’ contribution to GDP rose from 34% in 2013 to 40% in 2017 as South Africa experienced a 5% drop from $367bn to $349bn over the same period. Darron Wadey, a shipping analyst, attributes the improved performance of the ports of Dar es Salaam and Mombasa to increased business from the region’s landlocked countries, which has increased the number of containers handled by the ports. “Mombasa and Dar es Salaam are competing for hinterland cargo to Burundi, Rwanda, Democratic Republic of Congo and Uganda. State controlled ports are under increasing pressure to improve and develop their strained infrastructure,” reads the report.

African CEO Forum: selected highlights

  1. Businesses demand more say on EAC agenda to promote investment. Business leaders in the EAC say protectionism and differences between politicians are impeding efforts by companies to invest in the region. Tanzanian business magnate Ali Mufuruki accused politicians of failing to push policies that promote investment in the region. “We have never had the discussion on why there isn’t a single billion-dollar company in East Africa. If we have that conversation, people will start to ask whether it is going to be a Tanzanian or a Rwandan company. We need to be honest with each other and ask what we really want from this union,” Mr Mufuruki told the Africa CEO Forum in Kigali. Saying he had found difficulty in hiring workers in the region, he urged the EAC partner states to relax labour laws and abolish work permits. He asked politicians to let the business community - which is driven by profit and growth - to lead EAC integration. “If business leaders are allowed in the rooms where policies are made, then business can be put at the forefront and we will make more progress,” he said. His message was echoed by RwandAir chief executive officer Yvonne Makolo, who said that the lack of an open skies policy has continued to make air travel expensive for most people in the region and on the continent.

  2. Tshisekedi fronts DRC as key to Africa’s energy, water woes. Starting with the armed groups in his country which he has vowed to neutralise, Mr Tshisekedi, said their motives were more commercial than ideological. “The militias are petty business people and illegal peddlers of natural resources like minerals and timber. They are getting followers out of social realities like lack of jobs. We want to integrate these people into the society through the co-operation of other countries involved,” he told delegates at the Africa CEO Forum held in Kigali, on Tuesday. He said he would look to move the country forward with progressive policies such as those pursued by President Paul Kagame in raising Rwanda from the ashes of the Genocide Against the Tutsi to one of the world’s business and political success showcases in a short 25 years.

    He said the Great Lakes countries should concentrate on common interests such as exploitation of methane gas at Lake Kivu, which is on the Rwandan side close to the DRC border, and hydroelectric power at River Rusisi to help the countries diversify their economies. “These should be co-ordinated for development and peace,” he said. He said DRC was ready to offer its resources and opportunities to other African countries, pointing out that Congo River, in particular, could alleviate disputes on the River Nile, such as that pitting Ethiopia and Egypt over the construction of the Grand Renaissance dam.

  3. Regulators remain sceptical of cryptocurrencies. “Cryptocurrencies started out as really fantastic ideas, but as time went on, they now look like strong indicators of illicit flows. Even as we look at the potential, we have to look at the risks,” the Central Bank of Kenya Governor Dr Patrick Njoroge said on Monday at the ongoing Africa CEO Forum in Kigali. Regulators are concerned that with no guidelines the digital currencies could have an impact on financial stability. “There is no shared regulation for cryptocurrencies so far. It would be very dangerous for a bank to be part of any system that is not regulated,” warned Mr Alexandre Maymat, head of Africa, Asia Mediterranean Basin & Overseas at Societe Generale, a French-owned investment bank.

  4. Morocco’s Mohamed El Kettani emerged the 2019 African CEO of the Year at the 7th edition of the Africa CEO Forum. He has invested more than $1bn on the continent over the past seven years. He is a champion of south- south cooperation and is behind the pan-African development of Morocco’s leading bank, Attijariwafa Bank. Ethiopian Airlines won the accolade of ‘African Champion of the Year’ for their intra-African partnerships, reaching 40 countries on the continent. The award was received by the airline’s CEO, Tewolde Gebremariam.

  5. More inter-Africa trade at CEO Forum. Seen as the continent’s most influential networking platform for private sector actors, delegates participated in over 40 discussion sessions themed around how Africa can move from multi-lateral trade treaties to actual business opportunities. Deals estimated at worth over $1bn were also been sealed during the two-day summit.

  6. Africa Plastics Recycling Alliance launched (pdf). A number of international consumer goods companies operating across Africa including Diageo, Unilever, The Coca Cola Company, and Nestlé launched the Africa Plastics Recycling Alliance at the CEO Africa Forum in Kigali. This Alliance aims to turn the current challenge of plastic waste in Sub Saharan Africa into an opportunity to create jobs and commercial activity by improving the collection and recycling of plastics. The Africa Plastics Recycling Alliance has been established for companies to:

The productivity cost of illness in Africa: Diseases cost the African region $2.4 trillion a year (WHO)

The World Health Organization estimates that nearly 630 million years of healthy life were lost in 2015 due to the diseases afflicting the population across its 47 member states in Africa, now amounting to a loss of more than $2.4 trillion from the region’s GDP annually. Non-communicable diseases have overtaken infectious diseases as the largest drain on productivity, accounting for 37% of the disease burden. Other culprits for lost healthy years are communicable and parasitic diseases; maternal, neonatal and nutrition-related conditions; and injuries. Around 47%, or $796bn, of this lost productivity value could be avoided in 2030 if the Sustainable Development Goals related to these health conditions are achieved, WHO found. [Download: A heavy burden – the productivity cost of illness in Africa]

New report urges action to close Africa’s gender gaps in business performance (World Bank)

A new World Bank report proposes a menu of evidence-based solutions to address wide gender gaps in the performance and profitability of firms in sub-Saharan Africa. Drawing on rich survey data from several Sub-Saharan African countries including Ghana, Profiting from parity: unlocking the potential of women’s businesses in Africa finds that female entrepreneurs consistently lag men on several key indicators of business performance. Monthly profits and sales from female-owned firms are on average 34% and 38% lower, respectively, than those from male-owned firms. Bridging these business performance gaps is especially critical for African economies, where women are more likely to be self-employed -often out of economic necessity- than to engage in wage work and are more likely to be entrepreneurs than men.

Developing a “Pool of Customs Valuation Trainers” in Southern Africa (WCO)

Under the auspices of the WCO/JICA Joint Project, the Second Working Group Activity (sub-regional workshop) of the Master Trainers Programme on Customs Valuation was held in Maputo (18-22 March). The workshop was the second in a series of activities to be undertaken by these five Revenue Authority countries ( Botswana, Malawi, Mozambique, Zambia, Zimbabwe) to enhance their capacity related to the implementation of Customs Valuation.

The Global Alliance for Trade Facilitation has released its Annual Report 2018 (pdf)

At the close of 2018, 88% of Alliance global private sector stakeholders confirmed that the Alliance is effectively leveraging public-private partnerships to deliver trade facilitation reforms, while 95% of global businesses we work with said they believe Alliance projects are commercially relevant for their business and guided by evidence and global good practice. Ghana: We aim to see 75% of all shipments assigned to the green channel pre-arrival with 90% of all green channel shipments being released upon arrival. This has the potential to significantly reduce the cost of cross-border trade in Ghana. In 2018 the project team, comprised of representatives from the GRA and the business community, completed an analysis of international best practice, including a study visit to Germany, developed the new model and identified the necessary legal and regulatory changes that need to be made to support it. As we enter 2019, we are ready to begin delivering training and piloting the new pre-arrival process.

Paying across borders: can distributed ledgers bring us closer together? (World Bank)

These shortcomings make the cross-border payment industry ripe for disruption and innovation. Some see distributed ledger technologies (DLT) as having the potential to drive industry-wide change. Indeed, B2B cross-border payments, traditionally characterized by fragmentation and opacity, are a potential use case for the successful implementation of DLT. In 2018, Ripple, a FinTech company, piloted xRapid, a DLT-based cross-border payments solution, along the very competitive US-Mexico corridor. Financial institutions involved in the pilot saved 40%-70% in foreign exchange costs, and the average payment times was just over two minutes. The transfer of funds on xRapid took two to three seconds, with most of the processing time explained by domestic payment rails and intermediary digital asset exchanges. [Mauritius: 5th annual SIL e-Gov conference focuses on artificial intelligence, blockchain]

Looking forward: US-Africa relations (Brookings)

On 26 March, Brahima Coulibaly testified before the US House of Representatives Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations. Extract from his written testimony: Second, the U.S. will benefit from leveraging USAID’s regional trade and investment hubs more to strengthen U.S. commercial engagement on the continent, and from a high-level White House coordinator for U.S. commercial policy in Africa. Currently, USAID has regional trade and investment hubs in three countries - Ghana, Kenya, and South Africa - with an objective to “deepen regional economic integration,” “promote two-way trade with the US under AGOA,” and “attract investment that drives commercial expansion within the region and to global markets.” Compared to some other external partners, US companies often lack an understanding of the African business environment, which is a barrier to entry. The mandate of the trade and investment hubs could be broadened to include collection of timely information on investment opportunities on the continent, guidance for US businesses looking to expand their activities on the continent, and assistance in identifying various risk mitigation and financing instruments available across US agencies or elsewhere. A high-level White House appointee on US-Africa commercial activities would supervise and operationalize the recommendations of the President’s Advisory Council on Doing Business in Africa, coordinate US commercial activities in Africa across US agencies, and help resolve problems, such as possible unfair competition, faced by US companies doing business in Africa.

tralac’s Daily News Selection

Tunisia has formally ratified its membership of COMESA – becoming its 20th member

Diarise: Transforming Mauritius – policies to foster industrialisation and development. The workshop, 11-12 April, will be organised by UNCTAD, in collaboration with the Ministry of Foreign Affairs, Regional Integration and International Trade, and the Ministry of Industry, Commerce and Consumer Protection.

CoM2019 ends with African governments being urged to embrace digital transformation (UNECA)

The 52nd session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development ended on Tuesday with governments urged to move with speed to embrace digital transformation to spur economic growth. The Ministers said if Africa does not move with speed to adapt modern technologies and ensure everyone has broadband internet access at least by 2022, then the continent will not be able to leapfrog development challenges in the near future. The Ministers also discussed threats and challenges posed by digitization and the need to have measures in place to protect citizens and governments. “Limited Internet access in Africa continues to impede the development of digitization in economic and social sectors, including e-commerce, e-health and e-government, which are constrained by high transaction costs, the spatial distribution of information exchanges, and limited access to international markets,” the Ministers said in their statement. Progress was noted in regional integration efforts on the continent with the ministers committing to taking measures and steps to enhance the incorporation of regional integration agreements and treaties, including the African Continental Free Trade Agreement, into domestic law and implementation. The Ministers said it was worrying that Africa continued to lag behind other regions in terms of infrastructure development.

SA-EU Bilateral Trade Overview, 2018 (SADC-EU EPA South Africa Outreach initiative)

According to DTI figures, the EU remains South Africa’s main trading partner accounting for 26.4% of all trade in 2018; more concretely, the EU accounts for 24% of SA’s exports and 29% of its imports. The EU is also the country’s most stable post-apartheid partner with exports to the EU systematically above 19% of South Africa’s total exports. SA exports have grown 5.3% in 2018 despite recessive economic environment while exports to the EU have grown at a faster pace, 12.5%. This shows that the recent SADC EU Economic Partnership Agreement, which entered into force in 2016 guarantees a strong reliable framework for doing business and engaging on issues of mutual concern.

The deficit in favour of the EU has also been shrinking as South Africa has been developing its industrial base, now at R58bn down from R88bn in 2016. According to EUROSTAT figures, SA has a surplus with the EU of €162m (aprox R2.6bn). A significant part of the discrepancy in statistics has been attributed to a discrepancy in gold exports. At a sectoral level, and according to EUROSTAT figures, SA has a surplus balance with the EU in agriculture of €1.5bn, and of €867m in the automotive sector.

SA exports to the EU are also much more diversified than to other partners, with raw materials accounting for less than half of the total. According to EUROSTAT figures, the automotive sector alone accounts for 21.5% of SA’s exports to the EU, followed by agriculture at 12.4% and machinery at 6%. In the agricultural sector, and according to DTI figures, 37% of SA’s fruits and vegetables go to the EU, followed by 30% of its animal products exports and 20% of its prepared foodstuff including wines. [See: Table 1 – Overview of South Africa’s trade with the world; Table 2 – Bilateral trade SA-EU, pdf]

Namibia: Annual trade statistics 2018 (pdf, Namibia Statistics Agency)

The year 2018 recorded a trade deficit amounting to N$17.38bn, a remarkable reduction of 31% when compared to N$25.18bn observed in the preceding year. The current deficit was mostly attributed to the importation by Namibia of high valued manufactured commodities and machineries, while exporting mostly low value primary goods. Overall exports grew by 45% from N$63.87bn in 2017 to N$92.84bn, while imports recorded a 19% growth from N$89.04bn in 2017 to N$110.22bn. Exports were mostly destined to China which absorbed N$16.41bn (18%) of total exports overtaking South Africa that occupied the same spot in 2017 with N$15.06bn (24%) of total exports. This was mainly due to precious stones and metals destined to South Africa in 2017.

The growth in exports to China was mainly led by minerals such as copper (N$9.766bn) and ores (N$5.956bn). South Africa ranked second with N$14.89bn (16%), followed by Belgium N$9.30bn (10%), Botswana N$9.25bn (10%) and UK N$6.17bn (7%). Imports on the other hand, were mainly sourced from South Africa (N$49.13bn), Zambia (N$15.59bn), China (N$6.25bn), Bahamas (N$5.73bn) and Botswana (N$4.51bn). In terms of economic blocs, SACU was the major market for Namibia’s exports (N$23.44bn) mainly due to export of precious stones and metals to South Africa and Botswana.

pdf Namibia: FY2019/20 budget statement (529 KB) (MoF)

Three years since the implementation of the fiscal stabilization measures, we can together account tangible progress points: Public expenditure is aligned to revenue. Over the past three years, revenue grew by 3.8%, relative to 0.4% growth in expenditure. Expenditure as a proportion of GDP reduced from 42% to 34.9% in FY2018/19. The budget deficit narrowed from 8.1% in 2015/16 to 4.0% in FY2018/19, narrowing it by half over the last three years. Growth in the public debt stock slowed to an annual average of 11.2% in the past two years, compared to an average of 30.1% in the previous three years. The current account deficit narrowed significantly, from 14.1% of GDP in 2016 to 2.1% in 2018/19. The international reserves stock has strengthened from 2.1 months of import cover in 2016 to 4.2 months by February this year. The intensity of the recession has eased from -0.9% in 2017, to an estimate of between -0.5 to -0.2% in 2018. This would indicate that the recession has almost bottomed out and points to the economy recovering to positive GDP growth territory this year and over the MTEF. [Delivered by Minister of Finance Calle Schlettwein]

ECOWAS strategizes development of the Praia-Dakar-Abidjan corridor

During a Ministerial meeting held on 21 March 2019 in Praia, Cabo Verde, the Ministers stressed the need to expedite the ratification of the Treaty by their respective parliaments, which they stated will serve as a key document required by financiers to fund the project. Also the Commission and the West African Economic and Monetary Union will jointly advocate for financing from other multinationals and regional banks, such as the ECOWAS Bank for Investment and Development and the West African Development Bank, for the technical studies. Regarding the maritime link, a feasibility study has already been completed for the Praia-Dakar maritime services and financial advisory services will be conducted to secure investments for implementation. Also a feasibility of shipping services and an assessment study of all major seaports along the corridor will be conducted to improve the capacity, efficiency of operations, security and multi-modalism of maritime transport in the region.

IMF – Africa updates:

  1. Mozambique: Despite the likely adverse macroeconomic effects of Cyclone Idai in 2019, which are still being analyzed, the outlook is for a recovery in economic activity over the medium-term, with more significant expansion with the start of LNG production expected in 2023. The fiscal policy effort was significant in 2017-18. Subsidies on fuel and wheat prices were eliminated, an automatic fuel price adjustment mechanism was adopted, and electricity and public transportation tariffs were adjusted, bringing those prices close to cost recovery levels. Despite these efforts, the overall fiscal deficit in 2018 remained relatively high. Medium-term fiscal consolidation will be essential to ensure that public debt-to-GDP ratios remain on a clear downward path and, given that public debt is in distress, budget financing should rely to the maximum extent possible on grants and highly concessional loans.

  2. Côte d’Ivoire. Inflation is expected to remain well below the regional norm. The fiscal deficit should reach 3% of GDP in 2019, WAEMU’s regional convergence norm, in accordance with program objectives. Performance under the IMF-supported program was satisfactory in 2018. All performance criteria and all but one indicative quantitative targets for end-December 2018 were met. Almost all structural benchmarks were also implemented. The budget deficit reached 4.0% of GDP, meeting the program ceiling despite weaker than expected revenues which were offset by a slight reduction in public investment.

  3. Cabo Verde. Cabo Verde’s external position strengthened in 2018 with the current account deficit narrowing to 4.5% of GDP (6.6% of GDP in 2017) owing to strong export performance, increased remittances, and deceleration in imports demand. The signing of an agreement between Cabo Verde and the EU for fish exports is a welcome development in this context. Gross international reserves increased and reached 5.1 months of prospective imports at end-December 2018. In the fiscal area, the overall deficit narrowed, mostly because of strong revenue performance, consistent with sustained economic activity and implementation of revenue administration measures. The overall deficit declined from 3% of GDP in 2017 to an estimated 2.8% of GDP in 2018. However, financing needs rose from 3.4% of GDP to 3.9% of GDP as budget support to financially-strained state-owned enterprises increased.

IFPRI’s 2019 Global Food Policy Report: Urban middle class may offer lifeline to rural Africa (Reuters)

The rise of an urban middle class across much of Africa is stoking demand for food that could curb hunger and cut poverty in rural outposts, a US-based think tank said on Wednesday. The International Food Policy Research Institute said rural communities were in “a state of crisis”, with high poverty rates and poor services driving hunger and malnutrition. One in five people, or more than 256 million, are hungry in Africa, according to the latest figures from the United Nations Food and Agriculture Organization. But there are opportunities too, the IFPRI said in its annual report.

Revisiting the Georgetown Agreement: comparative region-building in Africa, the Caribbean, and the Pacific (ACP)

The two-day event (26-27 March) will be also an opportunity for reflections by public officials and practitioners of international affairs from the global South. Exchanges will be made on the origins, changing context and geo-political dynamics in which the ACP Group of States is crafting amendments to its 1975 Constitutive Act, the Georgetown Agreement. Extract from speech by Sandra Husbands (pdf) (Minister in the Ministry of Foreign Affairs and Foreign Trade, Barbados): One way of ensuring this sustainable growth and development strategy is through a comprehensive review of our trade. For example, our statistics reveal that Barbados’ trade with some of our ACP partners is virtually non-existent. If you will indulge me for just a while, I will elucidate on this fact for a few select countries. For the 2018 period for example, Barbados’ import and export trade with Ghana was BDS$243,078 and BDS$ 14,638, respectively. Our import and export trade with Nigeria was BDS$ 31,330 and BDS$ 2,844 and with Tuvalu it was BDS$ 27,767 in respect of imports and BDS$ 0 for exports. These are but a few countries within the ACP with which Barbados trades. The statistics are not encouraging. Given the length of time which our grouping has been together, I put it to you that our trade should have been more expansive. As I have said before, these are but a few of the countries with which Barbados trades but I suspect these trade figures are representative of Barbados’ trade with both African and Pacific countries. Further studies must be conducted, thereby allowing us to determine the main hindrances to trade among ACP members. [ACP Parliamentary Assembly: speech by Dr Patrick Gomes, Secretary-General of the ACP Group]

Today’s Quick Links:

NAFTA to USMCA: what is gained?

Declaration of the SADC Solidarity Conference with Western Sahara

IGAD Kampala workshop: Livelihoods and self-reliance for refugees, returnees and host communities

Anne-Marie Slaughter, Fadi Chehadé: How to govern a digitally networked world

63rd session of the Commission on the Status of Women: Agreed Conclusions

Africa Information Highway: AfDB EOI for technical experts to support field work in Lusophones

Call for papers for the 7th IMF Statistical Forum (14-15 November, Washington): Measuring the informal economy

CoM2019 ends with African governments being urged to embrace digital transformation

The 52nd session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development (COM2019) ended in Marrakech on Tuesday with governments being urged to move with speed to embrace digital transformation to spur economic growth on the continent.

The Ministers said if Africa does not move with speed to adapt modern technologies and ensure everyone has broadband internet access at least by 2022, then the continent will not be able to leapfrog development challenges in the near future. 

Leapfrogging in technology will change the lives of millions of Africans, they agreed, hence the clarion call on the continent’s leaders to embrace technology to improve governance systems, including revenue collection and efficient, transparent use, and ensure its growing youthful population is reskilled to compete in an increasingly digital world.

African economies face major financing gaps and challenges in the mobilization of domestic resources, despite the implementation of several fiscal and budgetary reforms, the Ministers noted, adding digitization may enhance fiscal policy performance and development finance by increasing domestic revenue generation and allocation.

The Ministers also discussed threats and challenges posed by digitization and the need to have measures in place to protect citizens and governments. 

“Limited Internet access in Africa continues to impede the development of digitization in economic and social sectors, including e-commerce, e-health and e-government, which are constrained by high transaction costs, the spatial distribution of information exchanges, and limited access to international markets,” the Ministers said in their statement.

Governments, they said, need to design and improve innovative digital mechanisms that facilitate revenue collection and increase the efficiency of tax administration by promoting the use of online platforms for self-reporting by taxpayers and the use of digital mechanisms to record relevant data on transactions and the identity of taxpayers.

They acknowledged the need to increase significantly the availability of high-quality and timely data to support fiscal policy, trade and private sector development in the digital era and strengthening the implementation of national development plans, the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063.

Member States were urged to undertake the 2020 round of population and housing censuses in Africa with the Ministers noting how they are ‘indispensable tools for promoting development in Africa and providing robust data to support the implementation and monitoring of national development plans, the 2030 Agenda and Agenda 2063’.

They also urged governments to develop and strengthen civil registration and vital statistics information systems and infrastructure as a foundation for legal identity, including effective digital identity systems.

Progress was noted in regional integration efforts on the continent with the ministers committing to taking measures and steps to enhance the incorporation of regional integration agreements and treaties, including the African Continental Free Trade Agreement (AfCFTA), into domestic law and implementation.

The Ministers said it was worrying that Africa continued to lag behind other regions in terms of infrastructure development.

“We acknowledge the need to strengthen resource mobilization in order to close the infrastructure gap and also to build the technical capacity necessary for the preparation of bankable cross-border infrastructure projects and, in this respect, commit ourselves to strengthening cooperation, in particular among landlocked developing countries and transit countries, in the development and management of cross-border infrastructure,” they agreed.

In her closing remarks, ECA Executive Secretary, Vera Songwe, said it was clear from discussions during the conference that Africa can do more and better if it worked closely together and speak with one voice.

She said Africa should tap into the ever-growing digital economy which has disrupted age old industries while giving rise to completely new ones.

“We can do well if we work together and move from theory to action,” said Ms. Songwe, adding discussions had proved that fiscal policy was important if the continent is to increase revenue collection to finance its development, in particular it’s desire to achieve Agendas 2030 and 2063.

She said with the advent of the AfCFTA, Africa was well and truly on the path to economic diversification and inclusion with the digital era bringing in efficient and effective ways of collecting, allocating and use of revenues, among many other benefits.

Morocco’s Economic and Finance Minister, Mohamed Benchaaboun, said it was important for Africa to realize that it needs to rely on itself more than outsiders for its progress and development.

“South-South cooperation is also important for us as a continent. We need to take it to a higher level,” the Minister said, adding the conference had been a huge success.

COM2019 was held under the theme Fiscal policy, trade and the private sector in a digital era: A strategy for Africa.