News Archive May 2019

tralac’s Daily News Selection

The AfCFTA Agreement is now in force: selected perspectives

@AmbMuchanga: Historic milestone! AfCFTA Agreement has today come into force. We celebrate the triumph of bold, pragmatic and continent-wide commitment to economic integration. We launch the market on 7 July; beginning the journey of transformation to secure inclusive prosperity.

@AUC_MoussaFaki:  I hail Amb Muchanga and his team for their relentless work to ensure the entry into force of the AfCFTA in a record 18 months, ushering in the world's largest trading market of 1,2 billion people with a combined GDP of $2,5 trillion. Today is a historical win for the #AfricaWeWant!

President Uhuru Kenyatta: “We must find a way where all of us come out as winners. We want Africa to come together for the mutual benefit of all countries”

tralac's Trudi Hartzenberg, Gerhard Erasmus: "If the AfCFTA is properly implemented, trade governance, customs administration and rules-based trade should benefit. All trade arrangements, including those with Africa’s most important trading partners (they are outside the African borders) should benefit. Africa should become a more attractive investment destination. The biggest challenge for the AfCFTA will be about rules-based governance and transparency at home."

Christoph Kannengiesser (head of the German-African Business Association) notes that the European single market didn't come about overnight either, adding that other trade agreements such as NAFTA or TTIP are still controversial as there tend to be winners and losers in the process. "That can trigger distributional conflicts and may prompt attempts to push and preserve your own national interests too much," he said.  Kannengiesser believes there's no big harm in Africa's most populous, oil-rich state, Nigeria, not wanting to join the AfCFTA. He thinks that while pursuing its own national interests and feeling stronger on its own, Niger won't be able to ignore Africa's economic dynamics in the long term.

Tshepidi Moremong (head of Africa coverage at Rand Merchant Bank): “In each of our countries, there are proper issues that one needs to deal with and where people need to see that the government is focused on their day-to-day issues. Opening up a market for the people from other parts of the continent to freely come and do commerce and trade in your country is going to take a lot.”

IATA's April data for African air cargo, passenger demand

Data from the International Air Transport Association shows that global air freight demand, measured in freight tonne kilometers (FTKs), fell 4.7% in April 2019, compared to the same period the year before. But: African carriers posted growth in April 2019 of 4.4% compared to the same period a year earlier. Global passenger demand (revenue passenger kilometers or RPKs) rose by 4.3% compared to April 2018. Regionally, Africa, Europe and Latin America posted record load factors.  African airlines had a 1.1% traffic increase in April, which was down from 1.6% growth in March and was the slowest regional growth since early 2015. Like Latin America, Africa is seeing some economic and political uncertainty in the largest markets. Capacity climbed 0.1%, and load factor edged up 0.7 percentage point to 72.6%.

Kenya: Foreign investment survey 2018 (KNBS)

 The Foreign Investment Survey (FIS) 2018 is the fifth in the series since the launch of the surveys in 2010 and captured data on foreign private capital flows and position for the period 2016 and 2017. Stock of FDI liabilities by region and country:  As shown in Table 2.5, the stock of FDI liabilities increased by 8.5% to KSh 683,839 million in 2017. Africa was the main driver of this growth with the stock of FDI liabilities from this region increasing by 11.5% to KSh 214,740 million in 2017. Europe was the major source of stock of FDI with a share of 45.3% and 43.6% to the total stock of FDI in 2016 and 2017, respectively, attributed to the EU. The stock of FDI attributed to France increased by 20.9% to KSh 51,163 million in 2017 from KSh 42,318 million in 2016.

Africa was the second source of stock of FDI contributing one third of the total stock of FDI liabilities in the review period. The stock of FDI attributed to South Africa increased by 54.8% to KSh 121,161 million accounting for 56.4% of total stock of FDI attributed to Africa in 2017. Stock of FDI liabilities attributed to COMESA declined by 22.0% to KSh 73,487 million in 2017 accounting for 34.2% of the total stock of FDI liabilities from Africa. The decline was largely reflected in reduced stock of FDI attributed to Mauritius. Stock of FDI liabilities attributable to the EAC accounted for 15.1% and 14.0% of the total FDI stock attributed to Africa in 2016 and 2017, respectively. Stock of FDI liabilities attributable to Uganda increased by 4.7% to KSh 27,870 million in 2017 and contributed the highest proportion within the EAC.

In 2017, the stock of FDI liabilities attributed to Asia increased by 18.1% mainly as a result of FDI liabilities attributed to the Far East, which increased by 25.0% to KSh 68,107 million. India and Japan were the main sources of FDI stock collectively accounting for over 70% of the total stock of FDI from the Far East in the review period. United Arab Emirates was a significant source of stock of FDI liabilities contributing about a quarter of the total FDI stock attributed to Asia in the period under review. The stock of FDI liabilities attributed to North America, grew by 4.3% to KSh 63,843 million in 2017 and was mainly from the United States. [CBK Governor: Kenya needs to begin reorganising debt]

Egypt targets quadrupling of exports over five years (Egypt Today)

 Non-oil exports have been rising by 10% annually since launching the Trade and Industry Strategy 2016-2020. However, that increase does not match the manufacturing capabilities of Egypt so the state aims at boosting exports by $55bn over the next five years.  In FY2017/2018, Egypt achieved a 12.7% growth in non-oil exports to record $12.7bn from $15bn in the previous fiscal year. The prime minister held meetings with export council's representatives in the previous weeks, where each presented a vision on possible mechanisms to increase exports. In parallel, the state carries out economic reforms and takes measures that would boost the value chain by decreasing raw material exports, and increasing investments in the manufacturing sector.   Chairman of the Egyptian Commercial Service,  Ahmed Antar, told Egypt Today that the state targets 12 African states in the plan’s first phase. They are Ethiopia, Rwanda, Uganda, Zambia, Tanzania, and Kenya in the East; and, Nigeria, Senegal, Ivory Coast, Gabon, Ghana and Benin in the West.   [Egypt’s new Aswan free zone to serve development purposes]

Ethiopia's exchange rate: Why it matters for structural transformation and growth (World Bank)

Although Ethiopia has achieved rapid economic growth since 2004, addressing the major challenges facing the economy is critical to maintaining the growth momentum. Exports witnessed relatively weak performance since the early 2010s. Exports plunged from 16.7% of GDP in 2011 to 8.9% in 2018. This, combined with the surge in imports, resulted in considerable deterioration in the trade and current account balances. The lackluster export performance is generally reflected in, among others, the acute shortage of foreign exchange, currency rationing, and flourishing parallel market. Real currency appreciation accounts for a significant part of the widening external imbalance, particularly before the devaluation in October 2017. The slow pace of structural transformation poses another challenge to the Ethiopian economy. The country’s first Growth and Transformation Plan (GTP I) (2010-2015) was mainly targeted towards jump-starting structural change by promoting light manufacturing. Manufacturing-led industrialization also features prominently in the GTP II, which covers 2015-2020. Against this backdrop, the present paper attempts to address the following main questions:

Uganda Economic Update: Economic development and human capital in Uganda (World Bank)

The World Bank’s analysis of cross-country data on human capital indicates that Uganda is under-investing in the future productivity of its citizens. A child born in Uganda today will only be 38% as productive when she grows up as she could be if she enjoyed complete education and full health. Uganda is ranked among the countries in the lowest quartile of the Human Capital Index (HCI) distribution, with an index slightly lower than the average for the SSA region, and below what would be predicted by its income level. Uganda’s low ranking in the HCI is mainly due to the country’s low education outcomes. A child born today in Uganda is expected to complete only 7 years of education by age 18, compared to a regional average of 8.1. Because of the low levels of learning achievement in Uganda, this is only equivalent to 4.5 years of learning, with 2.5 years considered as “lost” due to poor quality of education (as shown by the quality-adjusted years of schooling component of the HCI). Uganda’s score on this component is the lowest amongst the comparator countries and below the SSA average.

Songwe, UN heads of agencies discuss need for better coordination and delivery (UNECA)

ECA Executive Secretary, Vera Songwe, on Wednesday, met with key heads of UN agencies in Ethiopia to discuss how the UN in the region can coordinate better and deliver as one.  Continued collaboration for the implementation of the African Continental Free Trade Area and other related instruments, including the Free Movement Protocol and the Single African Air Transport Market, was also discussed, notably in view of their significant potential to boost regional integration, strengthen inclusive economic growth, generate jobs for young Africans, alleviate poverty and lead to more stable and peaceful societies. The Conference urged greater efforts to harness Africa’s youth dividend, notably with investments in health, education, data and in science and technology.

Digital trade issues: OECD's key issues paper prepared for the  Council at Ministerial Level (22-23 May)

 Digitalisation has cut the costs of international trade and more firms, including SMEs, are exporting to new markets as online tools are facilitating cross-border sales. Although difficult to measure and without internationally-comparable statistics, the available evidence suggests that digital trade is growing. Today, digitally deliverable services, for example, represent over 20% of services trade in OECD countries. Efforts are accelerating to provide internationally comparable statistics and evidence on digital trade and data flows. The OECD’s work on digital trade aims to help unpack some important policy and measurement issues raised by the digital transition. To start, the OECD and other international organisations including the WTO are developing a Handbook on Measuring Digital Trade. At the same time, the OECD is working on providing new frameworks for better trade policy making, identifying what matters for market openness in digital trade – including for services through the Digital Services Trade Restrictiveness Index – helping inform the debate on trade and cross-data flows, including in support of the work at the WTO. [Table of contents. Unlocking the potential of digital transition: the role of governments and importance of international cooperation;  Empowering different actors in society in the digital age: the role of jobs, skills, and education;  Realising the digital promise for sustainability and well-being;  Reaping and diversifying the benefits of trade in the digital era]

Mozambique: AfDB supports new tracking system to create growth-friendly labor market

The Ministry of Labour, Employment and Social Security of Mozambique has launched the Labour Market Information System (SIMT) Management Platform. The platform aims to establish a new dynamic in the analysis of the behavior of sector-based reliable statistics. More importantly, SIMT will enable the government to formulate skills development policies and programs, which will lead to the creation of decent employment opportunities, as well as growth and economic integration.

Migration and jobs: Issues for the 21st Century (World Bank)

With an estimated 724 million extreme poor people living in developing countries, and the world's demographics bifurcating into an older North and a younger South, there are substantial economic incentives and benefits for people to migrate. There are also important market and regulatory failures that constrain mobility and reduce the net benefits of migration. This paper reviews the recent literature and proposes a conceptual framework for better integration and coordination of policies that can address the different market and regulatory failures. The paper advances five types of interventions in need of particular attention in design, implementation, and evaluation:  [The authors: Luc Christiaensen, Alvaro Gonzalez, David Robalino]

Tackling the global profitarchy: Gender and the choice of business sector (World Bank)

 This paper investigates the horizonal dimension of sectoral segregation by studying global data on female and male enterprises operating in sectors that are typically dominated by the same and opposite sex. The analysis uses the novel Future of Business dataset, which spans 97 countries and was administered to enterprise owners, managers, and employees who use Facebook. [Note:  The geographic coverage of the Future of Business survey now includes 11 Sub-Saharan African countries. They are: Nigeria, Kenya, Uganda, South Africa, Côte d’Ivoire, Botswana, Benin, Mozambique, Tanzania, Ghana, Cameroon]

Today's Quick Links:

Japan grows stake in Africa with new deal

Japan and Austria support NDCs of African countries

Zimbabwe: Trade deficit narrows 22%

Mozambique exports power to Botswana

Nigeria: Trade ministry’s 13 reforms in Buhari’s 1st term

 

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tralac’s Daily News Selection

30 May 2019
The AfCFTA Agreement is now in force: selected perspectives @AmbMuchanga : Historic milestone! AfCFTA Agreement has today come into force. We celebrate the triumph of bold, pragmatic and continent-wide commitment to economic...
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tralac’s Daily News Selection

The AU, CoDA multi-stakeholder dialogue on implementing the AfCFTA concludes today in Addis Ababa. For insights on debates: @AUTradeIndustry#coda4afcfta#auccoda

(i)  Perspectives quoted in a New Times article from the conference:   Abdoulie Janneh (Executive Director of the Mo Ibrahim Foundation): “A big country like Nigeria which is such a big proportion of Africa, if they are not part of this it certainly reduces the impact of what we are supposed to do. Let’s push and encourage Nigeria.”  General Olusegun Obasanjo (Chairperson of the CoDA Board of Directors): “The economic welfare of our people in Africa and the clear benefits of the AfCFTA, when it is fully implemented, to this effect cannot be overemphasised. That is why this issue should be a matter of great concern to all who desire a strong, safer, secure and progressive Africa.”

(ii)  Perspective quoted in Daily Post article. General Olusegun Obasanjo: “It is nobody’s fault if your country cannot resolve its domestic problem. If you (Nigeria) is not signing the agreement, it is unfortunate. AfCFTA will go on without Nigeria. You will recall that this is the first time, since 1976, that Nigeria is not at the table of a major continental process. Nigeria should settle its problem at home and not bring it to the AU."

A week-long meeting of the EAC Sectoral Council on Trade, Industry, Finance and Investment began yesterday in Arusha: a brief overview of agenda items

The road to the Niamey Summit:  dates to diarise

17-18 June:  Permanent Representatives' Committee meets in Addis Ababa

4-5 July:  35th Ordinary Session of the Executive Council, in Niamey

7 July:  Extraordinary session of the Assembly of the Union on the AfCFTA

8 July: First mid-year coordination meeting of the AU and the RECs

Selected REC updates

(i )  Today marks the 44th anniversary of ECOWAS: message by President of the ECOWAS Commission, Mr Jean-Claude Kassi Brou. The Economic Community of West African States was established on 28 May 1975 in Lagos upon the signing of the Founding Treaty by the Heads of State and Government. This was the outcome of several years of consultations by the pioneers, which culminated in the launch of our regional community. While the original objectives were essentially economic, the revision of the Treaty on 24 July 1993 enhanced ECOWAS’ role, particularly with regard to political, peace and security cooperation in our region.

On the economic front, growth continues to improve with growth rates above 6% in several countries in 2018. Agricultural and industrial production continues to be boosted. Similarly, our various social programmes in education and health, particularly with the West African Health Organization, are being implemented in the different countries, alongside paying due attention to gender issues. Furthermore, while we recognise that the construction of our common market will require the roll-out of major cross-border infrastructure, we have remained committed to the ongoing Abidjan-Lagos and the Praia-Dakar-Abidjan corridor projects, and enhancing energy- generation capacity. In the same vein, we are striving to create an enabling regional framework for economic development and investment, through the Macroeconomic Stability and Convergence Pact, implementation of the recently adopted Regional Investment Code, and very soon through the Regional Mining Code and the establishment of the Regional Competition Authority.

However, despite these achievements, we are currently facing serious challenges that pose a major threat to the attainment of our integration agenda. In that respect, the most pressing challenge is certainly security. Another major challenge we have is to build our common market. We have certainly made clear progress in the free movement of persons and goods, particularly with visa-free travel to Member States for Community citizens. Unfortunately, obstacles and barriers remain, hampering trade and slowing down wealth and job creation. We must fight against all illegal obstacles and make our Community a true common market. The imminent entry into force of the AfCFTA will also offer new opportunities to economic operators in the region.

(ii)  ECOWAS to launch Regional Competition Authority (31 May, Banjul).  The ECOWAS Regional Competition Authority (ERCA) is established to implement the Regional Competition Rules adopted by the ECOWAS Authority in 2008. In recognition of its strategic importance to the regional integration efforts, beginning from 28 May 2019, a technical committee meeting of national experts from the Trade and Competition Agencies will precede the launch, offering all stakeholders the opportunity to chart a course for the operations of ERCA and also discuss the unique market structure of the ECOWAS regional market. ERCA Executive Director, Mrs Henrietta Uzoamaka Didigu, said ahead of the launch: [A profile of Mrs Henrietta Uzoamaka Didigu]

(iii)  ECOWAS moves to increase participation of women in peace and political processes.  ECOWAS’ maiden Annual Policy Dialogue on Women Participation in Peace and Political Processes ended on 24 May in Abuja.  The meeting, comprised of representatives of civil society organizations and regional institutions responsible for women rights and welfare,  developed a methodology for the collection and reporting of gender disaggregated data, gender mainstreaming parameters and a checklist on women participation in ECOWAS political processes and interventions.  In addition a draft template for an integrated database of women stakeholders in the region was developed to promote partnerships and synergies which will produce concerted efforts and results that are required to transform conflict prevention and peace-making in ECOWAS.

(iv) COMESA, UNCTAD to establish regional trade information portals. Under the Agreement, COMESA delegates to UNCTAD the design and development of national and regional Trade Information Portals (TIPs) and the Customs Automation Regional Centre (CARC). The two will be funded by the 11th European Development Fund Trade Facilitation Programme. The TIPs will facilitate easy access to essential trade information in one platform while the CARC will support technical and functional training on the Automated System for Customs Data (ASYCUDA) World Platform thereby improving skills to develop and use applications. UNCTAD's Dr Kituyi said the engine of regional integration and the deepening integration through trade is largely dependent on the success of COMESA as the regional organization with the largest member states and a very substantial component of the African economy.

(v) Joint meeting of SADC Ministers of Energy, Water (24 May, Windhoek). Extract from the statement (pdf): Ministers noted progress made in the amendment of the Protocol on Energy of 1996 and approved the Roadmap to finalize the review and amendment of the Protocol, and urged Member States who have not yet acceded to the Protocol to do so. Ministers urged Member States to commit to the Regional Priority Power Projects aimed at enhancing security of energy supply and directed the Secretariat to present a comprehensive report on energy projects that are under preparation and development by regional project preparation facilities. Ministers directed the Secretariat, assisted by Regional Energy Regulatory Association of Southern Africa, to establish appropriate structures to develop and implement regional regulatory initiatives pertaining to other energy sub-sectors namely; petroleum, gas and renewable energy under its expanded mandate. In summary, Ministers amongst other decisions...:

The political economy of Africa’s regional ‘spaghetti bowl’: synthesis report (ECDPM) 

This report synthesises the findings of a two-year research project on the political economy dynamics of regional organisations (PEDRO).  The findings presented discuss why regional organisations often struggle to promote the functional integration that is sought in Africa. Often the ambitions and scope of regional commitments and support go beyond the political ‘room for manoeuvre’ of national and regional actors. That implies a need to recognise that barriers to progress on regional integration and cooperation often arise from the continual flux of political bargaining processes between and within countries, and not simply a lack of finance and capacity. The nature of the regional ‘problem’ being addressed is also important, raising questions about the appropriate level and form of regional cooperation to aim for and the role of regional organisations within specific policy areas. It also raises the need to identify and focus on locally-defined problems where there is a clear value-added from working regionally. [The authors: Bruce Byiers, Sean Woolfrey, Alfonso Medinilla, Jan Vanheukelom]

Zambia: Truck drivers threaten to paralyze transport sector (The Mast)

In an open letter to President Edgar Lungu, the truck drivers, who do cross-border and local trips, lamented that they had been taken for granted and if their demands were not met, they would paralyze the country’s entire transport sector. They are demanding among other incentives better conditions of service and salary hike of not less than K15,000 after deductions. The truck drivers also want to know how Somalians acquire legal documents like the Zambian National Registration Card, passport and driver’s licence and eventually get employed as professional drivers in Zambia while many Zambian drivers were languishing without employment. They are also demanding that the Road Transport and Safety Agency  extends the years of renewing PDP to five years.

Zimbabwe:  Exporters keeping $900 mln in offshore banks - treasury official (Reuters)

George Guvamatanga, permanent secretary for ministry of finance told a parliamentary committee that $500m out of last year’s $4.3bn export earnings was still being kept offshore. Another $400m was outstanding from the January to May 2019 exports, which earned $1.4bn, he said. Exporters were also keeping $800m in local foreign currency accounts, he added. “There is $1.7bn that should be available in this economy to pay for the pharmaceuticals, to pay for the fuel and all the requirements we need as an economy. The issue is how do we enhance the interbank market so that those export proceeds can be liquidated on the interbank market,” said Guvamatanga, who appeared with Finance Minister Mthuli Ncube. [Zimbabwe’s 90-day export repatriation puzzle: how do other countries do it?

South Africa:  Agricultural trade surplus expands by 11% y/y in the first quarter of 2019 (pdf, Agbiz)

This was primarily due to an 18% year-on-year decline in the value of imports to $1.45bn, not an uptick in exports. South Africa’s agricultural exports were down by 10% from the first quarter of 2018, recorded at $2.11bn. From a destination point of view, the African continent and Europe continued to be the largest markets for South Africa’s agricultural exports, respectively accounting for 44% and 30% in value terms. Asia was the third largest market, taking up 18% of South Africa’s agricultural exports in the first quarter of 2019. The balance of 8% value was spread across other regions of the world. Looking ahead, South Africa’s agricultural trade prospects for 2019 are not as positive as for 2018, as unfavourable weather conditions in parts of the country could lead to lower production, particularly in grains and wine grapes.  [East, Central Africa: Trade and Markets Report, May 2019 update

WCO-Africa updates:

(i)  East and Southern Africa Region Governing Council meeting in Gaborone (23-24 May). The Vice-Chair for the Region, Mr Kateshumbwa,  referred to the outcomes of the December Policy Commission and the progress to date with the implementation of the regional strategy.  He highlighted the need for concerted efforts to successfully implement the AfCFTA, recognizing the important support of the private sector and development partners. Secretary General Mikuriya updated delegates on recent developments and highlighted the critical role played by technology in streamlining Customs procedures and enhancing regional integration.  Delegates went on to discuss the following: the Regional Strategy; Customs reforms and modernization; Efficient cross-border management during the response to disasters; and the AfCFTA and the WTO Trade Facilitation Agreement.

(ii)  East African Customs participate in benchmarking study on IPR border control in Thailand, Japan. Intellectual property rights control is a part of an overall project by the 5 Customs Administrations in East Africa, under the guise and support of the WCO and JICA Trade Facilitation and Border Control Project in East Africa, to further enhance their border control functions.  In particular on IPR-infringed goods, as these countries are experiencing increasing flows of counterfeit goods coming into their countries. Accompanied by WCO and JICA experts, 13 officials from the five administrations and EAC Secretariat visited Thailand (7-10 May) and Japan (13-16 May).  Participants exchanged procedures and practices with Thai and Japan Customs relating to IPR border controls, such as legal/institutional framework, cooperation with relevant authorities, partnership with Intellectual Property (IP) Right Holders, use of the recordation system as well as ex-officio control, public awareness activities and human resource development/management.

(iii)  Enhancing the skills of customs administrations in East, Southern Africa on gender equality. The workshop (6-10 May, Mauritius) provided an opportunity for 15 participants from 9 countries in the region (Eswatini, Kenya, Malawi, Mauritius, Rwanda, Uganda, Seychelles, South Africa and Zimbabwe) to enhance their skills on how to implement gender mainstreaming by using a project management approach including principles of strategic planning and change management with a particular focus on monitoring and evaluation.

Today's Quick Links:

Dr Edwini Kessie (WTO's Director of Agriculture and Commodities): WTO can’t be blamed for Africa’s struggles

Mauritius: Women in Industry and Trade workshop

Mauritius: Western Indian Ocean regional Science to Policy workshop

Rwanda: Economic activity and opportunity for refugee inclusion

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tralac’s Daily News Selection

28 May 2019
The AU, CoDA multi-stakeholder dialogue on implementing the AfCFTA concludes today in Addis Ababa. For insights on debates: @AUTradeIndustry , #coda4afcfta , #auccoda (i) Perspectives quoted in a New Times article from the...
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tralac’s Daily News Selection

T20 communique for G20 Leaders:  extracts from recommendations from Task Force 5 on Cooperation with Africa (pdf)

Agree on a unified approach towards macroeconomic stability by attaining fiscal and debt sustainability and strengthening domestic resource mobilization:

(i) Enhance discussions between G20 countries on debt data reporting and publication standards for low-income countries, especially those in Africa, as well as an orderly debt resolution mechanism with a more diffuse creditor base.

(ii)  Assist in negotiations over innovative funding sources that limit the need for foreign currency and volatile borrowing and ensure that borrowed funds, especially non-concessional, are used productively to enhance repayment capacity. In this context, ensure that Multilateral Development Banks are adequately capitalized.

(iii)  Ensure that taxation of the digitalized economy works for Africa, especially regarding the profit allocation rules for multinational enterprises.

Enhance policy coordination between the G20 and Africa to promote economic integration, including removal of policies that impede African development:

(i)  Realign G20 countries’ agriculture trade practices, especially subsidies and non-tariff barriers that are inconsistent with WTO regulations to provide opportunities for African producers to participate in global value chains. At minimum, a “do no harm” approach should be guaranteed.

(ii)  Develop regional regulatory institutions to ensure the safety and quality of African products, especially food products, while not placing a prohibitive burden on African small and medium enterprises and smallholder farmers in complying with associated regulations.

(iii)  Strengthen efforts to combat illicit capital outflows such as tracking and repatriating illicit funds back to African countries as well as support global and inclusive discussion of new approaches to taxation of the digital economy.

A listing of T20 Policy Briefs (all available for download):  

1:  Deliberate next steps toward a new globalism for Universal Health Coverage

2:  Transforming education towards equitable quality education to achieve the SDGs

3:  Early childhood development education and care: the future is what we build today

4:  Developing national agendas in order to achieve gender equality in education (SDG 4)

5:  Measuring transformational pedagogies across G20 countries to achieve breakthrough learning: the case for collaboration

6:  Teacher professional skills: key strategies to advance in better learning opportunities

7:  Sustainable financing for development

8:  Scaling up business impact on the SDGs

9:  Leveraging science, technology and innovation for implementing the 2030 Agenda

10: A gendered perspective on changing demographics: implications for labour, financial and digital equity

11: Women’s economic empowerment: strengthening public and private sector impact through accountability and measurement (SDG 5)

  1. Keynote speech at the T20 Summit by Haruhiko Kuroda (Governor of the Bank of Japan): Global economy: challenges and policy responses

TICAD Seminar Series 2019: schedule of forthcoming video conferences

(i)  Electricity access in Sub-Saharan Africa: uptake, reliability, and complementary factors for economic impact (29 May, Tokyo)

(ii)  Realizing the full potential of social safety nets in Africa (4 June)

(iii)  World Bank Africa Human Capital Plan (18 June, Tokyo)

Harnessing the opportunities of the digital economy in SADC:  a presentation by Research ICT Africa to the SADC Parliamentary Forum

On 22 May, Alison Gillwald, Enrico Calandro and Anri van der Spuy presented policy options for the digital economy to the SADC Parliamentary Forum meeting in Johannesburg. The two-hour session covered a range of issues pertaining to the governance of digital economies.  Extract (pdf, Slide 67): A phased approach is proposed. 1. Regional Technical Roadmap (‘Green Paper’); 2. White Paper; 3. Model Law on the Digital Economy;  4. Post-adoption: implementation training and guides.  [RelatedThe state of ICT in Uganda, pdf]

Michael Hewson:  Prepare for tax in digital economy  (Mail and Guardian)

The OECD will develop a plan for further work on the digital economy. This will be presented to the G20 finance ministers in June. The final consensus set of outcomes is expected to be finalised by the end of 2020. South Africa, as a member of the G20 and an observer of the OECD, is likely to consider the final proposals made. The outcomes of the OECD plan will potentially affect all multinationals operating in the digital economy. It is, therefore, imperative that relevant stakeholders contribute to the discussion. This includes taxpayers and tax authorities. For example, the value of digital services provided into African countries is generally greater than the value of digital services provided out of African countries. Accordingly, there may be a tendency for countries in Africa to seek to use this G20/OECD project to implement protectionist measures. But countries in Africa that are seeking to increase their services economies and encourage local companies to provide services to recipients in other countries should consider how potential proposals may affect these companies. Revenue and other authorities need to take a proactive approach in discussions on this issue, and to ask the key questions: How do we identify digital transactions; how do we determine value; how do we tax these transactions and how do we encourage the growth of the digital economy in South Africa?

Niger eyes cooperation with China's Alibaba (Global Times)

Niger wholeheartedly looks forward to cooperating with Alibaba Group Holdings, not only to boost agricultural product exports with the help of e-commerce but also to take part in training programs provided by the company, said Nigerien President Mahamadou Issoufou.  He commented after a brief visit to Alibaba's headquarters in Hangzhou, capital of East China's Zhejiang Province on Sunday, accompanied by Alibaba CEO Daniel Zhang.  Mahamadou Issoufou said he hopes Alibaba's e-commerce platforms can help Niger export more of its specialized agricultural products, like onions, to China.  China mostly imports agricultural products and uranium from Niger, while exporting items like fabrics, mechanical and electrical products, Song Wei, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation who focuses on the study of Africa, told the Global Times on Monday.  In the first four months this year, China's US dollar-denominated trade with Niger surged by 41.6% on a yearly basis, with exports increasing by 59.9% on a yearly basis and imports from Niger rising by 34.5%, customs data showed.

Zimbabwe: Fish farmers want 10% surtax on imports (NewsDay)

In a report following the 2019 fish farming indaba held recently, the Livestock and Meat Advisory Council  said the proposal would capitalise an aquaculture development fund they want introduced. “For Zimbabwe to realise the full potential of aquaculture, the private sector and government must work together with financial institutions to establish an Aquaculture Development Fund,” the report read. “It was proposed (in the meeting) that a surtax of 10 cents/kg on all fish imports entering Zimbabwe be implemented, which will then directly capitalise the fund. This innovative idea was discussed and recommended by participants.” Zimbabwe Fish Producers Association believes that fish production in Zimbabwe would grow significantly, with aquaculture proudly taking its place alongside the chicken, pork and beef industries as a key supplier of tasty, nutritious, home-grown protein for a growing population.

Morocco steps up efforts to attract foreign investors (North Africa Post) 

Morocco is set to create 12 special economic zones in its 12 regions offering tax incentives and other advantages to attract foreign industrial investors. The special zones are also meant to boost exports and curb imports in order to ease the country’s trade deficit. The decision was made in 2016 in a business charter that commits to establishing new economic areas to attract foreign firms to Morocco’s 12 regions and help spread industry throughout the country.The recent decision to turn the Tangier Tech City into an economic free zone is in line with the country’s industrialization strategy. The new zone is expected to attract major Chinese companies in the automotive, aeronautical and textile sectors. The city worth $1bn will help create 100,000 jobs as Chinese companies are expected to bring 10 billion dollars in investments.

New global rules curb unrestricted plastic waste exports (Guardian)

Amid Nigeria’s house of representatives bill to ban the use and sale of plastic bags, governments at the 14th Conference of the Parties (COP14) of the Basel Convention have restricted rampant plastic waste exports by requiring countries to obtain prior informed consent before exporting contaminated or mixed plastic waste. A deluge of plastic waste exports from developed countries has polluted developing countries in Southeast Asia after China closed the door to waste imports in 2018. International POPs Elimination Network (IPEN), the global network of environmental health, science and public interest organizations that has exposed environmental impacts of plastic waste exports to developing countries, applauded the move as a critical step to stem the toxic tide of plastic waste.

SADC EOI: Baseline study on support to peace and security in the SADC region (SADC)

The purpose of the assignment is to establish the collect data on all key indicators of the 11th EDF Peace and Security PAGoDA, by determining quantitatively and qualitatively the state of peace and security infrastructure and capacity in the SADC region in the respective areas that the programme covers.

Today's Quick Links:

Egypt plans new maritime line to East Africa for increasing exports

Wandile Sihlobo: Well-functioning shipping ports are key to SA’s agriculture success 

Nigeria: FG restates sommitment to Special Economic Zones

Digital trade in spotlight during 11th World Chambers Congress in Rio next month

Cisco to train 1 million potential digital workers in Africa by 2025

 

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tralac’s Daily News Selection

27 May 2019
T20 communique for G20 Leaders : extracts from recommendations from Task Force 5 on Cooperation with Africa (pdf) Agree on a unified approach towards macroeconomic stability by attaining fiscal and debt sustainability and...
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tralac’s Daily News Selection

Diarise: Investment to support competitiveness and inclusive growth in South Africa (27 May, Johannesburg). One of the speakers at this Tutwa CG seminar will be David Bridgman (outgoing WBG manager of Trade and Competitiveness – Sub-Saharan Africa)

Selected AfCFTA updates:  Zambia, Kenya, Zimbabwe, Cameroon

(i)   Zambia's National AfCFTA Consultative Forum concludes todayThe Forum included presentations by the AUC and the SADC and COMESA Secretariats; a ministerial session and presentations by business associations.  Extracts from the keynote address by UNECA's Said Adejumobi:

It is important to note that the AfCFTA Agreement is not self-executing; it requires Zambia to deploy deliberate strategies towards ensuring that the private sector, as key stakeholder in production and trade, is primed to exploit a larger market and product opportunities offered by the AfCFTA, with reduced tariff and non-tariff barriers. It is imperative to, among others, address supply-side constraints limiting the productive capacity of industry to stimulate competitiveness. Coherence between the National Industry Policy and trade promotion initiatives is critical. Furthermore, the effective exploitation of the AfCFTA will require consensus among all stakeholders – the private sector, government, academics, civil society, women and youth organisations; hence the imperative to establish a well-resourced national AfCFTA Committee as part of the framework to entrench and facilitate the required consultative processes in the implementation of the agreement.

Without pre-emptying discussions during this forum, I believe other key reforms required to ensure that industrialisation, investment and trade generate optimum benefits for Zambia under a larger market include the areas of trade facilitation, infrastructure development, doing business reforms to create a conducive environment for the private sector, product quality and standards and the general policy environment, its consistency, clarity and stability to facilitate evolution of a competitive industrial sector able to capture opportunities arising from a borderless trade continent. Zambia is assured of the technical support of the UNECA working with the African Union Commission in assisting Zambia to develop the national AfCFTA Strategy and Action Plan that will complement existing industrialisation, investment and trade policies in promoting overall national development aspirations. [The author is the director of the UNECA's Southern Africa Office, in Lusaka]

(ii)  Kenya offers five office buildings in bid to host AfCFTA Secretariat. Foreign Affairs Principal Secretary Amb Macharia Kamau said Kenya’s bid was anchored on key selling points including geographical centrality in the continent, improved infrastructure, and freedom of the press. “We’re availing many buildings in Upper Hill, Westlands, Gigiri, and Central Business District and we’ve already spoken to managers of some of the buildings who’re available to offer some of the buildings,” the PS stated adding the government would facilitate the furnishing of the buildings should Kenya win the bid to host the AfCFTA Secretariat. Kamua said the hosting of the AfCFTA Secretariat in Nairobi will open up opportunities for the capital and foster the country’s position as a multilateral hub. Kenya is up against Senegal, Egypt, Ethiopia, eSwatini, Ghana, and Madagascar.

(iii) Zimbabwe deposits its instrument of ratification: @AmbMuchanga.  “More good news! African Continental Free Trade Area State Parties increasing! Zimbabwe today deposited Instrument of Ratification, becoming 23rd. More expected before 7th July, 2019.”

(iv)  Cameroon will develop its national AfCFTA implementation strategy: starting in June, ending in October

(v)  Professor Faizel Ismail's Nigerian Institute of Advanced Legal Studies lecture: Inclusivity and the transformational potentials of the AFCFTA for African countries

Selected updates, commentaries on the WTO:

(i)  Escalating trade war to impact South Africa – Minister Rob Davies.  South Africa was getting the short end of the stick in the escalating global trade war, which might have a major impact on the country's future industrial, tariff and trade policies, Trade and Industry Minister Rob Davies said yesterday.  Davies attended a meeting of the WTO in France on Thursday, where he discussed the growing plight of developing countries such as South Africa. “The WTO is facing an existential crisis arising from the US’s refusal to agree to appoint the appellate body of the dispute mechanism of the WTO. If this continues until the end of the year the future of the enforcement of tariffs and duties on trade rules is uncertain,” said Davies. He said the US was also increasingly acting in a way where its trade policies appeared to be taken on arguments of national security, but there was no jurisprudence in the WTO for national security interests.

(ii)  South Africa part of collateral damage from US-China trade war.  South Africa may be almost 12 000 kilometres from Beijing and even further away from Washington DC, but the mass producer of fruit and wine is still affected by the US-China trade war. The country is “a small, open economy which grows by selling into the global demand,” central bank Governor Lesetja Kganyago told reporters in Pretoria on Thursday. That’s no different to other emerging economies, which will also be held back, he said.  Ultimately, “there are no winners,” Kganyago said as the SARB held the key interest rate at 6.75% while cutting the full-year economic growth forecast. “Trade wars are silly, you want to control your market, but you still want access to other markets so it’s illogical.”

(iii)  IMF Blog: The impact of US-China trade tensions.   Consumers in the US and China are unequivocally the losers from trade tensions.  Research by Cavallo, Gopinath, Neiman and Tang, using price data from the Bureau of Labor Statistics on imports from China, finds that tariff revenue collected has been borne almost entirely by US importers. There was almost no change in the (ex-tariff) border prices of imports from China, and a sharp jump in the post-tariff import prices matching the magnitude of the tariff. Some of these tariffs have been passed on to US consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins. A further increase in tariffs will likely be similarly passed through to consumers. While the direct effect on inflation may be small, it could lead to broader effects through an increase in the prices of domestic competitors.  [The authors: Eugenio Cerutti, Gita Gopinath, Adil Mohommad]

(iv)  WTO DG Roberto Azevêdo's speech yesterday to the OECD Ministerial Council: E-commerce must be a force for inclusion.  As of this month, 77 WTO members accounting for 90% of global trade have commenced negotiations on trade-related aspects of e‑commerce. A first substantive round of meetings was held last week. I understand that delegations discussed proposals on a wide range of issues, such as: facilitating electronic transactions, consumer protection, transparency, and non-discrimination and liability. Further discussions will be held next month. E-commerce issues range widely in their level of complexity and ambition. Time will tell what members can achieve. Ensuring that these discussions remain open to all members is important – but proponents should also be seeking to ensure that poorer countries that want to participate are helped to do so. Ultimately, the test of our success in responding to this revolution will be the extent to which we use it as a force for greater inclusion.

 (v)  The Ottawa Group and WTO reform: summary of Ottawa Group Meeting yesterday in Paris.  Recognizing its importance to the future functioning of the organization, we discussed how best to pursue the development dimension in the context of WTO rule-making. Ministers appreciate Norway’s leadership, including its discussion paper, which lays out the context on development concerns and serves as a useful basis for continued dialogue at the WTO. We agreed that further outreach to the broader membership is required. In addition, ministers were grateful for Brazil’s impressions of the recent ministerial meeting for developing countries hosted by India. The Ottawa Group discussed ongoing work including on the Joint Statement Initiatives, in particular e-commerce, transparency and notification obligations, and industrial subsidies. We welcomed Chile’s update on the recent successful APEC trade ministers’ meeting. We further discussed Japan’s plans for considerations on WTO reform under its G20 presidency.  [Canada: Disagreements over how to overhaul WTO could paralyse institution]

China's Ambassador to Namibia, Zhang Yiming: “As the ‘Grey Rhino’ of China-US trade war rampages, many people are worried that the ‘Black Swan’ of global economic crisis might come in the aftermath."

59 WTO Members yesterday adopted a Joint Statement on Services Domestic Regulation: this paves the way for a successful outcome on this issue at the next WTO Ministerial Conference in June 2020

EU, China, Thailand seek to join WTO consultation over India’s ICT products tariff

The implications of Korea’s experience for developing agriculture value chains in Africa (AfDB)

This report was prepared for the African Development Bank by a multidisciplinary team of consultants under the Korea Institute for International Economic Policy.  Extract from Chapter VI: Conclusions (pdf). The aforementioned changes that have taken place in Africa suggest that the role of the AfDB, as a vanguard of Africa’s economic development and social progress, has to be enhanced. And this study is intended to provide assistance to such determined efforts of the Bank by cataloguing Korea’s experiences.  One of the conclusions that can be drawn from cataloguing Korea’s experiences is that Africa needs to produce more rice to develop robust value chain activities. In doing so, challenges and success can be applied to other grains and agricultural products delineated in the AfDB’s Feed Africa Strategy report. To this end, Korea’s success with increased rice production can offer useful policy references to the Bank. As the gravity of control of the agro-value chains shifted to the market in the post rice self-sufficiency period, the concomitant policy changes can also be more relevant sources of reference that may well be in sync with the realities of Africa’s agriculture today.  [Download the summary version hereGlobal value chains and development paths: a conversation with Caroline Freund]

Malawi records Q1 drop in mobile money activity (ITWebAfrica) 

Despite an increase in subscribers to mobile money services, Malawi recorded low activity in this space in the first quarter of 2019, according to the latest report by the Reserve Bank of Malawi. The National Payment System 2019 First Quarter report stated that only 39.7% of the 6.5 million mobile money subscribers used the service, compared to the 41.1% recorded during the last quarter of 2018. It added that the number of registered mobile money agents rose by 10.1% to a total of 43, 406 in March 2019, but said there was a drop in the number of active agents with only 59.3% recorded as being active during the quarter under review. [Related:  First e-commerce day celebrations held in Nairobi; Western African Digital Pool: updateSA Post Office expects big things from ecommerce platform

Tracking SDG 7: The Energy Progress Report 2019

Sub-Saharan Africa remains the region with the largest access deficit: here, 573 million people - more than one in two - lack access to electricity. The region is also home to the 20 countries with the lowest electrification rates (see figure ES3). Burundi, Chad, Malawi, the DRC, and Niger were the four countries with the lowest electrification rates in 2017. If the rate of progress in expanding access to electricity remained at the same level as that between 2015 and 2017, universal access could be reached by 2030. However, connecting the last of the unserved populations may be more challenging than past electrification efforts, since many such populations live in remote locales or over-burdened cities. A projected 650 million people are likely to remain without access to electricity in 2030, and 9 out of 10 such people will be in Sub-Saharan Africa. Key strategies for closing this gap will include data-based decision-making and advanced policy-planning frameworks, private sector financing, versatile solutions that include decentralized renewables, and efforts to both extend rural electrification and cope with urban densification. [Sanea: South African Energy Risk Report 2019, pdf] 

Today's Quick Links:

Zambia's Ethiopia embassy partners with Addis Ababa Chamber of Commerce

Southern African Science Service Centre for Climate Change and Adaptive Land Management: Research call (pdf)

Central Bank of Nigeria: communiqué from MPC meeting, 20-21 May

Africa CEO Network debuts in Nigeria

Afreximbank releases first quarter financial statements: shows 59% growth in revenue, to $240.71m

AfDB's Independent Review Mechanism: Annual Report 2018

Eritrea: IMF staff completes 2019 Article IV Mission

Inaugural UK-West Africa Agritech Summit

UNSC's debate on Somalia: lengthy summary of the statements

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tralac’s Daily News Selection

24 May 2019
Diarise: Investment to support competitiveness and inclusive growth in South Africa (27 May, Johannesburg). One of the speakers at this Tutwa CG seminar will be David Bridgman (outgoing WBG manager of Trade and Competitiveness –...
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