News Archive November 2019

tralac’s Daily News Selection

Global Ireland: Ireland’s new Strategy for Africa, to 2025 (DFA)

To increase the value of two-way trade between Ireland and Africa to at least €5n by 2025 and to promote investment, we will:

Build on the strategic Local Market Team approach to grow exports and investment, include a trade focus to the increased number of Ministerial visits to Africa, and further develop business networks with viable propositions to boost trade and investment.

Increase support for innovation by funding Irish-African private sector collaboration, including through expansion of the Africa Agri-Food Development programme, the piloting of a new Ireland Africa Tech Development Fund, and exploring investment in areas such as female entrepreneurship and climate innovation.

Complement the triennial high-level Africa Ireland Economic Forum with an annual programme of focussed seminars and engagements with private sector and non-governmental actors;  Expand and enhance Ireland’s network of Double Taxation Agreements in Africa, consistent with international standards and serving mutual interests.  As a global actor, we will (pdf):  

Andrew Mold: A sceptics guide to the AfCFTA - and why the sceptics are wrong (OECD)

Objections to the AfCFTA follow familiar lines. There are a series of misconceptions which underpin these objections:  “African countries all trade the same things”,  “AfCFTA is a ‘neo-liberal’ project serving the interests of big corporations”,  “How can the AfCFTA succeed while regional trade is actually declining?”,  “It won’t be implemented”

Cameroon readies strategy for partaking in Africa's common market (UNECA)

Antonio Pedro, Director of ECA’s Subregional Office for Central Africa, argued that “the establishment of a conducive business environment to improving the productive capacity of the private sector is a concern to both state and non-state actors”. “This is one of those cases where collaboration between the public and private sector has to be at its best; coherence between the trade, industrial development and foreign policies has to be enhanced; and a closer attention needs to be paid to interventions at the macro and micro levels.” Pedro put the objective of the exercise into perspective, saying “Cameroon's accession to this new market must contribute to the creation of trade rather than a diversion of trade. 

Namibia: Quarter Two Trade Statistics Bulletin 2019 (pdf, Namibia Statistics Agency) 

The overall value of exports and imports for q2-2019 were estimated at N$23,468 million and N$27,247 million respectively, hence, total trade (export plus imports) amounted to N$50,715 million from N$49,250 million recorded in the previous quarter and N$48,869 million registered in the corresponding period of 2018. Chart 1 shows Namibia persistent trade deficit over a period of ten quarters, from q1-2017 to q2-2019.  The trade balance, measured as the difference between exports and imports for q2-2019 amounted to a deficit of N$3,779 million from a revised N$5,475 million deficit in q1-2019 and N$1,138 million registered in q2-2018. 

During the period under review, Namibia mostly exported to five countries namely; China, South Africa, Belgium, Botswana and Spain (Chart 4). These countries are the same reported in the previous quarter except that Botswana slipped one place down to the fourth position while Belgium moved up one place to occupy the third position. Together, these countries made up the largest share of the value of all goods exported to the rest of the world, with 58.2% of the value of all goods exported destined to these markets. Subsequently, overall exports to these markets grew by 10.7% to register N$13,657 million after recording N$12,335 million in the corresponding quarter a year ago. 

China lodged on top of the list as the largest export destination, accounting for 20.1% of all goods exported and South Africa in the second place accounting for 16.6%. Belgium and Botswana accounted for 7.8% each while Spain’s contribution to domestic exports stood at 5.9%. Further analysis of Chart 4 shows that exports to China experienced the largest growth of 48.9% (N$1,548 million) to N$4,713 million up from N$3,165 million witnessed in the corresponding quarter of 2018. Spain followed with 36.2% growth, up from N$1,023 million recorded in q2-2018 to N$1,393 million in the current quarter.

Botswana: International merchandise trade statistics, August 2019 (Statistics Botswana)

Botswana’s total exports amounted to P3, 700.4 million, resulting in an increase of 39.2% compared to the revised July 2019 value of P2, 658.9 million. Imports for the current month were valued at P5, 071.2 million, showing a decline of 14.0% from the revised July 2019 value of P5, 896.0 million. The UAE was the largest destination for Botswana exports, having received 25.3% of total exports during August 2019. India and Belgium followed with 19.7% and 12.6% respectively. South Africa received 12.4% of total exports. Asia as a regional block received 63.7% of Botswana’s total exports during the month under review. The EU got 16.7% while SACU received exports accounting for 15.4%. 

Botswana mostly exported diamonds, accounting for 87.3% of total exports during the month under review. Machinery and transport equipment contributed 4.2% while meat and meat products and salt and soda ash contributed 1.7% and 1.2% percent respectively. SACU as a region contributed 78.1% to total imports during August 2019. Most of the imports from SACU came from South Africa followed by Namibia, accounting for 67.4% and 10.5% respectively, of total imports value for the month. Imports from Asia and the EU regions made contributions of 10.5% and 4.0%, respectively. Canada and USA respectively contributed 3.7% and 1.5% of imports into Botswana.

Nigeria: Digital Economy Diagnostic (World Bank)

Nigeria is capturing only a fraction of its digital economic potential and will need to make strategic investments to develop a dynamic, transformative digital economy, according to a new World Bank assessment.  The report provides an assessment of the state of the country’s digital economy around the five pillars of the Digital Economy for Africa initiative (pdf); digital infrastructure, digital platforms, digital financial services, digital entrepreneurship and digital skills—key foundational elements of a digital economy. Extract (pdf):

Despite its entrepreneurial potential, Nigeria remains a minor player in the global digital economy in terms of exports of digital goods and services. The Information and Communication Technology (ICT) 56 sector expanded in the last decade: its contribution to GDP doubled in 2010–2017 (Figure 20) and accounted for 12.2% of the GDP in 2018. In 2018, the sector contributed 9.65% to GDP growth. However, in 2017, only 5% of Nigeria’s exports were in the ICT sector (Figure 21). 

Nigeria is Africa’s largest market for digital products and services, but its growth is constrained. Despite its protracted economic recession, Nigeria remains Africa’s largest ICT market with 82% of the continent’s telecoms subscribers and 29% of Internet usage. However, overall digital literacy rates remain low, especially among women, and low-income and rural populations. Micro-entrepreneurs and local SMEs are also missing out on digital dividends. [How tough is it to be a tech entrepreneur in Nigeria? Results from a new surveyUNCTAD: Young digital entrepreneurs leading Africa into a new era

Updates, commentaries on Nigeria's closure of its land borders:   

(i) Obasanjo backs border closure, FG restates terms for reopening. Briefing State House correspondents after the weekly Federal Executive Council meeting, the Minister of Information and Culture, Alhaji Lai Mohammed, asked the country’s neighbours, particularly Benin Republic, to respect the ECOWAS protocol on transit, ensure that right duties are paid on containers and uphold the sacrosanct of the rule of origin. He said the freedom of movement of goods from one country to another would be guaranteed only when all the various MoUs that were signed by the parties, were respected and also provided those goods were manufactured in the exporting states. He stated that despite diplomatic effort to resolve the differences with Benin and Niger over the border closure, the three Comptrollers of Customs of Nigeria, Benin and Niger, who met on Tuesday, failed to reach a compromise on the disputes.

“All we are saying is ‘please let us respect the protocol on transit’. ECOWAS set up a protocol on transit of goods, which is very simple. If a container meant for Nigeria is dropped in Cotonou, the authorities in Benin Republic should escort the container to Customs in Seme border, and that way proper duty will be levied and will be paid. But what has been happening over the years is that our neigbours will transload the container, put about five containers on one truck and drive it to the border as if it is only one container that they are going to pay duties on. Worse still, less than even 50% of what is meant for Nigeria will come through the approved border."

(ii) Shut borders: Uproar in ECOWAS Parliament. The verbal exchange followed presentation of Nigeria's country report by its delegation at the ECOWAS Parliament, led by Deputy Speaker of the House of Representatives, Ahmed Idris Wase at the 2019 Second Ordinary Session of the parliament in Abuja. Wase told the parliament that prior to the Nigeria's land border security drills, the Nigerian Government had in 2016 banned importation of rice through land borders. He said that despite this measure, imported rice continued to flood the Nigerian market at rock bottom prices, thereby rendering locally produced rice unattractive to buyers. Specifically, he said "most of the smuggled goods are not part of the legal items captured under the ECOWAS Trade Liberalization Scheme, ETLS, but rather imported by third countries, such as rice produced in Thailand and Vietnam, exported to Benin and finds its way to Nigeria through smuggling."

The Nigerian delegation had hardly finished its presentation when lawmakers from different ECOWAS countries voiced their dismay at the border closure, arguing that it goes against the spirit of the ECOWAS Protocol on free movement of persons and goods. Ghanaian lawmakers, led by Kwasi Ameyaw Cheremeh, said the closure of the borders since September this year was a major issue affecting Ghana's trade with its neighbours in the region, noting that several trucks from Ghana sending goods to Nigeria had been stranded at the Seme-Krake side of the border for over two months now.  Speaker of the ECOWAS Parliament, Moustapha Cisse Lo, condemned the closure of the border between Nigeria and Benin and between Niger and Nigeria, and urged immediate re-opening.

(iii) Central Bank Governor Godwin Emefiele on Tuesday said he would advise the Nigerian government to maintain the border closure in the interests of boosting economic output, which has been recovering relatively slowly in the non-oil sector. Emefiele said the impact of the closures on prices was “reactionary and temporary” and that the medium-term benefits of the government’s decision outweighed the short-term costs, after inflation soared to a 17-month high last month. 

(iv) Olu Fasan: It’s wrong to force feed Nigerians with local foods. The lesson is thus clear. Nigeria may close its land borders today and succeed in curbing smuggling, as the current border closures seem to have done, but if it opens the borders tomorrow without addressing the underlying institutional and policy problems, smuggling would resume. But how long would Nigeria close its land borders without doing irreversible damage to its vast informal sector, which at 65% is, according to the Financial Times, the largest in sub-Saharan Africa? What about legitimate businesses, including the export sector, that are affected by the border closures? And what about the social and human costs in terms of the impacts on ordinary Nigeria?

(v) Joachim Jarreau: A border patrol force is unlikely to solve Nigeria’s smuggling problem.  However, the scale and persistence of smuggling across the border has more fundamental causes. Nigeria has a restrictive trade policy, imposing high duties, or even import bans, on many products. This creates price differences between Nigeria and its neighbours: imports from third countries are cheaper in neighbouring markets than they are in Nigeria. In turn, these price differences create an incentive for smuggling goods across the border. The border patrol will not address this fundamental cause. Moreover, the experience from the past three decades also suggests it is unlikely to succeed.

(vi) Two twitter threads by @LeenaHoffmann

Over the past 4 years I have been involved in three projects investigating Nigeria’s informal economy, its trade relations with its neighbours/cross-border cooperation and regional integration in West Africa. In light of ongoing debates on Nigeria’s land border closure I feel compelled to draw on these research activities to share “two fundamental reasons and another” why I’m puzzled by the land border closure and think it is wrongheaded.

The other fundamental reason why Nigeria's border closure decision is wrongheaded is related to port competitiveness. There is fierce competition between West Africa's seven main maritime gateways to serve the regional market and to specifically handle Nigerian trade.

(vii) Léopold Ghins, Philipp Heinrigs: Nigeria’s border closure - why it will not pay off. African decision makers should endorse long-term policies that take potential adverse effects on consumers into consideration and seek to improve the overall business climate. This implies considering the realities of an increasingly interconnected world and relying on well-identified comparative advantages to allow countries to “leap directly into the global economy”. It is hard to believe that keeping borders closed in Africa’s largest economy is a step in that direction.

China small manufacturers’ rising exports to Africa help offset plunging sales to US amid trade war (SCMP)

Growing optimism is spreading among some small Chinese manufacturers in sectors ranging from car parts to textiles, as a spike in exports to countries involved in the Belt and Road Initiative is starting to offset a portion of lost demand from the United States due to the trade war. Exporters say they have seen a sharp uptick in demand from nations involved in Beijing’s trademark foreign policy initiative, which aims to link Asia, Europe and Africa with a network of ports, motorways and railways.

“Take the textile industry as an example, many export-oriented factories in Zhejiang that I know have doubled or even tripled their orders to the African market this year,” said Steve Xie, a textile exporter from the Chinese manufacturing hub, whose own business has seen a 40% increase in orders. “Every textile factory in Haining and Yiwu city is talking because there have been a particularly large number of African buyers placing orders this year. The increase in orders from Nigeria and Ethiopia is huge.”

tralac’s Daily News Selection

Diarise: 

(i) The COMESA Council of Ministers meets tomorrow in Lusaka

(ii) ACP Heads of State and Government Summit (6-10 December, Nairobi). The theme: A transformed ACP committed to multilateralism. Prior to the Summit, the Council of Ministers will discuss important aspects for the future of the Group. Among the items tabled for debate are the appointment of the new Secretary General for the period 2020 to 2025 and the revision of the ACP Group’s constitutive act, the Georgetown Agreement. The candidacy for the post of the Secretary General is done on a rotating basis among the six ACP regions. The new secretary general will be selected from the Southern African region which was charged with the implementation of a vetting process to shortlist suitable candidates for the post. The three candidates submitted for consideration by the Bureau of the Council as a result of this process are Ambassador Georges Rebelo Pinto Chikoti (Angola); Ambassador Dr Brave Rona Ndisale (Malawi) and Ambassador Tadeous T. Chifamba (Zimbabwe).  

30 years of the Trade Policy Review Mechanism: speech by WTO's Roberto Azevêdo

The TPR has become one of the main channels members use to promote accountability, predictability and transparency in the multilateral trading system. To be clear, TPRs are not about evaluating members' compliance with specific rules or commitments of the organisation, or about imposing new obligations on them. These can result only from negotiations between members. What the TPR does is shed light on trade practices and policies. This helps clarify trade concerns, defuse potential frictions, and promote good practices. If you look at the figures, they tell quite the story. The past 30 years have seen: more than 500 TPR reports; about 390 meetings of the Trade Policy Review Body; 157 WTO members have been reviewed thus far, most of them multiple times. All members, at all different levels of development, participate.

We need to ensure that the mechanism can respond to changes in the global economy. Today, trade is far more multi-faceted than it was a generation ago. Global value chains bring together flows of goods, services, investments and people. Nearly two-thirds of traded goods are made with components from at least two different countries. Advances in technology, such as e-commerce or artificial intelligence, are revolutionizing the way we trade. These changes pose new questions both for the broader trading system and for how the TPR mechanism should evolve. I hope this conference can spark conversationson this front, helping members define paths forward that would enable the TPRM to be as effective for the next thirty years as it has for the past. This debate is very important, especially in the current circumstances.

Jayant Menon: The proliferation of free trade disagreements (East Asia Forum)

Free trade agreements (FTAs) are being replaced by the proliferation of free trade disagreements (FTDs). Unlike FTAs, FTDs are not easy to measure or define - they cover a wide range of actions and inactions. They may be difficult to quantify, but they are real. FTDs arise when free or freer trade leads to outcomes that are perceived as being unfair by at least one party. When the benefits (or costs) of freeing up trade are viewed by participants as being disproportionately distributed, tensions can lead to FTDs. FTDs also arise when there are significant shifts in the distribution of global economic power. As the economic size of rivals catch up to the prevailing hegemon, the risk of conflict also rises sharply. 

With Japan in the past and China more recently, the response appears to be triggered when their share of the GDP of the United States surpasses the 60% mark. And when new major economic powers emerge, they generally do so by increasing their commercial relations with existing ones, resulting in greater interdependence. Although greater interdependence theoretically reduces the risk of conflict - as the costs are higher with more at stake - this is rarely observed in practice. This results in a sense of inevitability toward such conflicts and all that can be done is to contain them and manage their consequences. So far, there has been a rather poor job of both. Why should policymakers be concerned about the proliferation of FTDs? [The author is the lead economist (trade and regional cooperation) in the Office of the Chief Economist at the ADB]  

Informal Working Group on MSMEs: Draft ministerial recommendation on promoting MSMES inclusion in rulemaking in the area of trade (pdf, WTO)

The following communication, dated 26 November 2019, is being circulated at the request of the delegations of the Russian Federation and Uruguay:  We recommend that WTO Members enhance MSMEs inclusion in domestic rulemaking in the area of trade by paying special attention to the needs of MSMEs. For this purpose, WTO Members within their respective jurisdictions establish regulatory procedures in consistency with their implementation capacities that would include:

Consultation with MSMEs in the process of developing new regulations related to issues covered by the WTO agreements;

Publication of drafts of such regulations before their adoption, or of consultation documents that provide sufficient details about a possible new regulatory measure related to issues covered by the WTO agreements, preferably at an early stage of their development;

Provision of a reasonable period of time for all the interested parties to comment on such drafts; and

Assessment of impact of such drafts on MSMEs.

Kimberley Process: Consensus eludes new definition for ‘blood diamonds’ (Tribune India)

An attempt for a new, expanded definition of conflict diamonds eluded consensus during a meeting of the Kimberley Process countries in New Delhi. India is the current chair of the Kimberley Process, a multi-nation effort to prevent the sale of rough diamonds in Africa to sustain conflicts against governments. The new definition quarterbacked by the US was to include violence by a broader set of actors, including state security forces in the definition. Many countries at the meeting held here felt that the current definition’s limited focus on rebel groups does not sufficiently protect the legitimacy of the rough diamond supply chain. But other countries did not agree with the proposal, suspecting it to be an attempt to tie down governments. 

Related KP plenary updates: Final communiqué; World Diamond Council statement; Civil Society Coalition statement;Russia assumes KP Chairmanship, deputised by Botswana

A golden web: How India became one of the world's largest gold smuggling hubs (IMPACT)

In its latest report, IMPACT uncovers how India imports approximately 1,000 tons of gold per year—a quarter more than official figures indicate. Some enters as legal imports thanks to falsified paperwork. The report identifies three primary factors (pdf) which allow a problem of this magnitude:

Tax breaks: To boost India’s refinery sector, the government introduced tax breaks in 2013 for gold doré –also known as unrefined gold. This has led to traders covering up questionable provenance claims by falsifying documentation of gold doré to take advantage of lower taxes. Gold doré imports shot from 23 tons in 2012 to over 229 tons in 2015 as a result of these tax breaks.

Falsified origin documents: Gold doré imports have spiked, with the majority coming from producing countries that lack strong internal controls or are linked to supply chains with weak evidence of due diligence. Analysis of trade data reveals more declared gold imports to India than some countries are capable of producing, such as in the Dominican Republic and Tanzania, as well as instances of paperwork fraud like in Ghana. In the case of the Dominican Republic, as much as 100.63 tons of gold doré imported to India between 2014 and 2017 cannot be accounted for in the country’s gold production.

Complicit allies: Refined gold is being smuggled into India primarily from the United Arab Emirates, while key traders and refiners in Africa’s Great Lakes region with links to India have been identified as being part of the illicit gold trade.

The “Borderline” project: Dar es Salaam regional workshop (4-5 December)

The "Borderline" project equips women with information on cross-border trade procedures, helping them reduce business costs and expand opportunities. The first workshop took place at the Nakonde/Tunduma border between Zambia and Tanzania on 11 November, followed by additional training sessions in Kyela, Tanzania; Karonga, Malawi; and Chipata, Zambia. As Malawi, Tanzania and Zambia belong to different regional economic communities, women traders often feel lost and unable to identify specific trade rules regulating their transactions. Experiences from the border training sessions will be reviewed at a regional workshop in the Tanzanian capital, Dar es Salaam, on 4 and 5 December, the final activity under the “Borderline” project.  UNCTAD will share with policymakers from the three target countries the findings of the project and present a set of policy recommendations aimed at making cross-border trade a more profitable activity, especially for women, and a tool for overall economic growth and regional integration.

Botswana: IMF staff completes 2019 Article IV Mission

After a relatively good performance in 2018, the economy is facing headwinds in 2019 related to weaknesses in the diamond market, a severe drought, and slower growth in neighboring countries. Growth is expected to slow to about 3½ percent in 2019, while inflation will remain low. The current account is projected to move to negative territory, contributing to a decline in reserves. The fiscal deficit is expected to reach 5¾ percent of GDP due to lower-than-expected revenue, higher-than-expected increase in public wages and other recurrent spending. Despite these challenges, the banking sector remains well capitalized and liquidity has improved. Under staff’s baseline scenario, growth is expected to recover to 4.2% in 2020, as the diamond market normalizes and copper production comes into stream, and hover around 4% thereafter - a level too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labor market. Inflation will accelerate amid accommodative monetary policy but remain in the bottom half of the Bank of Botswana target band. Fiscal consolidation will gradually reduce the deficit and would contribute to a gradual rebuilding of buffers over the medium term. The outlook is subject to significant downside risks, including a global rise in protectionism, a faster-than-anticipated slowdown in China and in the euro area, and continued slow growth in South Africa. 

WCO updates from Zambia, Ethiopia: 

Zambia: A national single window workshop was held in Lusaka (4-8 November). It emphasized the paramount role of all agencies in achieving a sound Single Window operating environment, while underscoring crucial activities that should be conducted to ensure the success of the initiative, such as a legal gap analysis, a business process analysis and reengineering, data harmonization and an attentive service design. The workshop succeeded a WCO field mission on implementation of the WTO Trade Facilitation Agreement  in Zambia which highlighted a recommendation to reinforce efforts to prepare other border agencies for digitalization and the adoption of Zambia Electronic Single Window, coupled with an outreach programme to raise awareness and build inclusive consultations and communication amongst all border agencies.

Ethiopia: Under the sponsorship of the EU-WCO HS Programme for Africa, a national workshop on the HS 2017 amendments for the Ethiopian Customs Commission was held in Addis Ababa (11-15 November).  The overarching goal of the workshop was to assist the ECC, which has just completed the migration to the HS 2017 version, to understand the scope of the amendments and align its classification work on the new version of the national tariff.

Mauritius Standards Bureau to develop National Standardisation Strategy (GoM)

The Minister of Industrial Development, SMEs and Cooperatives, Mr Soomilduth Bholah, launched the event, organised by ISO in collaboration with the Mauritius Standards Bureau. Delegates from various countries (Denmark, Spain, Belgium, Ethiopia, Eswatini, Gambia, Serbia, Bosnia and Herzegovina, Nigeria, Senegal, Germany, Switzerland, Iceland, Mauritius) are participating in the workshop. The Minister announced that his Ministry is in the process of reviewing the National Export Strategy with the main objective of establishing the building blocks and engines of growth of the future. The strategy outlines the roadmap for the development of key sectors having high export potential. 

Mauritius Jin Fei zone to further consolidate ties between Mauritius and China (GoM)

The Mauritius Jin Fei Economic Trade and Cooperation Zone is yet another step in further consolidating the friendship between Mauritius and China and is one of the economic zones being established in Africa to strengthen China-Africa economic and trade cooperation, said the Minister of Tourism, Mr Georges Pierre Lesjongard, on Friday 22 November 2019. The Minister was speaking at the Ground-Breaking ceremony of the Jinfei-Maritim Five-Star Business Apartment Hotel project, held in Riche Terre, Terre Rouge. The apartment hotel, to the tune of some Rs 2,6 billion, will be operational in 2022. The structure will comprise two towers of 16 floors each, with a mix of rooms and apartments. The hotel will also consist of two restaurants, five conference halls, and a helipad.  The collaboration of Jinfei as a partner is further expected to attract some 75,000 Chinese visitors by 2020. [New impetus to Sino-Mauritian collaboration to further consolidate the SME sector]


Today's Quick Links:

Egypt: Africans doing business

Harmonised Consumer Price Indices, September 2019:  SADCCOMESA  

Mauritius: SADC Regional Agricultural Policy sensitisation workshop

US cuts funds for WTO Appellate Body drastically

Wang Huiyao: Why China should lead the mission to save the ailing WTO and revive multilateralism

Istanbul Competition Forum: Keeping markets fair in digital era requires stronger cooperation

tralac’s Daily News Selection

EAC Trade and Investment Report 2018: Accelerating market-driven integration

This report is structured in three parts, covering four chapters. Part One includes the background chapter which highlights the introduction to the EAC, analyses the macroeconomic trends and outlines key initiatives that have the potential to affect trade and investment in the Region. Part Two deals with the trade and investment outlook in the Region. Chapter 2 reviews trade among the partner states as well as with the rest of the world. The chapter also reviews the impact of different trade promotion policies on customs revenue in the partner states and concludes with an analysis of the challenges to trade development in the region. Chapter 3 analyses foreign direct investment inflows as well as intra-regional investment flows. The chapter concludes with an analysis of the challenges of attracting investment to the region. Part Three is the wrap-up section while Chapter 4 draws conclusions.

Chapter 1: Background. As in other free trade agreements, the negotiations on Rules of Origin for the AfCFTA are likely to be dominated by strong industry lobbying. During the negotiations so far, West and Central Africa have preferred general Rules of Origin, which would probably resemble those in the East Asia and the Pacific region. On the other side, Egypt, Kenya, and South Africa have pushed for product-specific Rules of Origin, and South Africa has lobbied for adoption of the SADC Rules of Origin on a sector- or product-specific basis. If South Africa’s position prevails, the result would be costly Rules of Origin that would likely deny preferences to the low-income partners (such as Ethiopia, Mozambique, Tanzania, and Zambia). When the more developed partner has a comparative advantage in the upstream capital-intensive sector, such as weaving in textiles and apparel or engine building in the automobile sector, Rules of Origin create a captive market in the low-income partner, which has no choice but to source (at a higher cost) from the more developed partner. Potential benefits from the AfCFTA include elimination of tariff and non-tariff barriers in goods and services, customs improvements leading to reduction in cost of trading across borders.

Chapter 2: EAC merchandise trade. EAC merchandise trade grew by 11.7% to $52.4bn in 2018 from $46.9bn in 2017. The growth in merchandise trade resulted from the increase in the import bill for the region while export volumes fell during the year. Total EAC exports decreased by 4.7% to $14.0bn in 2018 from $14.7bn in 2017. The decline in exports was attributed to low international prices of mainly agricultural commodities on account of higher production as a result of improved weather conditions coupled with a drop in the export of primary minerals as a result of a fall in international demand especially due to decline in economic growth in China and the Far East. Earnings from coffee, tea and minerals fell by more than 24% during the year.

Outside the African continent, the EU was EAC’s major trading partner with exports to the EU increasing by 6.5% to $2.5bn in 2018, from $2.3bn in 2017, and constituted about 17.5% of total EAC exports. Exports to the USA and the rest of the world fell by 20.6% and 12.7%, respectively during the year.

Overall, the region continued to register a trade deficit with the rest of the world in 2018 partly due to an increase in imports into the region. The deficit for the EAC increased by 39.4% to $24.3bn in 2018 from $17.4bn registered in 2017. The increase in the deficit was attributed to increase in imports mainly due to a spike in global crude oil prices that peaked at $73 per barrel and increased the import bill for petroleum products. Other imports included machinery, motors, textile, wheat and rice. The EAC imports fossil fuels, textile, leather, crude palm oil, motors and machinery which account for a large proportion of import bill. On the other hand, the Region mainly exports agricultural commodities which in most cases, are unprocessed and fetch very little on the global market.

Chapter 3: Investment trends in the EAC. Foreign direct investment into East Africa decreased by 15.9%, to $5.7bn in 2018, from $6.8bn in 2017. Inflows to Tanzania increased by 2.3% to $3.1bn.  Inflows to Burundi and Rwanda decreased by 76.8% and 11.5% to $15.1m, from $65.1m in 2017 and to $1015.3m in 2018 from $1147.7m in 2017, respectively. FDI into Kenya, South Sudan and Uganda fell by 32.4%, 11.7% and 51.8% to $485.5m, $408.6m and $630.6m, respectively in 2018. Overall, FDI inflows to the EAC were concentrated in manufacturing, construction and services sectors. FDI into manufacturing and construction amounted to $2.1bn and $1bn, respectively in 2018. China and India continued to be the major sources of FDI to EAC with inflows amounting to $1.1bn and $281.02m, respectively.

Chapter 4: Conclusions and prospects. To ensure sustained growth in trade and investment in the Region, the partner states have to support initiatives that reduce the import bill on fossil fuels, motors, crude palm oil, textiles and capital items. Initiatives such as fast tracking the production of EAC oil and gas reserves, assembly of motors in the region and support to improved agricultural production including irrigation, post-harvest handling and value addition should be explored. Further reforms will include establishment of a credible central data unit to capture and disseminate all trade statistics in the EAC for use by the Secretariat and Partner States in planning, management and monitoring of the Single Customs Territory.

EU to consider concession for Kenya on stalled EAC export deal (The Star)

Kenya could be allowed to secure its own preferential market access for exports to the European Union if the regional Economic Partnership Agreement fails to take shape, EU has signaled. This comes amid continued delays by the EAC member states to ratify the EPA deal as a bloc, which would secure duty-free quota-free market access with the 28-member union. EU ambassador to Kenya Simon Mordue  yesterday said Kenya could be allowed to go ahead solo under the "variable geometry" provision, which allows certain members states to implement trade agreements faster than others or before others which are not ready. “Kenya is obviously very keen together with Rwanda to move forward and start this trading arrangement with European Union as quickly as possible because they full understand the benefits of this agreement,” EU ambassador to Kenya Simon Mordue said in Nairobi yesterday.

Freight forwarders move to establish self-regulatory body (New Times)

Regional clearing and freight forwarding firms are seeking to improve the professionalism of their operations through a model bill on clearing and freight forwarders industry in the East African Community region. The bill was developed through an initiative by the Federation of East African Freight Forwarders Associations (FEAFFA), in partnership with the revenue authorities and JICA. Under the lead of FEAFA, a model bill on self-regulation was initiated and developed in collaboration with various stakeholders to overcome challenges that are hindering the industry. According to Fred Seka, president of FEAFFA, even though the industry has been championing professionalism through a number of activities such as training, code of conduct, regional accreditation framework, among others, there is need to self-regulate the industry. The Rwandan government has already drafted the national bill and it is ready to be submitted to the concerned authorities, and more than 7000 thousand operators have benefited from the capacity development for international trade facilitation in the region.

Kenyan trade lobby to promote WeChat Pay to boost China-Kenya trade (Xinhua)

Kenya National Chamber of Commerce and Industry,  a business lobby, plans to promote the use of Chinese mobile payment service WeChat Pay in order to boost China-Kenya trade, an official said on Wednesday. George Kiondo, deputy CEO of the KNCCI, told Xinhua in Nairobi that adoption of the mobile payment service will be an advantage given that China is a key trading partner. "We are telling our members to use WeChat Pay because it is an affordable and convenient way to pay for imports of goods," Kiondo said on the sidelines of a forum for the preparation of the third edition of China-Kenya Industrial Capacity Cooperation Exposition that will take place 26-29 November. The event will bring about 83 Chinese enterprises which will showcase their latest industrial innovations.

UAE-Kenya Trade and Investment Forum: updates

(i)  Kenya National Chamber of Commerce and Industry in partnership with Sharjah chamber of Commerce and Industry has signed a MOU to open a satellite trade office in the United Arab Emirates. The agreement signed on Monday will enable and provide strategic bilateral cooperation between the business communities in Kenya and UAE with an objective to foster cooperation in trade, investment, joint activities, information and trade policy support programmes.

(ii)  Sharjah Chamber of Commerce and Industry Chairman Abdulla Sultan Al Owais: “We, at the Sharjah Chamber, are keen to enhance investment and business prospects with Kenya as a regional hub for finance and commerce in East Africa and a business gateway to the region. Likewise, the Emirate of Sharjah is a regional hub and a gateway to Gulf and Middle East Markets. I would like to seize this opportunity to invite the Kenyan business community to invest in Sharjah as an attractive destination for investors from all over the world, thanks to its outstanding strategic location, infrastructure and logistics, motivational investment environment, economic diversity, and pioneering projects in new sectors.”

(iii) Uganda is the second destination of the trade mission, where the first day will feature the UAE – Uganda Forum. The second day will feature bilateral meetings between Emirati businessmen and their Ugandan counterparts.

Kenya: Central governors in bid to revitalise agriculture (The Standard)

Meeting under the umbrella of the Central Kenya Economic Bloc in Nairobi on Monday, the leaders agreed on a raft of measures aimed at speeding up projects and sector-specific interventions in their counties. Under the chairmanship of Nyandarua Governor Francis Kimemia, the regional county chiefs also agreed on the way forward around several issues affecting the bloc, and whose resolutions will be implemented jointly and individually through the regional economic body. Some of the issues discussed include; value chain improvement on milk and agricultural produce from the region, coffee reforms sector report and its implementation, and fast-tracking the establishment of a regional development authority as a special vehicle for regional development programmes.

Mombasa port performance hits new record (Business Daily)

The Port of Mombasa has registered a new performance record of more than 6.24 million metric tonnes throughput in the month of October with containerised cargo taking the largest share of the total cargo handled in the month of September and October this year. Last month, the port recorded 6,245,960 metric tonnes with goods handled in the week of 17-23 October recording 3,269,508 metric tonnes of total cargo. In the same week, the port received 35 vessels that discharged and loaded containerised cargo, while 24 bulk cargo and 21 general cargo vessels were received during the same time. The Kenya Ports Authority weekly report for the month between September and early November indicates that for the last three weeks of October, the port registered the highest number of throughput of more than 1 million tonnes weekly.

Selected updates from the Global Gender Summit in Kigali:  

(i) Rwandan firms win big at inaugural women entrepreneurship challenge. Two Rwandan entrepreneurs have been named best in their respective categories during the inaugural women entrepreneurship competition, 2X Invest2Impact, that brought together several entrepreneurs from five African countries. The duo is among the 100 women entrepreneurs selected from the five countries as winners in four categories and will form the first cohort of the 2Xconnect, an online community dedicated to African women entrepreneurs. The announcement was made in Kigali on the sidelines of the Global Gender Summit 2019 that ended Tuesday. The challenge brought together women entrepreneurs from Rwanda, Uganda, Kenya, Tanzania and Ethiopia.

(ii) AfDB, partners officially launch AFAWA Risk Sharing Facility. The African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) programme gained momentum with significant support from commercial banks and a $1m commitment from the government of Rwanda. AFAWA is expected to unlock $3bn in private sector financing to empower female entrepreneurs through capacity-building development, access to finance as well as policy, legal and regulatory reforms to support enterprises led by women. In August, G7 leaders approved a package totaling $251m in support of AFAWA during the summit in Biarritz. Olukayode Pitan, president of Nigerian Bank of Industry said with the signings they could lend more to women.  [New Times: Will AfDB’s initiative bridge the $42bn funding shortfall for African women entrepreneurs?]

(iii) Using innovative financing mechanisms to accelerate finance for women in business. Wendy Teleki, Head of the We-Fi (Women Entrepreneurs Finance Initiative) Secretariat and the panel moderator, led the six panelists in exploring how financial institutions and multilateral development banks are innovating to expand women’s access to finance. Aside from risk-sharing interventions like credit guarantees to lenders, panelists said increasing women’s financial literacy was also key to closing the gender gap. “It’s not about corporate social responsibility or charity,” said panelist Barbara Rambousek, Director for Gender and Economic Inclusion at the European Bank for Reconstruction and Development. “It is about developing that business case and developing a proper set of financial and non-financial services.”

(iv) McKinsey Global Institute: The power of parity - advancing women’s equality in Africa. If Africa steps up its efforts now to close gender gaps, it can secure a substantial growth dividend in the process. Accelerating progress toward parity could boost African economies by the equivalent of 10% of their collective GDP by 2025, new research from the MGI finds. Advancing women’s equality can deliver a significant growth dividend. In a realistic “best-in-region” scenario in which the progress of each country in Africa matches the country in the region that has shown most progress toward gender parity, the continent could add $316bn or 10% to GDP in the period to 2025 (see Exhibit 1). Another increasingly important gateway to economic opportunity is access to digital technologies. Africa’s progress toward parity on digital inclusion is not far below the global average (0.81 female-to-male digital inclusion ratio vs. 0.86 globally), but that progress has stagnated. The continent still has the second largest gender gap in mobile ownership at 15% and only one woman out of three has access to the mobile internet in Sub-Saharan Africa compared with one man in two. [Acha Leke, Lohini Moodley: The economic potential of gender parity for Africa]

tralac’s Daily News Selection

pdf Request for observer status by the African Union at the WTO (61 KB)

The following communication, dated 22 November 2019, addressed to the Chair of the General Council and the Director-General of the World Trade Organization, is being circulated at the request of the delegation of Benin on behalf of the African Group:  

I wish to request Your Excellency to allow the African Union to have an observer status in the WTO. The African Union is Africa's inter-governmental Organization with the ultimate objective to accelerate the political and social-economic integration of the Continent. As you may be aware, the African Union operationalized the AfCFTA at the 12th Extraordinary Summit of the Heads of State and Government of the African Union in Niamey, Niger, on 7 July 2019. Once fully implemented, this historical continental flagship project of the AU’s development Agenda 2063, would make the continent the world's largest single market with 1.5 billion people and a combined GDP of $2.5 trillion. In recognition of the determinant role that trade plays for economic growth and sustainable development in today's globalized economy, the African Union attaches great importance to the enhancement of trade performance of its Member States of which 44 are Members of the World Trade Organization. Nine African countries are currently candidates to the WTO, including 6 LDC's.

Africa remains committed to the rules-based multilateral trading system in which WTO serves as the principal global organ of governance. To ensure that Africa is effectively integrated and represented into this international trading system and that its interests and concerns are adequately taken into account, the AU has been given the mandate by its Member States as per its policy organs, to coordinate and harmonize the position of African countries and regions, with a view to speak with one voice in international trade negotiations and fora. I have no doubt that the granting of observer status to the AU and its participation in the activities of the WTO and its technical sub-committees will facilitate the formulation of common African policies and enhance the equitable participation of the member States of the WTO to contribute to a rules-based multilateral international trading system. Above all, this will greatly reinforce the growing strategic partnership between the African Union and the WTO.

Note: Text of letter from Mr Moussa Faki Mahamat, Chair of the African Union Commission, addressed to Ms Sunanta Kangvalkulkij, Chair of the General Council and Mr Roberto Azevêdo, WTO Director-General, on 17 November 2019

pdf African Group elements on agriculture: For meaningful development outcomes (89 KB) at the 12th Ministerial Conference (WTO)

The following communication, dated 22 November 2019, is being circulated at the request of the delegation of Benin of behalf of the African Group: 

Agriculture is a vital sector for achieving Africa's aspirations to growth and development. Agriculture contributes by almost 15% to the total GDP of the continent, creating job opportunities for almost half of its working force, and therefore agriculture for Africa is a matter of food security, employment, income and mere existence.

The negotiations on Agriculture in the DDA are therefore of paramount importance to the African Group. It is widely known that Agriculture remains the most trade-distorted sector in the context of WTO rules. Hence, reforming the agricultural rules is a critical development outcome in the DDA.

The African Group reiterates its position that discussions on reforming the Agreement on Agriculture (AoA) in particular and the WTO in general shall be revolving around the means to make the rules more development oriented and responsive to the challenges our continent is facing. Therefore, our priority in Agriculture negotiations is to correct the historical imbalances in the AoA in a manner that would enable our countries to respond to the challenges of food security compounded by climate change.

On the Special Safeguard Mechanism:

African countries have been subject to massive and repetitive import surges, resulting over the years and in the absence of any means to safeguard the market in substantial reductions in production mounting in some cases to more than 50% decrease, and the loss of numerous jobs.

Members are to intensify the discussions in the dedicated session on SSM of the Committee on Agriculture in Special Session with the view of concluding the negotiations on the SSM by MC12.

The Mechanism shall cover both price-based and volume-based triggers with no a priori product limitations as to its availability, and it shall be easily applied by developing countries, with flexible time limits for application to address the needs of the developing Member utilizing the mechanism.

The operation of the SSM shall be carried out in a transparent manner, and the Member invoking the SSM should afford any interested Member the opportunity to consult with it in respect of the conditions of application of the measure. Transparency requirements shall be conducted in a manner that would not impose onerous burden on developing countries and especially LDCs and NFIDCs.

Communiqué on the Chairperson’s working visit to South Africa (AU)

The Chairperson of the AUC Moussa Faki Mahamat concluded a two-day working visit to the Republic of South Africa. Accompanied by Dr Ibrahim Assane Mayaki, CEO of AUDA-Nepad and other senior officials, the Chairperson held discussions with President Cyril Ramaphosa, Foreign Minister Naledi Pandor, Finance Minister Tito Mboweni and senior officials from the Department of International Relations and Cooperation. The two leaders and their teams held discussions to discuss the strategic priorities of South Africa ahead of the country’s assumption as Chair of the African Union in 2020.

President Ramaphosa emphasised his commitment to deepen engagement regarding unresolved conflicts on the continent, including Libya, as part of South Africa’s desire to accelerate action to Silence the Guns by 2020. President Ramaphosa also reaffirmed South Africa’s support to the AfCFTA and the critical role that infrastructure development should play in making the AfCFTA a reality.  For his part, the Chairperson of the Commission Moussa Faki Mahamat noted the importance of the upcoming presidency of South Africa to head the Union in 2020, and reaffirmed the commitment of the Commission and to support South Africa in preparing for this crucial role to push ahead with promoting the continental agenda. [Communiqué on the Chairperson’s working visit to Botswana]

South Africa: Staff concluding statement of the 2019 Article IV Mission (IMF)

IMF staff projects economic growth to remain sluggish in 2020 - below population growth for the sixth consecutive year. On current policies, the medium-term growth outlook would remain subdued accompanied by somewhat muted inflationary pressures. With low growth and low job creation, the increasing labor force is projected to exacerbate unemployment pressures, poverty, and inequality. Amid weak economic performance, credit expansion remains low, notwithstanding an uptick in unsecured loans. External debt and gross financing needs remain elevated, while external financing continues to be heavily reliant on non-FDI inflows. However, the relatively easy global financing conditions are providing breathing space to finance government operations. South Africa’s undeniable economic potential remains largely untapped and the recent economic performance points to rising risks. The economy faces three immediate challenges...:

The vulnerable outlook emphasizes the urgency of rebuilding policy buffers and implementing reforms to put the economy on a sustainable and inclusive growth path. Failure to implement the needed adjustment in government and SOE spending and efficiency will worsen debt dynamics, erode financial stability, and further raise the country risk premium. With delays in structural reforms, growth and social conditions will worsen. Implementing the reforms now will benefit from the benign financing conditions in international markets and prevent disruption from an abrupt adjustment in future.

Ethiopia: Science, Technology and Innovation Policy Review  (UNCTAD)

The STIP review contrasts Ethiopia's rapid economic growth with much slower growth in technological learning and innovation capacity as a major obstacle to sustaining this impressive performance and achieving more sustainable development. It shows that on paper, Ethiopia has most of the policies, regulations, background studies and roadmaps necessary to kick-start a successful process of technological learning, innovation and technological upgrading. However, in reality the country faces challenges in policy implementation across public institutions related to capacity constraints and sub-optimal allocation of efforts and resources. “Innovation ultimately takes place at the firm-level, but the state plays a key role as a facilitator of the national innovation system,” said Shamika N. Sirimanne, UNCTAD’s director of technology and logistics division during the report’s launch in Addis Ababa. “The state is the glue that holds the innovation system together.”

The STIP review also provides an in-depth analysis of two sectors as case studies for understanding how STI policy can stimulate technological upgrading and innovation and thereby improve the performance of industries identified as important for Ethiopia's development. They are the apparel and textile sector for resource-based labour-intensive exports and the pharmaceuticals sector for knowledge-intensive import substitution. The STIP review is based on fact-finding missions to Ethiopia conducted in December 2018 and March 2019.

PIDA Week 2019 is underway in Cairo on the theme: Positioning Africa to deliver on Agenda 2063 and economic integration through multi-sectoral approaches to infrastructure development

(i) Extracts from the concept note: Intended outcomes of PIDA Week include (pdf). Validation of key studies that contribute to the PIDA PAP 2 process; Validation of the Dispute Settlement Mechanism for operationalization of the Single African Air Transport Market; Progress on the Digital Transformation Strategy; Validation of the Strategy to unlock access to rural areas; Validation of the strategy paper as well as the Detail scoping study of the Continental High Speed Railway Network, followed by a capacity building workshop on the Luxembourg Protocol on railways; Launch of the African Network for Women in Infrastructure (ANWIn)

Sector specific workshops will be also held during the week, including: Validation workshop of the detailed scoping study for the Continental High Speed Railway Network; Efficiency and competitiveness of ports in Africa; Coordination workshop on the implementation of the Tourism Action Plan 2019-2021; Meeting of the working group in charge of the feasibility study on the African Tourism Organisation

(ii) Speech by AUC Commissioner for Infrastructure and Energy, Dr Amani Abou Zeid: Yesterday the Members of the Bureau of the STC on Transport, Transcontinental and Interregional Infrastructure, Energy and Tourism composed of the Arab Republic of Egypt, Democratic Republic of Congo, Somalia, Lesotho and Togo, met and validated the PIDA PAP 2 integrated corridor approach, the projects selection criteria, the strategy to unlock access to rural areas and the detailed scoping study of the Continental High Speed Railway Network.

With the validation of the PIDA PAP 2 studies by the Ministers the African Union Commission in collaboration with AUDA-NEPAD, the RECs and the Member States will engage the consultations for the selection of the list of priority projects which are expected to be implemented from 2021-2030.

At the political level, there is a need for African countries and RECs to mainstream PIDA projects into their national and regional development plans. It is also important that African Member States take ownership in the development and implementation of national and continental initiatives. This is necessary to ensure that there are clear and harmonized ambitions, strategies and political commitments towards ensuring access to infrastructure services as well as provide the necessary policy and financial instruments for infrastructure development at the local, national and regional levels.

(iii) Speech by AUDA-NEPAD CEO, Mr Ibrahim Mayaki: As we embark on the development of the next set of priority projects in PIDA PAP 2 we should take note of the lessons learned and match these with the imperative to deliver on the promise of infrastructure for Africa’s people. We particularly welcome the integrated corridor development approach for PIDA PAP 2.

With the aim of fully implementing MoveAfrica, AUDA-NEPAD developed a Traffic Light System (TLS) to rank and track the level and the quality of the service of Africa’ s transport corridors, starting with border posts as a point of departure. Four border posts, Beitbridge, Chirundu, Kasumbalesa and Kazungula along the North-South Corridor in the SADC Region were selected for the pilot phase. If we have to achieve the Continental Free-trade Area we must reprioritise African border posts and commit to addressing the unnecessary delays at these critical trading routes. To date the TLS has been expanded into 21 COMESA member states, 15 SADC members states and 15 West African countries. The current corridor coverage is on the North South Corridor, Abidjan Lagos Corridor and the Trans Kalahari Corridor. The TLS under MoveAfrica is growing becoming a credible tool that ensures the Africa Continental Free-trade Area is actualised.

(iv) PIDA Week Programme (pdf) 


CFA franc reform: CEMAC launches deep reflection (Cameroon Tribune)

The 15th Extraordinary Summit of Heads of State and Government of 22 November, in Yaounde, mandated the CEMAC Monetary Union and BEAC to carry out a study and make proposals within reasonable time. The six countries of the Economic and Monetary Community of Central Africa (CEMAC) have unanimously agreed to reform its currency so as to have a stable and strong legal tender capable of giving the economies the boost for better development and population's livelihood. The direction the reform will take can only be known when the CEMAC Monetary Union and Bank of Central African States, mandated by the Heads of State of CEMAC to carry out the study, must have tabled their proposals in the shortest or reasonable time possible.

According to point seven of the 16-point resolutions read by the President of the CEMAC Commission, Daniel Ona Ondo, "... concerning monetary cooperation with France on the CFA Franc, the Heads of State decided to engage a deep reflection on conditions and framework of new cooperation. To this effect, they mandated the Central African Monetary Union and BEAC to propose within a reasonable timeframe an appropriate scheme that can lead to the evolution of a common currency."