News Archive October 2019

tralac’s Daily News Selection

Diarise: World Bank Group's Fragility Forum 2020 (2-4 March, 2020): 

The Forum will focus on implementation: the concrete approaches that are needed to maximize our collective impact and more effectively respond to dynamic, multidimensional, and global challenges affecting countries around the world.  The Forum’s sessions - selected through a global Call for Proposal - will focus on five themes:

UNCTAD's Global Investment Trend Monitor (pdf)

FDI flows to developing economies, largely unaffected by repatriations, remained relatively stable at an estimated $342bn, a decline of 2% compared to 2018H1. Flows were 2% lower in Africa and developing Asia, and 4% lower in Latin America and the Caribbean. Three of the top 5 recipients of FDI in the world were from developing countries.

FDI flows to Africa in 2019H1 were an estimated $23bn, a decline compared to 2018H1. Subdued global economic growth, persistent trade tensions and political instability in a few countries on the continent are acting as dampeners for investment in Africa in 2019, despite the recent coming into force of the AfCFTA agreement. In terms of sub-regional groupings, East, West and Southern Africa registered upticks, while North and Central Africa had lower flows compared to 2018H1. Egypt continues to be the largest recipient of FDI on the continent, attracting $3.6bn in 2019H1; a significant number of new investment deals have been announced.  FDI flows to Nigeria - the largest economy in Africa, picked up significantly, possibly driven by reforms in regulations for oil and gas companies, including lowering mandatory public ownership requirements.

FDI flows to South Africa dropped from $4bn in 2018H1 to $2.6bn in 2019H1.  However, indications of several large deals in the third quarter could put the country on track towards higher FDI flows for 2019 as a whole. Ethiopia also experienced a moderate slowdown in FDI in the first half of this year with inflows amounting to $2.1bn, a decline of about 20% compared to 2018H1. In contrast, inflows increased by almost 75% in Uganda to nearly $1bn on account of increased Chinese investment as well as some progress in the development of the country's oilfields. Mozambique and Zambia also experienced rising inflows in 2019H1, with investments in oil and gas and copper fields, respectively.

Financing Africa Industrialization: AU validation workshop

The AUC Department of Trade and Industry successfully hosted a high-level stakeholders validation workshop (24 October, Abuja) for the study it undertook earlier this year. The workshop capped the Department’s RECs strategic interface mission that was focused on the ECOWAS region, and delivered from 21 - 25 October.   Participants at the validation workshop noted the need for tailor-made financial products targeting the peculiar needs of SMEs, given the critical role they have towards advancing Africa’s industrialization agenda. It was further noted that SMEs constituted 90% of Africa’s industrial ecosystem, hence the need to afford them more attention in designing interventions to boost their viability, and survival. Thus, it was noted that the banking sector had to design SMEs financing products that were aligned to address the challenges of this strategic sector, if the continent was to create employment, and boost incomes for the populace.

Whilst acknowledging the importance of SEZs and industrial parks across Africa as a catalyst for upscaling industrialization in the continent, participants highlighted the need to ensure that this production model also accommodates the need to grow local industries. The participants, further noted the need to mainstream digital industrial policy and financing of investments in that sector to enhance the continent’s capacity to tap into the benefits of Industry 4.0, the current global high-tech centred industrial production wave. Cross-border and regional integrated industrialization projects were encouraged to strengthen the continent’s prospects to deliver balanced and shared industrialization benefits, as well as to improve the risk profile of most member states in the continent.

Richard Baldwin: Globalisation, robotics and pathways to development (EIF)

TfD: Least developed countries have young and rapidly growing populations. As discussed, wages will become less important in global manufacturing and the sector may no longer offer its historical pathway for poor nations to create jobs and develop through labour-intensive and productivity-enhancing activities. How best should these countries prepare tomorrow’s workforce for the future of work?

RB: This is something that needs to be thought through hard because the traditional development route is being shut off by automation. There is simply no way that human wages – as cheap as they are in countries like Burkina Faso – will compete with robots in mass manufacturing. It may not be in ten years, but most manufacturing will probably be automated within forty years at most. So policymakers need to prepare for the challenges and opportunities ahead. However, I do not think that preparing the workforce for service exports is any different to preparing them for the jobs of the future. They must be literate, healthy and connected.  When looking at robotics and pathways to development, I am combining two strands in the literature. The first is that manufacturing’s contribution to employment and growth will change because of automation. The second is that service exports offer an alternative route. In fact my argument is stronger: there will be no more Chinas. Not because of trade restrictions but automation. The service-led development path will become the norm and that is what we need to think about.  [Related: Trade4DevNews - Aid for Trade & LDCs (pdf)]

Guy de Jonquières: The WTO struggles to remain the world’s trade rule-maker  (Prospect Magazine)

When the WTO was founded in 1995, its first director-general, the late Peter Sutherland, described it as “the pre-eminent institution for managing global economic integration.” That phrase captured the widespread sense of optimism at the time that the organisation would be steward of a more harmonious world order based on increasing cooperation, shared values and common rules. A quarter of a century later, that optimism has evaporated amid growing global tensions and instability. Today, the WTO looks less like the herald of a bright new era than a monument to a fast-fading vision of a future that has failed to arrive.

Roberto Azevêdo: Regional and multilateral efforts are key to Africa’s integration strategies (WTO)

Meeting with ministers and senior officials in Ouagadougou, WTO Director-General Roberto Azevêdo discussed the importance of regional and multilateral trade efforts to help drive Africa’s economic integration, growth and development. During his visit, the Director-General met with Burkina Faso's President Roch Marc Christian Kaboré. He also met with the President of the West African Economic and Monetary Union,  Mr Abdallah Boureima, at the group's meeting for trade ministers, attended by Mr Harouna Kaboré, Minister of Trade and Industry (Burkina Faso); Mrs Shadiya Alimatou Assouman, Minister of Industry and Commerce (Benin); and Mr Iaia Djalo, Minister of Trade and Industry (Guinea-Bissau).  At the WAEMU gathering, the Director-General discussed how work at the multilateral level, including at the WTO, could complement the economic integration efforts spearheaded by WAEMU countries. He gave a round-up of ongoing initiatives by the WTO to help build trading capacity in the region, and highlighted discussions in Geneva aimed at making the organization more responsive and agile, including on issues where WAEMU members have shown great interest, such as agriculture, cotton, fisheries subsidies and e-commerce.

Women cross-border traders: Uganda - South Sudan Elegu  OSBP (EAC)

The EAC Secretariat, supported by GIZ-AUBP and GIZ-SEAMPEC, in collaboration with the South Sudan Women Entrepreneurs Association (SSWEA), convened a three-day training programme for women cross-border traders between Uganda and South Sudan (16-18 October) at the Elegu One Stop Border Post.  It was attended by 25 women cross-border traders from Uganda and South Sudan. The women learned how to engage in cross-border trade, making use of the economic opportunities provided by the EAC without suffering from harassment and other challenges at border crossing points. Using the ‘EAC Simplified Information Package for Micro and Small-Scale Women Cross Border Traders and Service Providers in the EAC’, the women learned how to apply the EAC trading rules.

Nigeria’s border closure has implications for Africa’s economic integration (The Conversation)

Border closures are not new in Africa. But Nigeria’s actions raise important concerns about the seriousness and prospects of regional integration in Africa. African countries have different economic configurations and strategic priorities. The huge number of diverse countries within the free trade area isn’t going to make things easy. Indeed, free trade has its benefits, but it also has costs. Nigeria’s bid to protect a declining rice farming industry and save foreign exchange has led to protectionism that defies the principles of a free trade area. The African Union (AU) has been muted on the issue of the border closures. This might be because it does not yet have detailed institutional arrangements for settling disputes within the free trade area. Another factor might be that it has been quiet because Nigeria is involved. As Africa’s largest economy, the AU courted it earnestly to sign. The agreement needs Nigeria, arguably at whatever cost.  [The author, Tahiru Azaaviele Liedong, is attached to the University of Bath]

Nigeria needs a competent customs and immigration service, not border closure (The Conversation)

Informal trade along the borders is carried out by hawkers of assorted goods such as textiles, footwear, alcohol and non-alcoholic beverages. There is also trade in food, fuel, transport services and foreign currencies. The poor in Nigeria typically don’t engage in large-scale smuggling. They lack the means of acquiring, transporting and warehousing large volumes of smuggled goods. Some poor unemployed Nigerians may engage in petty and innocuous smuggling, as a means of survival. But they are paying the price for the border closure, while those responsible for the worst cases of smuggling live comfortably. Apart from its domestic implications, the border closure is also inconsistent with the spirit of regional economic integration. Nigeria spearheaded the establishment of the Economic Community of West African States (ECOWAS) 44 years ago with the major goal of a “free trade area” among member countries. Nigeria’s unilateral decision reinforces the general notion that the regional bloc has not been successful at freeing up the movement of goods, services and even people within the sub-region. If that were the case, Nigeria would have coordinated its efforts at curbing smuggling with other member states.  [The author, Stephen Onyeiwu, is attched to Allegheny College]

Bad bilateral trade deals haunting Africa (The East African)

According to Nicomedes Kajungu, secretary general of the National Union of Mines and Energy Workers of Tanzania (Numet), the growing number of legal suits that multinational companies are bringing against Tanzania and other African countries is a major concern. Mr Kajungu told The EastAfrican that most of these suits stem from bilateral investment treaties (BITs) signed between countries over the past three decades. “So far, African countries have signed 568 BITs and free trade agreements with investment provisions, mainly with other countries outside Africa,” he said. Mr Kajungu dismissed claims that BITs guaranteed greater foreign direct investment inflows into a country. “Huge FDI flows have been registered in countries like Brazil which do not have a single BIT in force,” he said. Numet are calling for an overhaul of the country’s 1997 Investment Act in the wake of a recent order against the government by the International Centre for Settlement of Investment Disputes.

Liberia:  AfDB's Country Strategy Paper 2019-2023

In direct response to Liberia’s overarching development challenge, the main objective of the Bank’s CSP  2019-2023 is to tackle key drivers of fragility and to strengthen  the country’s resilience, in a selective manner and in close alignment with the Bank’s corporate strategic framework and Liberia’s development priorities as spelled out in the PAPD. To achieve  this  objective,  the CSP will support  private  sector  driven  economic  diversification  and strengthen economic  governance.  Accordingly, the CSP is articulated around the following two priority  areas  for  Bank  support: Priority  Area  1: Economic  diversification  through  improved transport  and  energy  infrastructure;  and Priority  Area 2 –Improving  economic  governance  and enhancing private sector development.

Liberia's external sector: Liberia has faced various external shocks in recent years, including the Ebola crisis in 2014 to 2016, commodity price shocks, and a significant reduction in economic activity resulting from the United Nations Mission to Liberia withdrawal in March 2018. The current account balance as a percentage of GDP averaged -22.7% in the last 6 years and it is projected to remain around that level in the next two years. The year 2014 was an outlier due to the response to Ebola crisis as large foreign aid flows supported remediation of the Ebola epidemic.  Minerals (iron ore, diamond and gold) and rubber account for 90% of total export value of which 55% is from the minerals sector. Total exports for 2018 are estimated at $490m - an increase from $279m in 2016. In terms of imports, food imports account for  25%  of  import  value  followed  by  machinery  and  transport  equipment  (24%),  petroleum products (15%) and manufactured goods (15%). Total imports value for 2018 was estimated at $1.0bn - a marginal increase from %0.99 billion for 2017. The over reliance on imports is not sustainable as the trade balance continues to grow hence the need for economic diversification to high value exports.

Regional Integration and Trade: Liberia ranks below average with an index of 0.31 against an Africa average of 0.39 on the Africa Regional Integration Index. At ECOWAS level, Liberia is the second bottom out of the 15 member countries. This shows that non-tariff barriers to trade are significant and these include poor infrastructure for regional connectivity and their limitation to trade facilitation beyond its bounders. The Liberian Parliament passed the ECOWAS Common External  Tariff  and  ECOWAS  trade  liberalization  scheme  in  September  2016.  The Government of Liberia  has signed on to the treaty connecting Liberia to the West African Power  Pool  (WAPP).

Related:  IMF reaches staff-level agreement with Liberia on an economic and financial programme

Since the Article IV consultation, in a context of intensifying economic challenges, the Liberian authorities and IMF staff have now agreed on an economic and financial program that could be supported by Fund resources. A key element of the program is the FY2020 budget recently approved by the Legislature that constrains expenditure to available resources, and avoids inflationary and reserve-depleting borrowing from the CBL. This budget is underpinned by important reporting and institutional safeguards aimed at preventing slippage and avoiding the re-occurrence of domestic payment arrears. The budget faces tight financing constraints at a time of significantly reduced fiscal buffers and will therefore need to be strictly implemented. Importantly, this budget retains its intended pro-poor orientation. It protects essential social spending, while providing enough resources to allow the CBL to use monetary policy aggressively in the fight against the inflation that has been so damaging to the living standards of the most vulnerable members of society.

Staff welcomes the Liberian authorities’ determination to restructure the wage bill. This is a key policy reform needed to free up fiscal space and make a credible and viable budget possible, while also increasing transparency, accountability, and equity. It is noteworthy that all three branches of Government participated, and that the process yielded a progressive outcome, in that the burden was borne by the higher paid employees with the poorest benefiting from salary increases, including among teachers, health workers and line security forces.

Solving the Indian export puzzle (East Asia Forum)

The finance minister’s announcement flagged the most critical area for exports — complying with international standards. Market access barriers have shifted from the conventional instrument of tariffs to standards compliance and this has hurt Indian exporters. The inability of domestic producers to meet exacting standards in international markets is a well-established fact. Sitharaman’s proposed roadmap for the adoption and enforcement of standards seems to be the way forward. The issue of standards has been discussed by the Department of Commerce on several occasions in the past. The critical issue now is to examine the non-implementation of past recommendations and to identify bottlenecks, particularly at the institutional level. Standards must be enforced in every sector and yet the finance minister has focussed solely on the engineering sector. This appears inadequate given that exports of agricultural and agro-processed products are among the worst-performing in terms of standards compliance. In 2018, the government announced the Agriculture Export Policy that noted India’s inability to export its horticultural products was partly due to a lack of uniformity in quality and standardisation. [The author, Biswajit Dhar, is attached to Jawaharlal Nehru University;  Asean trade facilitation instrument for trade in services fully operational

Today's Quick Links:

Mauritius wants to sign FTA with Eurasian Economic Union "in near future"

EAC explores potential for Russo-EAC cooperation

South African businesses in Uganda hold forum on strengthening bilateral trade

ECOWAS Commission, UN Women partner on gender mainstreaming

UNCTAD kicks off eTrade for Women masterclass series

China unveils new cross-border trade, investment facilitation measures

The October Commodity Markets Outlook: prices revised down as global growth weakens and supplies remain ample

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tralac’s Daily News Selection

30 Oct 2019
Diarise: World Bank Group's Fragility Forum 2020 (2-4 March, 2020): The Forum will focus on implementation: the concrete approaches that are needed to maximize our collective impact and more effectively respond to dynamic,...
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tralac’s Daily News Selection

Diarise: SheTrades Global (to be held in conjunction with the World Export Development Forum, 18-22 November, in Addis Ababa) 

Themes that will be discussed include how free trade agreements catalyze more inclusive trade for women, with a spotlight on the AfCFTA, innovative tools that promote trade and women’s economic empowerment such as the SheTrades Outlook; and priorities that SheTrades private sector partners are acting upon. SheTrades Global will be preceded by two days of closed workshops where women’s business associations will discuss how the AfCFTA can deliver economic opportunities for women. In addition, key SheTrades partners will discuss business models to deliver together on shared goals.

R35bn in South African exports to the USA are at stake in a 'review' just triggered by SA's copyright reform efforts (Business Insider)

South African exports to the US - worth some R35bn last year - will be at stake when the Office of the United States Trade Representative launches a review of SA's eligibility for duty-free imports under the US system known as the Generalized System of Preferences (GSP). The US federal government announced plans for the review on Friday. The exports threatened include – but go beyond – exports to America under the African Growth and Opportunity Act.  AGOA exports are predicated on participating African countries being eligible under GSP rules, the US embassy in Pretoria's spokesperson Robert Mearkle told Business Insider South Africa on Sunday. That implies that should a review end in South Africa being ejected from the GSP, it will automatically be ejected from AGOA too.

"US imports from South Africa under GSP and AGOA equaled a combined total of $2.379bn in 2018," Mearkle said. That is the equivalent of R34.8bn. All those exports will not necessarily halt if they can no longer be sold in the USA duty-free, but they will become price-uncompetitive if any other countries can sell the same items while still benefiting from AGOA,  or the broader GSP. "During the review, there will no change to GSP participation or to benefits under the African Growth and Opportunity Act. The government of South Africa will have the opportunity to participate in the review process," said Mearkle. [USTR statement: USTR announces GSP enforcement actions and successes for seven countries]

Simplice A. Asongu: Can a West African currency union work? (Project Syndicate)

After all, the France-backed currency, which is currently pegged to the euro, offers significant advantages, including exchange-rate stability and lower interest rates. Members of the West African CFA franc currency union might not want to risk these benefits by joining an unproven currency union with countries that have a history of high interest and inflation rates. And France itself has an interest in the CFA franc countries’ rejection of the ECO, because they deposit half of their foreign reserves in the French treasury. Despite these formidable challenges, there are reasons to be optimistic about the ECO – beginning with its potential to accelerate regional integration.   A successful ECOWAS currency union would likely spur progress on the proposed East and Southern African Monetary Zones. This would go a long way toward advancing progress on the ambitious African Continental Free Trade Area. The eurozone’s experience showed how unruly currency unions can be, and how important it is to continue experimenting and adapting. An ECOWAS union will be no different. But if member countries commit to making it work, the ECO could be a boon to regional – and continental – growth and development. [Note:  The author is lead economist and Director of the African Governance and Development Institute]

IGAD battles internal wrangles as Horn of Africa craves for mediation (Daily Nation)

Services at the Inter-governmental Authority on Development  could be crippled following a stalemate on who becomes chief executive officer and chairman of the bloc. Normally a calm organisation focusing on Horn of Africa’s political scene, members seeking to lead Igad for the first time since its formation in 1996 are agitated. The spark occurred 10 days ago when Ethiopian Prime Minister Abiy Ahmed, the current chairman, appointed his former Foreign Minister Workneh Gebeyehu as the executive secretary. Workneh is supposed to take office on November 1, according to details contained in the appointment a letter. Member states complain that the decision did not follow laid down procedures. Ethiopia has chaired IGAD since 2010 when Kenyan President Mwai Kibaki handed the mantle to PM Meles Zenawi. Zenawi died in 2012 but the chairmanship has continuously been held by his successors Hailemariam Desalegn and now Abiy Ahmed, despite it being rotational. In fairness, there were no complaints before, probably because those interested now had other targets. A Somali diplomat told the Nation that the rotation policy “seems to have been discarded years ago”. IGAD bureaucrats, however, told the Nation that there are no wrangles but “competition”.

EAPP Regional Power Market Trade Project: project appraisal report on capacity building issues (AfDB)

The Capacity Building for the Operationalization of the EAPP Regional  Power Market Trade Project will  provide support  to EAPP to  establish  the  regional  power  market  trade  in  Eastern  Africa,  thereby improving access to reliable, clean and affordable electricity in the Region. The key output is finalization of shadow market operations, i.e. power market modelling and simulation of the existing bilateral trade, which is a final step in the transition to real market trade. The second output is the full establishment of the EAPP Market Committee, with capacity in regional power market development. The Project will also support the harmonization of regulatory framework for power trading, such as wheeling arrangements to facilitate cross-country power trade.  It will also enable  the integration  of  the  EAPP  and  the  Southern  Africa  Power  Pool,  thereby  creating  the largest power market anywhere in the world, spanning from Cape Town in South Africa to as far North as Egypt and Libya. This will greatly ease the challenges of access to clean, affordable and reliable energy by enabling countries that will generate surplus power, such as Ethiopia, Kenya and   others, to   share   with   those   in   deficit.  

Rwanda: Why government has mixed feeling over Doing Business Ranking (New Times)

However, despite the reforms and progress, the report ranked Rwanda 38th globally from 29th in its previous ranking. The drop was traced to an indicator, protecting minority investors, where Rwanda was placed 114th globally from 14th in the previous report. The drop in ranking was however not a result of performance but a change in the methodology and approach of measurement. It is this review of the methodology and approach in the process of compilation of the report that led government officials to receive it with mixed feelings. Among the changes made by the World Bank in the evaluation of the indicator was the late addition of assessment of the stock market performance as part of the sub-indicators in the report. According to the latest ranking, for an economy to be seen as having an active stock market that protects minority investors, it has to show at least 10 companies listed and trading equities. Rwanda’s grievances with the review were that it was not communicated as is the standard practice of the World Bank Doing Business Report ranking methodology. [New Times editorial comment: Doing Business report is about results and not ranking]

Madagascar Economic Update: new start? (World Bank)

Growth continued apace in 2019, although moderating slightly to an estimated 4.7%, according to Madagascar’s latest Economic Update. The report highlights two main decelerating factors: export revenues and industrial activity were adversely affected by a significant deceleration in major export markets, and execution of public spending was slow in the first half of the year, as the new government took office following the presidential election at the end of 2018. A post-election rebound in public and private investments is expected to raise growth to 5.3% in 2020, offsetting the impact of softening activity in China, Europe, and the United States. However, risks to the outlook have intensified due to the international context and the potential for higher and more inclusive growth continues to be held back by inadequate infrastructures, low human capital, and weak governance. Extract: Trade and balance of payment (pdf):   Weakening export revenues and sustained imports were reflected in a deteriorating current account balance. In the first semester, the current account recorded a deficit of $220.4m, compared to a surplus of $213.9m in the first semester of 2018. The shift mainly stems from a deceleration of export revenues, including from cash crops and nickel. In recent years, vanilla has been the main source of export receipts, supported by exceptionally high prices and robust demand. Both export quantities and unit prices, however, shrank in the first half of 2019. Despite vanilla being a key source of foreign exchange and income for Madagascar, gains are accruing to intermediaries and exporters, rather than to smallholders (see Chapter 3). Nickel is the second largest source of export revenues, and while export volumes continued to grow in the first semester, lower international prices on expectations of slowing demand from China and other major industrial economies have reduced export revenues there as well.  [Related blog analysis, by Marc Stocker: Time to review costly tax exceptions in Madagascar]

Djibouti: 2019 Article IV Consultation (IMF)

Large-scale infrastructure investments and a rapid expansion of trade and logistics activities have fueled strong growth in recent years. The authorities’ development strategy aims at positioning Djibouti as a regional trade and logistics hub. Since 2014, the government has promoted investments in ports, free trade zones, a water pipeline, and a railway from Djibouti to Addis Ababa. Against this backdrop, real GDP growth averaged close to 7% during 2014-17, driven by buoyant trade and logistics activities. The latest national account and external sector statistics attest to the importance of these sectors in the economy. Supported by IMF and World Bank technical assistance, the authorities have overhauled their national accounts and international trade statistics to include new information on the activity of ports and FTZs (Annex I). Driven by higher value added in the trade and logistics sectors, nominal GDP was revised up by close to 38% relative to the last Article IV Consultation. Activity in the FTZs grew by about 10.5% during 2014–17, and now accounts for one-fifth of the economy. Exports and imports were also revised up significantly to account for the large re-exports out of the FTZs.

Using regularized labor migration to promote Nigeria’s development aims (World Bank)

By 2050, Nigeria’s working-age population will have increased 125% (see figure 1). It is estimated 30 million additional jobs will be needed by 2030 to keep the employment to population ratios at current levels, let alone improving them. Even maintaining the assumption of an economic growth rate of 6% per year, only one in four Nigerians entering the labor market will be able to obtain good, wage-paying jobs in the formal sector. The World Bank is currently exploring where Nigerian job-seekers can be competitive in external labor markets, and which skills are in demand in both contexts. This analysis will allow Nigeria to craft a pathway that maximizes the benefits of migration to all parties, including by promoting development and combatting skills drain at home. As shown above, this model will benefit both countries, and promote sustainable economic development. To date, the number of workers involved in these projects is small, and we acknowledge that the model is unlikely to meet all demand, both in Nigeria and abroad. But it should be viewed as one tool which can be used to manage migration in a mutually beneficial way — a tool that is hitherto missing from the development community’s toolkit.  The scale of the demographic shifts highlighted above means Nigeria, and key countries of destination, cannot wait until migration flows visibly increase to implement new legal labor migration pathways. Tools such as the Global Skill Partnership should be tested now, in a period of relative manageability, before the scale and pace of migration makes innovation difficult.

Kenya:  Only 1 in 100 firms meets China rules for avocado export (Business Daily)

Only one firm out of over 100 has met the requirements laid down by the Chinese for export of avocados to the Asian country, six months after Nairobi and Beijing signed the deal. The deal agreed in April this year between President Uhuru Kenyatta and his Chinese counterpart Xi Jinping allowed Kenya to export frozen avocado to tame pests common with Kenyan fruits. The Government, through the Ministry of Trade, has started negotiations to have the directive eased and allow local firms to export fresh avocado as they work towards laying necessary infrastructure to meet the requirements. “The Ministry of Trade has opened negotiations with China over the matter and we expect a positive response,” said Ojepati Okesegere, chief executive officer of Fresh Producers Consortium of Kenya. [Kenyan bank mulls partnership with Chinese fintech firms]

When two elephants fight: Unstable relations between Nigeria and South Africa threaten the future of pan-African integration (IPS-Journal)

In the long term, the AfCFTA envisions a protocol on free movement of persons and seeks to establish a visa-free zone within member countries and an African Union passport. Given current tensions, however, any such common pan-African project looks to show little promise. And unless the respective governments and elites address their internal challenges and include civil society, labour organisations and the ever-growing informal sector in the debate on national development and wealth distribution, the AfCFTA with its neoliberal inclination will only make things worse. The aggressive expansion of big capital will prevail and intra-continental migration to the economic centres and megacities will increase. If left unregulated and unprotected, exploitation of and rivalry among the poorest are likely to continue their violent trend. Nationalistic sentiments and scapegoating of immigrants spread easily among the downtrodden.  [A note on the authors: Ulrich Thum is Resident Representative of the Friedrich-Ebert-Stiftung office in Abuja; Bastian Schulz is the Director of the FES Trade Union Competence Centre for Sub-Saharan Africa based in Johannesburg]

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tralac’s Daily News Selection

28 Oct 2019
Diarise: SheTrades Global (to be held in conjunction with the World Export Development Forum, 18-22 November, in Addis Ababa) Themes that will be discussed include how free trade agreements catalyze more inclusive trade for...
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tralac’s Daily News Selection

EXIM 2019 Sub-Saharan Africa Advisory Committee convenes interagency meeting to advance President Trump’s Prosper Africa Initiative (Exim Bank, US)

The 2019 Sub-Saharan Africa Advisory Committee of the Export-Import Bank of the United States met earlier this week to discuss how EXIM can work closely with other federal trade agencies to fulfill President Trump’s Prosper Africa initiative aimed at increasing US trade with Africa and fostering Africa’s economic development. Interagency cooperation is vital to the success of President Trump’s Prosper Africa initiative. EXIM convened an open meeting with a wide variety of both public and private stakeholders to explore venues of cooperation on this important subject. “A whole-of-government strategy is necessary to substantially increase two-way trade and investment between the United States and Africa,” said EXIM Board Member Judith D. Pryor. “Working with our sister agencies to leverage our collective resources can help provide the stimulus needed for sustainable economic development in Africa while also supporting US jobs here at home.”

“Since 2009, EXIM has authorized more than $12bn in support of America’s exports to sub-Saharan Africa,” said EXIM Board Member Spencer Bachus III. “We see great opportunities for American businesses, particularly small businesses, to dramatically increase US exports to Africa.”

“It’s critically important the US EXIM Bank be reauthorized to achieve the Trump Administration’s vision for Prosper Africa,” said SAAC Chair Daniel Runde. “There is a bipartisan consensus that we need to see Africa as a business opportunity, and we need the US EXIM Bank to make that happen. If the US EXIM Bank is not authorized, African businesses will work with others, including the Chinese.”

“In Africa, we are the good guys,” said Steven Dowd, executive director of the African Development Bank Group. “If you do business with U.S. firms, buyers will receive quality products and fair value, and they won’t be strapped with unsustainable debt.”

Newt Gingrich: The Export-Import bank is crucial to America’s ability to compete with China (Newsweek)

In the age of Huawei, the Belt and Road Initiative, and China’s state-sponsored companies, we need the US Export-Import Bank more than ever. The EXIM Bank, an independent agency, provides government-backed financing for those looking to export goods and services from the United States. Since the 1930s, it has helped grow the U.S. economy and foil unfairly aggressive foreign competitors. However, due mostly to recent politics, it hasn’t been fully functioning since 2014. This needs to change—for many reasons. [Jomo Kwame Sundaram, Anis Chowdhury: Development banks needed to finance sustainable development]

George Ingram, Sally Paxton: How the new Development Finance Corporation can get off to a solid start (Brookings)

As one of its earliest principles, the leadership of OPIC has stated that it wants the DFC to set the gold standard for a modern and transparent DFI. We think that approach is essential. The private sector is increasingly being looked to as a critical source to fill the financing gap for the Sustainable Development Goals. To mobilize more of this capital, governments are turning more towards utilizing scarce public money as the catalyst. To date, however, it is not clear whether or not this is a wise investment. To what extent, for example, can we measure whether the use of public money - such as a subsidy or de-risking an investment - has actually mobilized more/better private resources? Has the use of public money resulted in improved development outcomes? Has the investment introduced a new business activity that advances development in a business sector, has it brought in a more developmentally impactful approach to business, has it created more jobs than would have happened without the public funds? Do the DFIs themselves even have the necessary information to make their case that they deserve government resources? And do DFI policymakers and shareholders have the data they need to make informed decisions about the right level and type of contributions to DFIs? The bottom-line question on all of this is: Do we know what our public resources are buying?

Manufacturing in SADC: moving up the value chain (Exim Bank, India)

Exim Bank’s study analyses the current trade and commodity export composition in the SADC region. An analysis of the global value chain participation rate for SADC countries, highlights the high rate of domestic value added embedded in other countries’ exports. In this regard, the purpose of this study is to delve on making the region a globally competitive industrial base by having India’s engagements into key potential manufacturing sectors in the SADC region. India’s investment potential in SADC manufacturing:

According to data from the Ministry of Finance and the Reserve Bank of India, India’s approved cumulative investments in the SADC region during April 1996 to March 2019 amounted to $60.5bn. Mauritius, Mozambique and South Africa are the top destinations of India’s investments in the region. India’s investments in the SADC region accounted for nearly 93.8% of Indian investments in Africa during April 1996 to March 2019, mainly dominated by investments in Mauritius. During 2010-11 to 2018-19 the cumulative Indian investment in the SADC region amounted to $51.2bn. The manufacturing sector accounted for the largest share of approved investments from India to the SADC countries (42%) of total investments received by SADC, followed by financial, insurance, real estate and business services (24%), wholesale, retail trade, restaurants and hotels (9%) transport, storage and communication services and agriculture and allied activities both accounting for 8% share in total investments by India. Mauritius has received the highest investment in manufacturing (98.7%), mainly due to the country’s offshore financial facilities and favourable tax conditions. The other SADC countries which have received Indian investments in manufacturing are South Africa, Zambia, Tanzania, Botswana, Zimbabwe and Malawi. [Note: This occasional paper, dated 30-09-2019, can be downloaded from the Exim Bank website’s publication section]

India - North Africa conclave to take place in Cairo in early November

The Confederation of Indian Industry will organize the “Regional Conclave on India - West Asia and North Africa” in Cairo in cooperation with the Ministry of Commerce and Industry and Ministry of External Affairs of the Government of India, along with the Export-Import Bank of India on 6-7 November. In a press release on Thursday, the Indian Embassy in Cairo said this is the first time that the Confederation of Indian Industry will organize a forum in the North Africa region. Hardeep Singh Puri, India’s Minister of State of Ministry of Housing and Urban Affairs; Minister of State of the Ministry of Civil Aviation; and Minister of State in the Ministry of Commerce and Industry will lead the Indian delegation. Egypt’s ministers of trade and industry and investment and international cooperation will take part in the conclave along with a number of dignitaries and businessmen from Egypt, Tunisia, Morocco, Algeria, Jordan, Lebanon, Iraq, Sudan and South Sudan.

India, France explore 3rd country projects in Western Indian Ocean region (Economic Times)

India and France have taken concrete steps to firm up their strategic partnership in the western Indian Ocean, as part of their respective Indo-Pacific strategies, within two months of Prime Minister Narendra Modi’s trip to Paris. Leaders of India, France and Vanilla Islands – consisting of Comoros, Madagascar, Mauritius and Seychelles in the western Indian Ocean – are currently meeting for the first time in Reunion Islands (French territory) for exploring economic and development partnership. India is being represented by the minister of state for external affairs V Muraleedharan at the meet. India, in partnership with France, is keen to focus on port development, blue economy, trade, connectivity, tourism, skill development, hospitality and healthcare in this resource-rich region, said people aware of the matter. India is also eyeing gas deposits in the Mozambique Channel near Vanilla Islands, they said.

Communique on cross-border coordination, partnerships, and communication for Ebola virus disease preparedness in at-risk member states (WHO)

We, the Ministers of Health and senior immigration officials of the DRC and the nine neighboring countries to the DRC, met on 21 October 2019 in Goma in the DRC; Noting with concern the ongoing outbreak of the Ebola virus disease (EVD) in north-eastern DRC and the potential risk for EVD transmission including other public health threats into the neighbouring countries; Aware that there are several African Union Member States neighboring the DRC at potential risk for EVD transmission including Angola, Burundi, Central Africa Republic, Republic of Congo, Rwanda, South Sudan, Uganda, Tanzania and Zambia. Collectively, we resolve to (extract):

Cross-border joint planning and implementation of EVD preparedness and response activities, including risk communication and community engagement campaigns; Movement of people across national borders in accordance with the International Health Regulations; and Legal and regulatory processes and logistics planning for rapid cross-border deployment and receipt of public health experts and medical personnel for EVD response; Establish the Africa Ebola Coordination Task Force (AfECT), hosted at the African Union secretariat in Addis Ababa, under the leadership of the Member States with support from the Africa CDC, WHO and other relevant partners to support the cooperation and collaboration described above. Whilst AfECT maintains political oversight through AU institutional arrangements, technical support would be facilitated through the WHO sub-regional technical coordination platforms in collaboration with the Africa CDC. [Related: Statement on the meeting of the International Health Regulations (2005) Emergency Committee for Ebola virus disease in the DRC]

South Africa: Beitbridge port of entry challenges  (SA Parliament)

The Select Committee on Security and Justice earlier this week visited the Beitbridge Port of Entry. The committee received a joint briefing from the Department of Home Affairs, the SA National Defence Force and the South African Police Service who spoke to the responsibilities of the respective departments in managing the border crossing and the systematic challenges they faced. The port services an average of 30 000 trucks, 40 000 light motor vehicles and 10 000 buses a month. The committee noted the vast infrastructural challenges relating to poor road conditions, human resources challenges faced by the departments and the issues around the almost non-existent border fence. Officials from the Border Management Authority requested that the committee assist by asking the Department of Public Works to prioritise these issues, which pose a particular challenge to the South African National Defence Force that has to patrol an area stretching up to 1 000 kilometres. The committee heard that the SANDF budget and its human resources are just not enough to expand on these, and that the redeployment of members from Namibia to the Beit Bridge Port could possibly be an option to investigate. The committee thus notes that areas of high vulnerability need to be prioritised given the lack of resources. Whilst taking cognisance of these challenges, the committee noted the view that the illegal crossing on the South African borders is not necessarily what contributes to the large number of undocumented foreign nationals in the country, but rather those who enter through the legal channels and end up settling in South Africa despite (sic) overstaying their visas.

NACCIMA: Nigeria’s border closure in order (ThisDay)

The Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture has said the recent closure of the country’s borders “is in order and long overdue”. NACCIMA also maintained that the federal government should resist any pressure from any quarters for the reopening of the borders. Speaking to newsmen in Minna on Wednesday, the Director General of the Association in Niger State, Alhaji Adamu Salihu, however asked the federal government to seize the opportunity created by the closure to reform the nation’s ports. “The closure of the borders is a welcome development, it has been long overdue. We should seize this opportunity to reform our ports. We should eradicate human rats in the ports and make the ports safer,” he said. Salihu also tasked the federal government to, while the borders remain closed, put structures in place so that imported goods will be received in good order, insisting that “if we make this effort and no reforms in the ports, it will amount to wasted efforts, time and money”. “This is a good policy. All they need to do is that in the short run the structures should be put in place to avoid any backlash. The closure of the borders is a welcome development, it has been long overdue. We should seize this opportunity to reform our ports.”

Report of the Committee on Rules of Origin to the General Council on preferential rules of origin for Least Developed Countries (pdf, WTO)

This report is being submitted by the Committee on Rules of Origin to the General Council in accordance with the requirements of Paragraph 1.10 of the Ministerial Decision of 7 December 2013 ( WT/L/917 , the “Bali Ministerial Decision”) and of Paragraph 4.4 of the Ministerial Decision of 15 December 2015 ( WT/L/917/Add.1 , the “Nairobi Ministerial Decision”) on Preferential Rules of Origin for Least Developed Countries. Under these provisions, the Committee on Rules of Origin “shall annually review the developments in preferential rules of origin applicable to imports from LDCs” and report to the General Council. Extract (pdf):

To facilitate access to origin-related requirements, the Secretariat informed Members about a collaboration with the International Trade Centre and the World Customs Organization for the development of the online “Origin Facilitator”. The tool allows users to consult and compare origin requirements, at the tariff-line level (origin criteria, origin certification and other related elements) . Because preferential rules of origin entail compliance with dozens of variables, finding a user-friendly way of navigating these requirements is a key aspect of facilitating trade. The Facilitator was publicly available at no cost. It offered a useful tool for government officials in order to identify and compare market access opportunities. In that sense, it is an initiative aimed at facilitating exports from LDCs. Members also heard updates from some preference-granting Members about ongoing efforts to examine current origin practices in light of the Ministerial Decisions. In particular, Members heard an update about the implementation of the self-certification system for registered exporters (Registered Exporter system, REX) being implemented by the European Union; Norway; Turkey; and Switzerland.

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25 Oct 2019
EXIM 2019 Sub-Saharan Africa Advisory Committee convenes interagency meeting to advance President Trump’s Prosper Africa Initiative (Exim Bank, US) The 2019 Sub-Saharan Africa Advisory Committee of the Export-Import Bank of the...
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Doing Business 2020: Sub-Saharan Africa

Economies in Sub-Saharan Africa continued to improve their business climates, with the region’s largest economy, Nigeria, earning a place among the year’s top global improvers alongside Togo, according to the World Bank Group’s Doing Business study (pdf). Economies of the region enacted 73 reforms in the 12 months leading to May 1, down from a record high of 108, and the number of countries implementing at least one reform fell to 31 from 40. The regional average ease of doing business score was 51.8 on a scale of 0 to 100, below the OECD high-income average of 78.4 and the global average of 63.0. There were several bright spots in the region. Togo is on the list of top improvers for the second year in a row thanks to reforms lowering fees for construction permits and streamlining property registration procedures, among other measures. Nigeria conducted reforms impacting six indicators, including making the enforcement of contracts easier, which placed the 200-million-person economy among the world’s top improvers. Kenya also carried out six reforms, including improving the reliability of its electricity supply and introducing an online system for social security contributions, positioning it third highest in the regional rankings, behind Mauritius and Rwanda. With four reforms implemented this year, Mauritius remains the easiest place to do business in the region, ranking 13th globally. Among other reforms, the country made resolving insolvency easier and improved contract enforcement.

Elsewhere, Cabo Verde and Eswatini each carried out four reforms, a record for both. Zimbabwe improved in five areas measured by Doing Business while the Democratic Republic of Congo, Gabon and Rwanda advanced in three. Due to active reform efforts, Niger’s and Senegal’s scores improved significantly.

The region conducted the most reforms in the areas of starting a business, dealing with construction permits and getting credit, with twelve reforms in each. Thanks to initiatives led by the Central African Economic and Monetary Community, getting credit became easier in several economies in the region. The region’s economies performed best in the areas of starting a business and getting credit, with three economies – Kenya, Rwanda and Zambia – ranking among the world’s top 10 in the latter category. On average, it now takes around 20 days and costs 33.5% of income per capita to start a new business in the region, substantially faster and less expensive than the 62 days and 305% of income per capita it took in 2003. [Download: Sub-Saharan Africa regional report (pdf)]

A special feature on the Russia-Africa Summit, which concluded today in Sochi:

(i) Declaration of the First Russia-Africa Summit: profiled outcomes

Establish a Russia-Africa Partnership Forum with a view to coordinating the development of the Russian-African relations, and designate the Russia-Africa Summit as its supreme body to be convened once every three years.

Hold annual political consultations between Ministers of Foreign Affairs of the Russian Federation and African States acting as the present, former and future Presidencies of the African Union in the period between Summits.

Make efforts to substantially expand the trade between the Russian Federation and African States and diversify it, including by increasing the share of agricultural products in import and export operations. Assist the existing bilateral Russian-African intergovernmental commissions and committees on trade, economic, scientific and technical cooperation in their work, and contribute to establishing new similar partnership mechanisms between the Russian Federation and African States.

Provide necessary assistance to major Russian companies working in African markets and entrepreneurs from African States who plan to operate in the Russian Federation through reciprocally improving investment and business climate, as well as through providing possible special preferences.

(ii) Putin seeks to double trade volume with Africa within five years. Military cooperation is set to dominate the first Russia-Africa summit in the Black Sea resort of Sochi, attended by leaders and top officials from all 54 African countries and scores of African businessmen eager to tap into Russia’s emerging market. While opening Wednesday’s summit, Russian President Vladimir Putin told leaders and representatives of Africa’s 54 countries that he would seek to double trade ties between the two partners over the next 5 years. [Putin: Russia exporting more food than weapons to Africa]

(iii) Russia-Africa trade has doubled since engagement, says Afreximbank chief. Trade between Africa and Russia has doubled in the years since the African Export-Import Bank started engaging with the Russian Export Center to promote trade between the two sides, Bank President Prof. Benedict Oramah said yesterday. Professor Oramah, who was speaking during the opening of the Russia-Africa Economic Forum organised as part of the first-ever Russia-Africa Summit taking place in Sochi, Russian Federation, told the heads of state from about 50 African countries from Africa and Russia and other participants that annual trade between Africa and Russia now stood at about $20bn as against $10bn in the past. He announced that Afreximbank and the Russian Export Center had committed to act to achieve another doubling of the trade volume in next two years. Afreximbank would offer guarantees and other programmes to address certain risk perceptions and increase trade, stated Professor Oramah. The Bank was also working with the Russian Export Centre to create a trade information portal which would provide information to businesses to facilitate trade between the two sides.

(iv) Egypt could be the hub for Russian exports to Africa: Russia’s trade minister. In a session on supporting African trade, Russia’s Trade Minister Denis Mantorov pointed to the possibility of enhancing the role of the Egyptian market as a hub for Russian products to access the African continent, where Egypt is a key trade partner of Russia and the volume of trade exchange between the two countries increased by 17% and Egypt accounts for 30% of Russia’s exports to the African continent.

(v) Putin courts Africa and offers to mediate dam dispute. Russian President Vladimir Putin on Thursday sought to expand Moscow’s clout in Africa by touting military aid and economic projects at the first-ever Russia-Africa summit and even offered to help mediate a growing dispute between two of the continent’s largest powers, Egypt and Ethiopia. Kremlin spokesman Dmitry Peskov said Putin addressed the issue with Egyptian President Abdel-Fattah el-Sissi and Ethiopian Prime Minister Abiy Ahmed in separate meetings on the sidelines of the two-day summit attended by leaders of 43 of Africa’s 54 countries. Peskov didn’t say whether Egypt and Ethiopia accepted the mediation offer, which the United States also extended in recent days after talks on the dam collapsed this month.

(vi) Russia sets up $5bn trading platform in Africa. An agreement has been reached at the Russia-Africa summit in Sochi to establish a mechanism for funding trade deals. It is aimed at giving Russian exporters access to the African market. “The deal is designed to develop cooperation with African states by arranging mechanisms of issuing loans for joint foreign trade projects,” the Russian Export Center said. It explained that the deal opens up opportunities for increasing the volume of Russian exports to Africa, including to Angola, Ethiopia, Mozambique, Zimbabwe, and other states. With a volume of more than $5bn, the platform will enable risks related to trade with African countries to be absorbed. According to REC Director Andrey Slepnyov, Russia will “attract at least 10 countries and literally open a trade corridor to the African continent.” That will create “a unique opportunity for Russian businesses to systemically expand presence in the region and consolidate on one of the most promising and dynamically developing global markets opening it for high-tech domestic export.”

(vii) Inside the Russia-Africa matryoshka: summitry, geopolitics and resources.  The paper begins with a brief overview of the drivers of recent Russian foreign policy, followed by a focus on the evolution of its Africa engagement and an analysis of the different sectors that have formed the basis of this re-engagement. The paper includes a brief overview of relations with South Africa, probably the most significant country in Russia’s Africa engagement in sub-Saharan Africa, not so much because of commercial relations but because of South Africa’s important regional and global role and its presence in many international forums. The last section focuses on what Africa could expect from Russia and how the continent as a whole should engage with Russia in the future. [The authors: Chris Alden, Elizabeth Sidiropoulos]

(viii) Sochi Summit Quick Links

Landry Signé: Vladimir Putin is resetting Russia’s Africa agenda to counter the US and China

Peter Fabricius: Putin showcases Russia’s support for Africa at inaugural economic forum

President Faure speaks on building Blue Economy partnerships at Russia-Africa Forum

Lavrov inks co-operation agreements with African countries at Russia-Africa summit

Arms, oil and influence: What you need to know about Russia’s first-ever Africa summit

Andrew Hammond: Why is everyone suddenly wooing Africa?

DW: Russia’s comeback in Africa


Rwanda hosts 1st Forum of Owners of Cotton, Textile and Apparels Manufacturing Industries (EAC)

The establishment of fully serviced industrial parks with plug and play facilties to attract investments is one of the proposed actions to gain quick wins in the promotion of the Cotton, Textiles and Apparels (CTA) Manufacturing Industries in East Africa. Themed Promoting Local Production and Consumption of Cotton, Textile and Apparels Made in the EAC Region, the two-day forum was attended by participants from the ministries responsible for industry, trade, agriculture and EAC; private sector players, CTA industry associations, private sector associations, industry associations and development partners, among other stakeholders. The overall objective of the Forum was to ensure that the Owners of CTA industries meet, discuss pertinent issues within the sector and make useful and practical recommendations to the EAC Policy Organs especially the Heads of State Summit for purposes of promoting the sector.

Opening the Forum, Rwanda’s Permanent Secretary of Trade and Industry, Mr Michel Minega Sebera, noted that CTA has the potential to create employment, improve economic well-being and widen the tax base in the region. Mr Sebera called on EAC Partner States to fast track the phasing out of the second hand clothes in order to reap the benefits of the sector. He informed the meeting that in 2016, Rwanda started implementing the Summit directives and embarked on the phase out of the second hand clothes. The PS disclosed that the phasing out of second hand clothes in Rwanda had attracted new investments in the sector and led to more than 15 new companies investing in apparels. He further revealed that the country had also developed enabling infrastructure in the exports processing zones. He noted that the region’s efforts to promote the sector comes at a good time as the region stands to benefit with the larger market as part of the Africa continental free trade area.

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tralac’s Daily News Selection

24 Oct 2019
Doing Business 2020: Sub-Saharan Africa Economies in Sub-Saharan Africa continued to improve their business climates, with the region’s largest economy, Nigeria, earning a place among the year’s top global improvers alongside...
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