News Archive September 2019

tralac’s Daily News Selection

Reporting African trade and industrialization trends, dynamics:  media workshops in Johannesburg, Cape Town, Addis Ababa

(i) Next week in Johannesburg: ECA's AfCFTA Media Hub Workshop (2-3 October). “The workshop will bring together journalists from all corners of the continent and expose them to the essentials of trade economics; national and regional trade policy analysis, and global political economy. It will also focus on new strategies to gather and report African trade news and economic issues. As well as support participants in tackling news assignments that involve economics and business data with an emphasis on how to ensure media content is exciting and relevant to their audiences.”

(ii) Reporting on the AfCFTA: a tralac training course for journalists (3-4 October, Cape Town). "We’ll discuss the state of the negotiations, providing an update on the ratification and entry into force of the Agreement, the ongoing negotiations on tariff concessions and rules of origin, as well as services sector commitments. We will also consider the second phase of the negotiations – on investment, competition and intellectual property rights. We’ll interrogate the potential of the AfCFTA to contribute to Africa’s development.  An introduction to trade data analysis to assess intra-Africa trade – with trade data visualisation techniques will also be included in the programme."

(iii) Earlier this week: An AU Department of Trade and Industry media orientation workshop in Addis Ababa on the reporting of Africa's industrialization. Mrs Esther Azaa Yambou Tankou (AU’s Department of Information and Communication): “In the media sector, it is arguably more difficult to report on economic and financial issues than ribbon cutting ceremonies. A lack of understanding and expertise can hamper economic, political and social issues reporting. Journalists, should therefore, have an aptitude to be research and analytics-oriented.”

South Africa’s Department of Trade and Industry convenes a workshop on Monday, in Johannesburg, to discuss the AfCFTA and Doing Business in Africa. The workshop will provide an opportunity for South Africa’s private sector to engage senior policy makers on aligning the agreement with the needs of business.  

A special feature on East African trade and regional integration, anchored on this wee’s EAC High Level Trade Integration Conference:

(i) Mr Steven Mlote, EAC Deputy Secretary General in charge of planning and infrastructure, said the conference was a precursor to the commemoration of the EAC’s 20th Anniversary and the 15th anniversary of the Customs Union Protocol.

(ii) EAC Secretary-General urges partner states to ratify the TFTA. The Secretary-General of the EAC has lauded the EAC’s Customs Union which, he says, has registered a number of successes including application of a common customs law, operationalization of the Single Customs Territory, the establishment of One-Stop Border Posts, the Authorized Economic Operator Programme and interconnectivity of the customs business systems. Amb. Liberat Mfumukeko says the SCT has reduced the turnaround time and tremendously cut down the cost of moving goods in the region.  At the continental level, Mfumukeko opines that progress has been recorded towards realization of the Tripartite Free Trade Area. Three EAC partner states have ratified the Agreement, which was launched in June 2015. He urged the remaining partner states to also ratify the Agreement in accordance with the timelines that have been agreed upon so as to enable all the EAC partner states maximize on the opportunities offered by the TFTA.

(iii) East African bloc urges removal of hurdles to cross-border trade (Xinhua)

Dr Richard Sezibera, chairperson of the EAC Council of Ministers, said in Nairobi that there are a number of impediments to trade, including tariff and non-tariff barriers, excessive regulation and inadequate infrastructure in border towns. "The need to address aspects related to trade costs, harassment and corruption, infrastructure efficiency, excessive regulation, and excessive requirements at borders and formalize the informal sector are important policy directions required to support informal cross-border trade and enhance regional integration," Sezibera said during the official opening of the high level conference on EAC trade integration. According to Sezibera, who is also Rwanda's Minister of Foreign Affairs and International Cooperation, the trading bloc has a lot of potential in informal cross-border trade. "Informal cross-border trade is estimated to be as high as 50% of formal trade in Africa and is a diverse source of livelihood for millions of people," he added. He noted that the EAC has considerable unexploited potential in trade, but intra-regional trade is far below its potential.

(iv) EAC has made tremendous progress says Kenya Cabinet Secretary (East African Business Week)

Tremendous progress has been made in pursuing the EAC integration agenda notwithstanding any challenges on the path as any ambitious project will not be without challenges. This is according to the Cabinet Secretary in the Ministry of East African Community and Northern Corridor Development in Kenya  Adan Mohamed who was the Chief Guest during the official opening of the high-level conference on EAC Trade integration in Nairobi. “I am aware of the progress made in the realm of trade facilitation including the transformation of the Customs processes, the introduction of technology in driving regional business, re-orienting the border operations under the coordinated border management concept, and the re-engineering of the immigration procedures. I am proud as an East African that today fellow citizens of East Africa can move around without any hindrances. The one network and one tourist visa for some Partner States is another bold step we have taken and I am hopeful that all the Partner States will soon be on board,” said Mohamed.

(v) Kenneth Bagamuhunda, EAC's director general of customs and trade: "A single currency regime is expected to lower the cost of trading transactions among partner states and hence boost level of imports and exports within the region."

(vi) EAC seeks to spur demand for local textiles (Anadolu)

An East African bloc’s decision to promote the wearing of locally made attire and annual exhibits in the member states will help the garments gain popularity, said experts. The optimism follows the EAC’s recent declarations of Fridays as Afrika Mashariki (East) Fashion Day, during which the people in East Africa will wear attires manufactured in the region. Afrika Mashariki Fashion Week would also be held annually in the first week of September for trade fair and exhibition of locally designed textiles and garments. The declarations are expected to get effected in all EAC member states - Rwanda, Uganda, Kenya, Tanzania, Burundi and South Sudan. According to Simon Peter Owaka, senior public relations officer at the EAC Secretariat, the declarations are part of strategies adopted by the region to stimulate demand for locally made textiles and garments, and to build brand identity. “The declarations would enhance local consumption of East Africa-made products and enhance our productive capacity in the textile sector. Imagine a foreigner moving in EAC countries on a particular Friday and finding people donning similar attire -- a strong message of an intact community,” Owaka told Anadolu Agency.

(vii) Kenya: Declining quality of tea blamed on factory rivalry (Business Daily)

Stakeholders in the tea industry say the rapid growth in capacity of factories is compromising the quality of the beverage in the market, leading to falling prices of the commodity in the international market. The declining quality, say tea buyers, has negatively impacted the competitiveness of Kenya’s tea, hence reducing demand. “Factories are now competing for volumes and not quality. As such, the quality of our Kenyan tea that we used to enjoy some five or 10 years ago has been going down, affecting the price of the commodity,” said Peter Kimanga, a tea exporter with Global Tea Commodities. “Kenyan tea is of such a high premium in some consuming markets that the importers keep track of the auction trends on a weekly basis and will make purchase orders for a specific plantations or garden marks,” said East African Tea Trade Association managing director Edward Mudibo. The Tea Directorate says about five factories have been registered in the last three years while the existing ones have been expanding their production lines. Agriculture and Food Authority (AFA) director general, Anthony Muriithi said they have been addressing the issue of quality by carrying out of quarterly checks in factories.

(viii) Uganda trade minister addresses UIOGS on local content and diversification (Oil Review Africa)  

Looking at the broader economic picture, Ms Amelia Kyambadde, said regional cooperation was important if the oil and gas industry was going to succeed in Uganda. She said it was vital that there is “harmonisation of framework in the region”, such as standards for oil and gas production. In particular, Ms Kyambadde said she was keen to collaborate with Kenya and Tanzania. “We need regional consensus, we need to normalise methods and policies for the management of industry and ensure certification, recognition of our oil and gas, and think outside the borders,” she said. “We need to ensure benchmarks with other oil-producing countries to share knowledge, to share information, to share expertise.” She called for more “aggressive infrastructure development” such as the 1,440km pipeline between Uganda and Tanzania, called for rail projects to be fast-tracked with standard gauge tracks across neighbouring countries, and pointed out the opportunities in the marine transport sector because “we have a lake between us”. As well as regional harmonisation of relevant regulations, Ms Kyambadde said meeting international standards was important.

(ix) Eritrea and the AfCFTA (The East African)

While African customs officials say AU officials are working on persuading Eritrea to sign the agreement, chances of realising a breakthrough remain low. Eritrean government officials could not be reached for comment by press time. “Eritrea does not produce much, which could explain why it is not bothered about the AfCFTA. However, despite economic and financial sanctions imposed on some African countries, member states are still able to trade fairly well with each other. I visited Eritrea the other day and I noticed quite significant volumes of imports,” said Peter Malinga, a trade expert who attended the Kampala meeting of director-generals of customs, revenue authority officials and trade experts from AU member states.

ACTFA seeks to improve intra-Africa trade (World-Grain)

Although sub-Saharan Africa has potential key drivers for the growth in demand in cereal grains, such as being home to 13% of the world’s working age population, a rapid urban population growth at 3.5% annually and increasing consumer spending that surpassed the $1.4 trillion mark in 2015, the economic blocs in the region still face the challenges of completely eliminating import bans, protective tariffs and trade-distorting subsidies. Uganda and Rwanda, for example, have imposed a 75% import duty and value-added tax on all rice imports from Tanzania. This is because Tanzania, which produces 80% of East Africa’s rice, receives duty free importation of rice from Asia, which then is re-exported to other EAC countries

Rwanda: Volkswagen gambles on ride-hailing to break through African roadblocks (The East African)

When Volkswagen’s Africa boss Thomas Schaefer set out to conquer the continent, he quickly realized he needed more than a flashy new product. He needed a new business model. Study after study showed the same thing: there was no demand for new cars. Low purchasing power and a lack of financing put them out of the reach of most Africans, while competition from used imports gave buyers a cheaper alternative. So Schaefer is placing a $50m bet on a new business built around ride-hailing and car-sharing. And VW is using Rwanda as its laboratory. While VW sees Kigali is an ideal test ground, offering a data sample that’s statistically significant at a reasonable cost, critics say the city - where Uber and Bolt are absent - is not an accurate gauge of conditions in bigger markets. Schaefer cautioned that the experiment was still in its early stages, adding he’d like to give the business model a two-year test run before assessing it.

Africa dreams of free trade as red tape rules on the ground (Reuters)

The speed limit is 110 km per hour on the new highway that Abadalla Chande uses to haul his truckload of animal feed from Tanzania to Kenya, two nations that share a common market often hailed as a model for the continent. But Chande is parked on the tarmac, caught up in a snarl of red tape. He is in a long line of trucks waiting for cargo to be scanned or for documents to be checked by officials. One of the most successful of Africa’s many trade blocs, it should be superseded by a continent-wide free trade area that will begin trading in July next year. But businessmen say the delays plaguing the East African union bode ill for the future of the unified market. “Sometimes we get to the border crossing and spend five, six days or even a week,” said Chande, who said he’d been waiting there more than a day. Behind him, police pried apart shouting drivers as hundreds of trucks slowly belched and groaned towards the Kenya-Tanzania border in Namanga town. Kenyan and Tanzanian officials say that even in a free trade area, goods crossing borders must be checked by multiple agencies including the tax authorities, plant health inspectorate, departments of human health, livestock control and forestry. This takes time.

Africa Risk-Reward Index 2019: reforms and resistance (Control Risks)

In the fourth Africa Risk-Reward Index, Control Risks and Oxford Economics analyse the impact of ambitious reform agendas in Angola, Ethiopia and South Africa. We also focus on relationships and rivalries in the East African Community, and the impact of geopolitical competition in a post-Bashir Sudan. The Africa Risk-Reward Index plots each country’s performance relative to its African peers, by comparing some of the continent’s largest and emerging markets, offering investors a comparative snapshot of market opportunities and risks across Africa. [Note: The report can be downloaded after registration]

Standard Chartered’s Trade20 index: Mapping the rising stars of tradeCôte d'Ivoire, Kenya and Ireland join India and China in the top five markets with the greatest potential for future trade growth. 

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tralac’s Daily News Selection

27 Sep 2019
Reporting African trade and industrialization trends, dynamics: media workshops in Johannesburg, Cape Town, Addis Ababa (i) Next week in Johannesburg: ECA's AfCFTA Media Hub Workshop (2-3 October). “The workshop will bring...
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tralac’s Daily News Selection

David Luke, Phil Rourke: Canada, Africa and the inclusive trade agenda  (Canadian Foreign Policy Journal)

Canada's inclusive trade agenda has been put forward as part of the solution to ensuring more and better jobs for more people in both developed and developing countries. The agenda, however, remains a work in progress. Discussions have too narrowly focused on process outcomes through the promotion of a trade policy making process that is more consultative, inclusive, participatory and transparent. Canada's support for an inclusive trade agenda can have a real and meaningful influence globally if it is more clearly defined based on a common understanding on what elements are essential for trade and trade policy to yield real change and substantive benefits for all. Formal structures for consultations to take place alongside and to feed into and influence the trade policy making process are required. Africa is the best starting point for Canada to put such a policy into practice with real impact on the ground.

UNCTAD's Trade and Development Report 2019: Financing a Global Green New Deal

Extract: Making development wag the debt tail .  A brief overview of essential features of the current trading positions for three main developing country trade areas - MERCOSUR, ASEAN and SADC -  provides some preliminary insights into the feasibility and potential benefits the use of internal clearing mechanisms might provide. This, first, looks at the share of intraregional commercial trade in member states’ overall commercial trade. The higher the share of intraregional trade, the higher the scope for intraregional monetary arrangements to help expand this.  As figure 4.12 shows for three developing country groupings with a history of economic integration in Latin America, Asia and Africa, while this share remains relatively low overall, it has been rising steadily in both ASEAN and SADC, but less so in the case of MERCOSUR. Second, the net commercial trade balances within country groupings also matter, since the idea of a regional clearing union is precisely to use the extension of trade credits to participant deficit countries to replace covering trade imbalances through compensating external capital inflows. As figure 4.13 highlights, these intraregional dynamics are diverse.

By contrast, SADC presents a more difficult case: While SADC, with the exception of oil-exporting Angola, is a deficit region with the rest of the world, and intraregional clearing to reduce the need to cover trade imbalances through external capital flows and substitute these for the extension of intraregional trade credits would, in principle, be beneficial, the current intraregional trade dynamics are not favourable. Other than South Africa, most member countries are in surplus with the region, limiting the scope to which a wider number of member countries could benefit from internal clearing at present.

Thus, core features of current trading patterns provide a varied picture in regard to the benefits that could be derived from the use of regional clearing. While some regions (MERCOSUR, ASEAN) could benefit immediately, if to differing degrees, others (SADC) face more formidable obstacles. However, the purpose of such clearing arrangements is of course also to increase intraregional relative to extraregional trade, such that current trade patterns change. This, in turn, also requires political will. For regional clearing unions to function properly in the interest of freeing up own financial resources and policy space to pursue national development strategies, regional interests have to be prioritized, sometimes over immediate national interests, in the understanding that reverse priorities will, ultimately, undermine collective as well as national developmental goals.

Press releases:   Forget securitization, backing public banks is best for sustainable developmentUN ecalls for bold action to finance a global green new deal and meet the SDGsManaging capital could provide a $680bn annual windfall for financing 2030 agenda

Downloads by chapter (pdf):  Overview;  Chapter I:  Trends and challenges in the global economy;  Chapter II:  Issues at stake;  Chapter III:  A road map for global growth and sustainable development;  Chapter IV:  Making debt work for development;  Chapter V:  Making private capital work for development;  Chapter VI:  Making banks work better for development

The inaugural UN summit on the progress of the 2030 Agenda for Sustainable Development has closed.  Download country statements here, and/or the report of the Secretary-General on SDG Progress 2019 (Special Edition)

The AU's Legacy Project on Diaspora Investment, Innovative Finance and Social Enterprise in Africa (AU)

In 2012 at the Global African Diaspora Summit in South Africa, the AU Heads of State and Government agreed to the creation of a diaspora investment fund, as a legacy project. In September 2018, the AUC and GIZ commissioned GK Partners ‘to establish the design and implementation framework for the African Diaspora Investment Fund in accordance with the Action Plan of the Global African Diaspora Summit’. This ‘Strategic, Business and Operational Framework for an African Diaspora Finance Corporation’ is the result of the consultancy assignment.  Extract (pdf): 

It has not been possible to find any credible case study of a regulated diaspora mutual fund or similar products, run and subscribed by the diaspora, investing in debt and equity portfolio investment products in Africa. There is evidence that a range of different groups, organisations and institutions are discussing, designing or developing Diaspora Portfolio Investment (DPI) products, but there are hardly any products trading in the regulated African and international capital markets. In practice, DPI to Africa occurs at a relatively low level, through: remittance savings deposited in portfolio products; diaspora investment clubs investing in Treasury Bills; and specialist Diaspora Investment Accounts run by African banks. The great potential of using diaspora bonds to finance development in Africa has been argued by diverse studies and advocated by the World Bank, IMF, African Development Bank, diaspora organisations and a wide range of other reputable institutions. However, only four African countries have ever issued bonds package and targeted specifically for the African diaspora. Of the Diaspora Bonds issued by Ghana, Ethiopia, Kenya and Nigeria, only the 2017 Nigeria Diaspora Bond was fully subscribed. There is a big gap between the potentiality, declared enthusiasm and general rhetoric about diaspora bonds, and the actual reality in the marketplace.

For the purpose of business simplicity, operational feasibility, and commercial viability, it is recommended that an AU-backed African Diaspora Finance Corporation (ADFC) should focus on the delivery of a core diaspora investment programme comprising a small number of product classes, namely Bonds, Mutual and Endowment/Trust Funds. The DPI products go beyond remittances, and target diaspora savings and Innovative Finance contributions. The key elements of the investment strategy help define the framework for business implementation and operations, covering the essential topics of products, services, operational systems, processes, structures, governance, compliance and management. The proposed ADFC is not an opportunistic corporate venture; it is a continental social enterprise which will use business and market mechanisms to pursue public benefit and African development. As such, it lends itself to practical Diaspora Public Private Partnership (DPPP), Blended Finance and cross-sectoral collaboration with diverse strategic, institutional and operational partners. Together with policy advocacy partners, ADFC can be a ‘development activist’ investor and market marker, working to reduce market failure and sectoral dysfunction. ADFC shall work with a wide range of relevant African institutions, international development partners, multigenerational Diaspora, and Friends of Africa.

The AfDB has updated its 2008 report: Revisiting reforms in the power sector in Africa

This report updates previous AfDB and Association of Power Utilities of Africa (APUA) assessments of power sector reforms in Africa. APUA conducted a study in 2008 on reforms in the African power sector, focusing on 19 countries. The 2008 study examined the reasons, drivers, and triggers underlying reforms; actors promoting the reforms; the design and implementation of reforms; the impacts on utility performance; and the key success and failure factors of reforms. The 2008 study was complemented by a Compendium of best practices (2009), drawn from nine country case studies.  With this report, the AfDB and APUA examine African experiences to provide valuable lessons on the implementation and success factors of reforms. These lessons should guide the design of policies, programs, and regulatory frameworks to adapt to new challenges. Understanding the policy implications is essential to support efforts to catalyze Africa’s progress, or to facilitate a ‘leapfrog’ development with respect to other regions. This report also sharpens the focus on mapping and answering new needs and concerns that derive from recent technological trends, innovations, and transformations affecting the economy, politics, and power sector.  Extract:  

Managing  the  complex  political  economy  of  power  sector  governance  remains  a  challenge  for  many  African countries. The sector is economically central and therefore highly politicized, which creates a contested discussion around reforms.  Opening  up  capital  investment  flows  in  the  African  power sector is often at the forefront of reform goals. The fastest-growing sources of private sector investment in   the   sector   are   IPPs,   alongside   Chinese-funded   projects.  IPPs  are  now  present  in  over  30  countries,  with  270  operating  or  in  construction  totaling  over  27  GW  of  capacity.  These represent about $51.7bn in investments.  Transmission investments have  not  benefited  from  the  same  influx  of  private  investment  as  generation.  Only a handful of countries have some form of private participation in transmission. Private management has been introduced in the form of concessions, affermage, and full privatization programs in different segments of the power sector in several countries.  Occasionally, this has caused controversy and even contract reversal. The quality of governance—including  corruption  levels,  rule  of  law,  and  regulatory  environment—is  a  key  factor  to  support  transparency  and stability for private investment in the sector.

Mini-grids  and  off-grid  electricity  supply  models - especially those that harness small modular renewable generation  technologies - are  increasingly  attractive  and  cost-competitive  for  remote  communities.  Over half of study respondents (all in sub-Saharan Africa) report the existence of a mini-grid industry in the country. These industries are rapidly growing, especially with support from development institutions, notably the AfDB.

 

Trapped in illicit finance (Christian Aid)

Our estimates show that IFFs cause tax losses of $416bn in the global South. This is money that could enable governments to deliver much-needed public services, and bring us closer to a world where all experience dignity, equality and justice. As eminent economist Professor Jayati Ghosh stated in the report foreword: ‘Illicit financial flows – both illegal and legal – may be the major constraint to development and achieving human rights today’. World leaders have previously committed to fight IFFs. At the Third International Conference on Financing for Development (FfD) in 2015, participants agreed to ‘substantially reduce illicit financial flows by 2030, with a view to eventually eliminating them’. A similar commitment was made when the UN 2030 Agenda was agreed. However – and this is the crucial point – what has been missing until now has been a robust definition of IFFs. Governments of the global North insist on a legalistic definition that would only capture flows of money universally accepted as being illegal, eg, money laundering or corruption. However, we and many of our partners in the global South believe what matters is not whether flows of money or tax practices are legal, but whether they are abusive, harmful or limit governments’ ability to deliver on their human rights obligations.  For instance, this report (pdf) documents abusive practices that have harmed Nepal – a country that is still recovering from a major earthquake in 2015. The events outlined below shine a light on our broken economy and underscore the urgent need to stem the bleeding caused by IFFs. That’s why Christian Aid is calling for the debate around IFFs to shift towards a rights-based one. We want the definition of IFFs broadened to refer to ‘crossborder flows of money that are either illegal or abusive of laws in their origin, or during their movement or use’. It is not about whether it’s illegal, but immoral.

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tralac’s Daily News Selection

26 Sep 2019
David Luke, Phil Rourke: Canada, Africa and the inclusive trade agenda (Canadian Foreign Policy Journal) Canada's inclusive trade agenda has been put forward as part of the solution to ensuring more and better jobs for more...
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tralac’s Daily News Selection

Tributes continue to pour in following the death of Nigeria's chief trade negotiator and one of the AfCFTA's architects, Ambassador Chiedu Osakwe.  A selection:

(i)  David Luke: Chiedu was a great African. A man who believed trade is a sustainable road out of poverty in Africa; a man who chaired final stages of AfCFTA negotiations with wit, humor and skill; a man who worked hard to secure Nigeria’s signing deal; and I’ve lost a friend of over 20 yrs.

(ii)  Ambassador Albert Muchanga: Heard with sadness, passing away of brother and giant of AfCFTA, Ambassador Chiedu Osakwe. He contributed immensely to what AfCFTA is and will be. Condolences to family, people and the Government of Nigeria.

(iii)  President Buhari: "President Buhari commiserates with all friends, relations and professional associates of the deceased, who served the country for many years as Foreign Service Officer, before joining the WTO, and later accepting to return to the country as a trade adviser to the Ministry of Industry, Trade and Investment, and Director-General of NOTN. The President affirms that the intellectual depth, fervour and sense of patriotism that Amb. Osakwe handled will be sorely missed, especially the front-line and historical role of chairing the Negotiating Forum of the African Union from June 2017 to March 2018, during which time the negotiations were concluded on the Agreement Establishing the African Continental Free Trade Area."

(iv)  Olu Fasan: The African Union should honour this great African. The AfCFTA negotiations were going nowhere until he was asked by the AU to lead them in 2017 and he turned the negotiations around. He should be honoured posthumously - perhaps naming the AfCFTA Secretariat building after him!

(v)  Sand Mba: My role model Ambassador Chiedu Osakwe, DG, Nigerian office for Trade Negotiation has passed on. He was the finest trade negotiator in the world that originated from Nigeria. A trade negotiator personified and a strong pan Africanist that was dedicated to Africa development.

(vi)  Paul Okolo: Even as his health was failing, Osakwe soldiered on passionately, strenuously canvassing Nigeria's position on the AfCFTA. One can safely say he finished well when he saw President Buhari sign the trade deal in July in Niamey. He'll be greatly missed.

(vii)  The Africa Report: Chiedu Osakwe’s passing may hit free trade ambitions. One of the band of tireless and exceptionally qualified Nigerians who pushed the country forward beyond the glare of the limelight, Ambassador Osakwe was one of the strongest advocates for the creation of the AfCFTA.

(viii)  CNBC multimedia: Nigeria remembers trade icon, Chiedu Osakwe who passed on at 64.

Selected trade policy events now underway: Gaborone, Lusaka

(i)  The 53rd meeting of the SACU Commission began yesterday in Gaborone and will conclude today. The 54th meeting of the SACU Commission is scheduled for 3-4 December 2019, in Windhoek. The schedule of associated prepatory meetings can be accessed here.

(ii)  A workshop to validate Zambia’s strategy for the implementation of AfCFTA Agreement starts today in Lusaka and will conclude tomorrow. The workshop will also review the proposed Terms of Reference for the National AfCFTA Committee on the AfCFTA to ensure the terms provide a solid foundation for the required leadership in the implementation of the AfCFTA Agreement in Zambia.

Outcomes of selected recent trade policy events: 

(i)  African Multidimensional Regional Integration Index training workshop (Lusaka). The AMRII, therefore, in part, responds to the Union’s quest for monitoring and evaluation tools. The new index is composed of 7 dimensions and 39 indicators, which are both qualitative and quantitative. It consists of thresholds for assessing the RECs and identify those lagging behind in the implementation of integration plans and programmes such as the Abuja Treaty and Agenda 2063. This new index was approved by the 3rd STC of Finance, Monetary Affairs, Economic Planning and Integration, in March 2019 as the main tool for evaluating African regional integration. The AU’s Department of Economic Affairs has since rolled out training workshops for member states to facilitate better understanding of the methodology and tool and to also obtain technical inputs from experts, before its final utilization as the sole technical tool for assessing, monitoring and evaluating Africa’s integration process.

(ii)  Malawi's recent AfCFTA sensitization workshop. The workshop mapped out specific benefits of the AfCFTA for Malawi, such as access of Malawi's products and services to 1.2 billion people; creation of business opportunities for Malawians; promoting industrialization for the country due to increased market; infrastructure development; amongst others.

(iii)  35th session of the ICE of Senior Officials and Experts for Central Africa (Malabo). A motion was made for upgraded laws and regulations to cushion the smooth take-off of the digital economy accompanied by appropriate institutions to peddle progress, as well as for shared cross-country visions for the digital age. Mr Norberto Bartolomé Monsuy, Adviser at the Presidency of Equatorial Guinea on digitization: “Our subregion is one of the smallest in the world, so it is time to break our silos and work together as a team,” he said in a candid vote for regional integration in all spheres but more so in the digital ecosystem."

EAC locks out duty-free car imports from South Africa (The EastAfrican)

Players in the automobile sectors from the EAC and SACU are developing a joint policy to encourage motor vehicle manufacturing that is beneficial to both blocs. This development comes at a time when the TFTA tariff negotiations launched more than four years ago are near conclusion. The two economic blocs have had a prolonged battle over whether to abolish the contentious 25% import duty under the Tripartite Free Trade Area.  The two blocs have agreed that import duty on some motor vehicle parts will be abolished within the first five years of the TFTA, and others will enter duty free as provided under the EAC CET. The move ostensibly curbs a massive influx of motor vehicles from South Africa into the EAC region once the more than 700 million-people TFTA comes into force. It is estimated that the number of vehicles imported into East Africa each year has grown to over 250,000 and is expected to reach 500,000 by 2030. “We have agreed to discuss the sector in terms of the regional value chain and not liberalisation of motor vehicles coming from SACU,” Kenya’s Principal Secretary in the Department of Trade Chris Kiptoo told The EastAfrican.  The EastAfrican has also established that EAC and SACU have agreed to retain the more than 25% duty as provided for under the existing EAC Common External Tariff to all imports of sensitive dairy products such as milk, yoghurt, cheese and butter into the EAC bloc. Those classified as not sensitive will be liberalised through a five-year duty phase down after the TFTA enters into force.

Linking Southern Africa into South Africa’s global value chains (UNU-WIDER)

The objectives of the study are two-fold: First, it identifies the existing lead products of South Africa, in which South Africa forms its own GVCs, and estimates the potential market share that Southern African countries could capture in South Africa’s markets by supplying intermediate inputs for these lead products. This provides a basis for selecting products for potential investment to increase regional integration in Southern Africa. Secondly, narrowing the analysis to the agricultural sector—a key regional priority sector with immense potential for industrial growth and large-scale employment—the study identifies existing agricultural lead products in South Africa, and the ‘new markets’ to which South Africa can export. This is intended to highlight products in which South Africa can expand its existing GVCs to new markets and potentially increase regional integration.  [The authors: Karishma Banga, Neil Balchin]

An evaluation of the single currency agenda in the ECOWAS region (Brookings)

The Eco will clearly not be the panacea for West Africa’s myriad problems, including high levels of unemployment, especially among the burgeoning population of youth and the increasing numbers of the poor. The lessons from the eurozone highlight continuing challenges among a group of highly developed countries with very strong institutions. ECOWAS will do well to heed these lessons. Second, efforts by member states to strengthen domestic macroeconomic frameworks are important. Third, concerted efforts must be made to reduce the inordinate bureaucratic delays that severely constrain exports and imports at the border. Launching the single regional currency, the “Eco,” by January 2020 is, at best, an expensive distraction that the people of West Africa can ill afford at this particular moment. [The author: Aloysius Uche Ordu;  Peter Kristensen: What is happening on West Africa’s coast?]

US-Africa trade and investment relations:  Responses to EXIM Competitiveness Report (2018)  (pdf)

(i)  EXIM 2019 Sub-Saharan Africa Advisory Committee Statement:  Africa is richer, freer, and offers more opportunities to the United States than the continent did a few decades ago. If the American business community does not engage there, Africa will take its business to China and other countries. By any number of metrics, Africa is going to be one of the world’s greatest business opportunities of the next 50 years. EXIM has a critical role in helping American business take advantage of these opportunities, and, in so doing, create and sustain jobs in the United States. Africa does not receive the attention that it deserves in terms of its countless entrepreneurs, spectacular growth, and the amazing progress that has taken place in recent years. Today Africa’s middle class encompasses approximately 350 million persons.  Forty percent of Africans now live in cities, and 50% will live in cities in ten years. Widespread advancements in technology have greatly expanded communications across the continent. For example, there are now more than 650 million mobile-phone users in sub-Saharan Africa. According to many estimates, sub-Saharan Africa will have a larger working-age population than China and India combined in 30 years. This “demographic dividend” can be expected to lead to accelerated economic growth. The United States would do well to find ways now to share in that growth potential, especially considering that Africans in business throughout the continent continue to tell us that they want to buy from Americans.

Today, China is the number one exporter of goods to 19 of 48 sub-Saharan African countries and has become Africa’s largest trading partner. Forty countries on the continent have signed bilateral trade agreements with Beijing. If Africans view the United States only as a provider of foreign aid, at some point they are going to question the US commitment to the continent. It is important that the United States offers a viable and more favorable alternative. EXIM Bank is a critical instrument of engagement to reframe the relationship between the United States and Africa as a mutually beneficial economic partnership. If the United States does not have a strong EXIM, that will make it much harder for American businesses to engage in Africa and to realize the opportunities on the continent. In summary, Africa offers tremendous business opportunities for the United States.

(ii)  EXIM 2019 Advisory Committee statement:  Based on a review of the overall landscape, it is clear that the export credit environment has undergone a fundamental change in a short period of time. There are significant new state actors multiplying the range of financing options being offered to exporters and buyers. In particular, the Advisory Committee concurs with and would draw attention to the report’s findings regarding the aggressive growth of Chinese export credit agencies  activities. In 2018 alone, it is estimated that China provided more than $500bn of export credit—in just one year approaching the $610bn that EXIM has financed in its entire 85-year history, in nominal value. In fact, China’s export finance activity is larger than all the other export credit agencies in the G7 combined. And in the larger picture, China today is the world’s largest official creditor, possessing a portfolio more than twice the size of the World Bank and IMF combined.

The Advisory Committee was struck by the changes occurring in Chinese export credit activity that have fundamentally transformed the nature of official export credits, stimulating other export credit providers to broaden their offerings of unregulated and other, more opaque forms of support. EXIM’s Competitiveness Report accurately documents how extensively foreign ECAs have expanded programs aimed at embedding their small- and medium-sized exporters into the global supply chain to the detriment of US exporters, particularly small businesses. Indeed, the world economy is four times the size of the US economy. To ignore this development is to resign ourselves to a reduced presence in world geopolitical affairs and accept a lower standard of living for Americans in the long-term future. Export promotion now also has become a critical lever for macroeconomic growth for many governments. Other governments are strategically using ECAs to influence procurement decisions in ways that hinder the participation of US firms.

Witney Schneidman: AGOA 2.0 must embrace Africa’s new common market (The Africa Report)

Most specifically, reciprocity needs to replace the non-reciprocal structure of the current trade relationship. AGOA 2.0 also needs to be developed in a manner consistent with the implementation of the AfCFTA. AGOA’s benefits should be extended past 2025 as long as agreement has been reached on the phase-in of mutually reciprocal trade benefits. The phase-in periods should be different for Africa’s low-income, lower-middle-income and upper-middle-income countries. Revising the AGOA framework should be a priority in the US-Africa relationship as US goods and services are being increasingly discriminated against in Africa – at a time when the commercial relationship should be deepening. Given the EPAs, for example, a refrigerator or tractor being exported from an EU country will enter the South African market with a 4.5% tariff. That same refrigerator or tractor coming from the US will face an 18.4% tariff. Not only does this stifle the US-Africa commercial relationship, but it also discriminates against African consumers and companies, who will automatically find American products to be more expensive.

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tralac’s Daily News Selection

25 Sep 2019
Tributes continue to pour in following the death of Nigeria's chief trade negotiator and one of the AfCFTA's architects, Ambassador Chiedu Osakwe. A selection: (i) David Luke : Chiedu was a great African. A man who believed...
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tralac’s Daily News Selection

Featured tweet, Yinka Adeyemi: Chiedu Osakwe, Nigeria's chief trade negotiator, who chaired the Africa process that yielded the AfCFTA in Rwanda is dead. Was a global authority on trade negotiation and former WTO director.

Selected trade and development event listings for the week ahead:

(i)  Profiled EAC events:  Regional meeting to review the Draft EAC Common Market Protocol evaluation report (22-23 September, Nairobi);  EAC High Level Conference on Trade Integration (25-27 September, Nairobi);  Sectoral Council on Agriculture and Food Security (23-27 September, Arusha)

(ii)  The 35th Session of the ICE for Central Africa starts today in Malabo on the theme Digital transformations and economic diversification in Central Africa

(iii)  The WEF's Sustainable Development Impact Summit starts tomorrow in New York

(iv) A reminder: UNCTAD's Trade and Development Report 2019 will be launched on Wednesday

(v)  The high-level Dialogue on Financing for Development takes place on Thursday in New York

(vi)  The programme for the WTO's Public Forum (8-11 October, Geneva) on the theme Trading Forward: Adapting to a Changing World, is now available.

Updating South Africa trade policy: comments by BUSA in response to the National Treasury's economic strategy document (pdf, Agbiz)

The Policy Paper’s focus on trade and trade policy is important. The promotion of exports and increasing export capacity is critical, as is a smart import strategy. Appraising South Africa’s current trade strategy (last updated in 2012), both in terms of its substantive scope and our strategic partnerships, should be a key priority for government. Although the links between trade and industrial policy are recognised, important gaps seemingly remain. An example of this is that South Africa does not yet have a trade in services strategy. This is alarming given that services are not only important as tradeable (evidenced by the commercial presence established by many South African services suppliers across the  African continent) but are also integral to the export of goods. The role of South Africa’s logistics, wholesale and retail distribution suppliers across the continent in taking agricultural and industrial exports to these markets provides ample evidence of these linkages. Services are therefore essential to trade facilitation. Given that more than two-thirds of South Africa’s GDP is accounted for by services, the lack of a trade in services strategy is incomprehensible. Furthermore, the services sectors in the domestic context offers significant opportunities for innovation, diversification and transformation, especially for youth. Services sector development and regulatory reform should therefore be correspondingly high on the agenda.  [Wesgro: Cape Town companies sign export deals worth over R1.8bn; Government to ban foreign business from 'certain sectors']

Kenya: Mombasa port records decline in transit cargo (The East African)

The port of Mombasa recorded a sharp decline in transit cargo destined to Ethiopia, Tanzania and Burundi in the first seven months of the year even as Uganda, Rwanda and DR Congo raised their usage of the Kenyan port, official data has revealed. Goods on transit to Tanzania from Mombasa dropped by 9.4% to 141,000 tonnes in seven months to July this year, with tonnage expected to drop much further with increased usage of the $345m World Bank-funded Dar es Salaam Maritime Gateway Project.  Kenya Ports Authority data also shows that Ethiopia, expected to be a key player in the Lamu Port South Sudan Ethiopia Transport (Lapsset) Corridor project, did not use the Kenyan port of Mombasa in the seven months to July, even as next month’s unveiling of the Lamu ports’ first berth draws closer. KPA data showed transit goods to Ethiopia dropped to zero from 1,000 tonnes. Ethiopia’s drop could be attributed to its investment in two of Djibouti’s ports and also usage of Somaliland’s ports. The KPA data shows that Burundi, also a client of the Dar port, is dumping Mombasa as its cargo volumes in the seven months dropped by more than 90% compared with the volumes traded over a similar period last year. Imports to Burundi through Kenya plummeted to 1,000 tonnes compared with a total 21,000 tonnes during the same period last year.  Partly helped by friendly relations and continued investments in the Northern Corridor infrastructural development, Uganda, Rwanda, South Sudan and the Democratic Republic of Congo remained bright spots for the Mombasa port.

Tanzania sees 2019/20 cashew nut output up 33% - agriculture minister (Reuters)

Tanzania expects to raise cashew nuts production by 33.5% in the year to September 2020, helped by favourable weather conditions and increased plantings, its agriculture minister said on Saturday. Output in 2019/2020(October-September) is seen reaching 300,000 tonnes, up from the 225,000 tonnes produced in the 2018/2019 season.

African banana producers urge EU to maintain tariffs on Latin American imports (Reuters)

Struggling African banana producers called on the EU on Friday not to cut tariffs on imports from Latin America any further. Exporters in Africa, the Caribbean and Pacific have been losing market share since 2009, when the EU agreed to progressively cut tariffs on bananas from bigger growers in Latin America. That reduced the advantage previously enjoyed by ACP growers in mostly former European colonies, who have tax-free access to European markets, although the EU agreed to provide them around 200 million euros in compensation. At a convention in Abidjan, banana industry representatives from Cameroon, Ivory Coast and Ghana urged the EU not to cut tariffs on Latin American producers below 75 euros/tonne, the rate which will come into effect on Jan. 1, 2020. They cited recent trade discussions between the EU and Colombia, Ecuador and Peru that they fear could lead to even lower tariffs.

Egypt, Switzerland step up partnership to boost textile and clothing exports (ITC)

Egypt’s Ministry of Trade and Industry and the Swiss Confederation have announced the scaling up of collaboration to strengthen the competitiveness of textiles and clothing producers in Egypt. The new initiative – Egypt: Improving the International Competitiveness of the Textile and Clothing Sector – forms part of the three-year Global Textiles and Clothing programme, funded by the Swiss State Secretariat for Economic Affairs, which is being implemented by the ITC.  The new project aims to support Egypt to build a sustainable export-oriented sector with increased sales to traditional and new markets, with a focus on creating long-term and sustainable employment, particularly for women and young people.

Nigeria EPC: 30% of Nigerian exports don’t meet packaging standard (ThisDay)

As stakeholders in the manufacturing sector intensify efforts to push more Nigerian products beyond the shore of the country, the Nigeria Export Promotion Council, has identified poor packaging and labelling as major stumbling blocks to Nigeria’s products exported overseas, especially to the United States. The director, business development at NEPC, Mr Wiliam Eze, who delivered a keynote address at the 2019 Packaging, Plastics, Food Processing, Labelling and Print Exhibition in West Africa in Lagos, said some Made-in-Nigeria products are faced with poor packaging which results in rejection.  According to him, a recent report revealed that 30% of Nigeria’s exports to the US are rejected as a result of poor packaging and labelling, not quality of the products.

Nigeria:  No going back on aggressive tax drive, FG insists (ThisDay)

The Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, has said there is no going back on the federal government’s determination to increase public revenue through intensified tax collection. This is coming as the Tax Leader, PwC, Mr. Taiwo Oyedele, has raised the alarm that Nigeria’s  tax system contains 354 different taxes, stressing that these multiple taxations do not allow businesses to thrive. Speaking during the Lagos Chamber of Commerce 2019 Presidential Policy Dialogue on the Economy, held in Lagos at the weekend, Adebayo, said those expecting the government to reduce taxes and at the same time increase revenue to meet its responsibilities to the country should come and show the government how to perform the magic.  [The challenge before the new Advisory Council

SADC Ministers responsible for ICT, Public Information, Transport & Meteorology: statement from Dar es Salaam meeting (19-20 September)

The High Level Ministerial Round, on the theme, “Emerging Technologies to Support SADC Regional Integration and Sustainable Industrial Development”, provided a platform for an interactive discussion on high impact infrastructure projects and technology-related-priority issues that the region need to immediately address. In the ICT and Information Sectors, the Ministers approved the Multi-Stakeholder Intra-regional and Trade Facilitation Project which is aimed at promoting and facilitating the participation of SMMEs in the regional e-commerce ecosystem. In the transport sector, the Ministers reviewed progress on the implementation of SADC Regional Infrastructure Development Master Plan and noted the completion of critical infrastructure such as the opening of the new Walvis Bay Container Terminal in Namibia, and associated Dry Ports, rehabilitation and upgrading of critical sections of the Regional Trunk Road Networks in most regional corridors and the One Stop Border Posts at Kazungula which links Botswana and Zambia, the Nakonde/Tunduma which links the United Republic of Tanzania and Zambia and the Mwami/Mchinji which links Zambia and Malawi. The Ministers further noted:

Today's Quick Links:

Communiqué of the second IGAD Inter-Ministerial stocktaking meeting on the Nairobi Declaration and Action Plan

UNECA partners ECOWAS towards the development of post-2020 Vision

1000 Chinese companies to attend Lagos International Trade Fair in November

UNCTAD Research Paper: Fish and fisheries products - from subsidies to non-tariff measures

Ahead of UN summit: Leading scientists warn climate change ‘hitting harder and sooner’ than forecast

UN Climate Action Summit: Banks worth $47 trillion adopt new UN-backed climate, sustainability principles

UNCTAD's Deputy Secretary-General Isabelle Durant: World needs fairer and more sustainable trade, not less trade

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tralac’s Daily News Selection

23 Sep 2019
Featured tweet, Yinka Adeyemi : Chiedu Osakwe, Nigeria's chief trade negotiator, who chaired the Africa process that yielded the AfCFTA in Rwanda is dead. Was a global authority on trade negotiation and former WTO director....
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