tralac’s Daily News Selection
Today in Gaborone: Botswana’s Budget 2017/18
President Paul Kagame: address on AU reform issues at Heads of State and Government retreat (GoR)
The previous landmark studies of the African Union’s organs and institutions served as the starting point of the review, notably the 2007 Adedeji Report and the 2016 Mekelle Report. Three observations stood out. First, the institutional quality of the African Union has been a concern for a long time, virtually since its founding in 2002. Indeed, the problems documented then are not so different from those on our minds today, namely poor execution, lack of focus, overdependence on external funding, an unclear division of labour with other continental organisations, and a perception of irrelevance for African citizens. Second, there is no shortage of sensible ideas for reform. In many cases, despite the passage of time, the recommendations are as relevant as ever. Third, these proposals have had almost no impact. Despite wide consensus about their merit, as reflected in adoption by the Assembly of Heads of State, the agreed reforms were simply never implemented.
Industrial clusters: the case for Special Economic Zones in Africa (UNU-WIDER)
To seize these opportunities African governments will need new approaches to industrial policy. In this paper, we consider the role of SEZs as an instrument of industrial development. Public policies to bring a critical mass of investors into SEZs are often a prerequisite to breaking into global markets in manufacturing. We begin in Section 2 by defining agglomeration in a general sense and provide theoretical arguments for why firms tend to naturally cluster together. Following this we present some of the empirical evidence for agglomeration in low and low-middle income countries, its drivers and the impact of agglomeration on firm-level productivity. In Section 3 we consider the rationale for policies that actively encourage firms to cluster together through the establishment of SEZs, and we review the past performance of SEZs in Africa.
In Section 4, we give an overview of the current status of African SEZ programmes and summarize the various policy measures that are in place to promote them. Section 5 looks at recent efforts by China to support spatial industrial policy in Africa. China’s Ministry of Commerce is undertaking the development of a number of ‘official’ SEZs, and a number of private Chinese investors have set up industrial zones outside of these official arrangements. We review the status of these initiatives and use the case of Ethiopia, the country in which the Chinese SEZ model is most advanced, as a window into the possible costs and benefits of the new approach. In Section 6 we conclude by identifying some key factors that are needed for the success of SEZs in Africa. [The authors: Carol Newman, John Page]
The Japan External Trade Organization plans to promote partnerships between Japanese and Indian companies looking to expand their presence in Africa by leveraging their mutual expertise, JETRO officials said. The move is aimed at reducing market risks by combining the experience and knowledge of Indian firms in the African market with the technical and funding capabilities of Japanese companies to tap growth opportunities on the continent, the officials said. Reiko Furuya, director of JETRO’s New Delhi office, said it is organizing a conference in March to discuss collaboration in Africa, among other topics. Izuru Kobayashi, chief operating officer of the Economic Research Institute for ASEAN and East Asia based in Jakarta, said the Japanese and Indian governments are planning to start consulting on selecting specific projects in Africa as per the November statement.
Retno LP Marsudi: ‘Indonesia and Africa: beyond the Bandung Spirit’ (Jakarta Post)
Notwithstanding the positive signs, we cannot be complacent. Our trade value with Africa is dwarfed by the trade value between the continent and India, which stood at $70bn or by Africa-China trade that reached $200bn. We realize that current bilateral cooperation between Indonesia and Africa is still way below potential, and as such Indonesia is determined to advance its cooperation with Africa. A testament of that commitment is my visit to three African countries this week, namely to Egypt, South Africa and Mozambique. It will lay the ground for President Joko “Jokowi” Widodo’s tour to the region in the near future. The focus of our relations will be economic cooperation. [The author is Indonesia’s Foreign Minister]
Is Kenya getting a raw deal from trade ties with China? (Business Daily)
“This is one of the most lop-sided trade relationships in the world. In fact if you stripped out titanium, the Kenya export pipe to China would read close to zero. Clearly both governments need to energise their responses to this problem,” said Mr Aly-Khan Satchu, chief executive of Nairobi-based investment advisory firm Rich Management. “AGOA was a US silver bullet for exactly the same problem and China will surely have to look at something similar.” Mr Satchu said countries such as Ethiopia had managed to create policies that protect local industries and Kenya should take a similar route.
Uganda mortgages oil to China to get Standard Gauge Railway (Daily Monitor)
After denying countless times that they cannot borrow against future oil revenues, the government at long last has admitted staking the country’s oil as a “guarantee” for receiving the first batch of loan from China’s EXIM Bank for the much hyped Standard Gauge Railway project. Details available to Sunday Monitor indicate that Attorney General William Byaruhanga gave a no objection to ministry of Finance, the principal signatory to the loans, arguing that “nothing prohibits the government from using oil revenues directly as guarantee for the payment of loan for the SGR project.”
Anzetse Were: ‘Africa must now get ready for Trump-inspired China shift’ (Business Daily)
Chinese factories are already moving to Africa and Trump may incentivise the relocation of labour intensive manufacturing from China to Africa where wages are cheaper. Thus, in trying to protect America, Trump’s policies may push China further into Africa. Time will tell whether Trump is truly serious about China; and Africa will be at the centre of the action.
Song Wei: ‘China should give more ‘soft’ aid to Africa’ (Global Times)
As such, China should continue to cooperate with African countries on infrastructure projects, but should move beyond that to imparting China’s experience and translating its confidence in its development path, theory and system into an intangible force that is internationally recognized. Nevertheless, the current cooperation framework focused on hardware infrastructure doesn’t cater to new situations. First, the framework doesn’t help with precise poverty alleviation in African countries, as insufficient importance attached to "soft" environment planning makes it hard for China to accurately fit into development plans proposed by its African partners. Second, it’s unfavorable for the dissemination of China’s governance experience, considering that the completion of infrastructure projects discontinues China’s sharing its values and ideas in the continent. Third, it’s detrimental to the improvement of China’s national image in Africa, as most of the infrastructure projects have remained closed and have triggered scepticism among local people. [The author is an associate researcher with the Chinese Academy of International Trade and Economic Cooperation]
Safeguards in the South African poultry sector: an economic perspective (Econex)
The recent decision by the Department of Trade and Industry to implement a provisional safeguard duty of 13.9% on frozen bone-in chicken imports from the European Union (EU) has placed renewed focus on the South African poultry industry. Poultry producers state that increased imports are threatening to derail the industry in the form of job losses and plant shutdowns. Last year, the South African Poultry Association applied for a safeguard duty on imports of frozen bone-in chicken from the EU. The International Trade and Administration Commission of South Africa (ITAC) is continuing its investigation, but approved a provisional safeguard duty on 15 December 2016. During the initial investigation, Econex was instructed by Shoprite to conduct an economic analysis. [The analysts: Colin McCarthy, Helanya Fourie, Willem van Lill]
Intra-SACU trading relationship (tralac)
This synopsis should be read in conjunction with the spreadsheet on tralac’s website, and the two documents together contain the following data: (i) Graphical illustrations of SACU intra-trade over the last decade, for the top six traded products - a second graph is provided based on the top products traded at the start of the period, since the shifts over the decade are substantial; (ii) an input-output matrix showing all the bilateral trade flows and a relational trade flow figure based on the matrix data; (iii) data and figures describing dependence and asymmetry in the intra-SACU trading relationships. [Various downloads] [The analyst: John Stuart]
Kenya: Mount Kenya region develops Sh100bn economic blueprint (Daily Nation)
In the plan, the counties will spend about Sh10bn each, although most of the investment will be private-sector driven, with the government providing infrastructure such as revived roads and railways to create a conducive business environment. This comes a year after the governors signed a memorandum of understanding establishing the Mt Kenya and Aberdare Counties Economic Bloc, with a population of 17 million people. Priority pillars of the organisation are agriculture and agri-business, industrialisation, healthcare, tourism, water and resource management, infrastructure and ICT.
Egypt: Ministry of Industry creates export strategy to Africa for next 3 years (Daily News)
Minister of Industry and Trade Tarek Kabil announced that the ministry will complete the establishment of a new strategy that aims at increasing exports to Africa within the next three years. He added that the ministry cooperated with five export councils, namely the chemical and fertilisers, building industries, food, engineering, and medical councils, to create the strategy. About 80% of all Egyptian exports to Africa are from those councils, according to a statement issued by Kabil on Sunday. The minister said that the strategy includes a business plan with a timetable, targeted countries, and implementation mechanisms that open new markets for Egyptian exports to Africa. Kabil explained that the strategy focuses on the African market, which receives Egyptian exports worth of $3.7bn.
Today’s Quick Links:
SADC Development Finance Resource Centre: Annual Report 2016
SEATINI-Uganda: ‘Consolidate EAC regional market, forget about EU pact’
Malusi Gigaba: ‘Prioritise South Africans for jobs’