tralac’s Daily News Selection
New tralac publications: The EAC Mode 4: trade data (by Viola Sawere), Africa’s trading relationship with Japan (by Ron Sandrey), WTO: Agricultural Issues for Africa (by Ron Sandrey, Moses Lubinga, et al.)
South Africa’s March trade statistics: trade surplus jumps (SARS)
The South African Revenue Service has released trade statistics for March 2017 recording a trade balance surplus of R11.44bn. The year-to-date trade balance surplus (1 January to 31 March 2017) of R4.98bn is an improvement on the deficit for the comparable period in 2016 of R24.27bn. The trade balance surplus is attributable to exports of R101.23bn and imports of R89.79 billion. Exports increased from February 2017 to March 2017 by R13.96bn (16.0%) and imports increased from February 2017 to March 2017 by R7.32bn (8.9%). Africa zone: Exports of R27 007 million – an increase of R3 360 million from February 2017. Imports of R9 785 million – a decrease of R 547 million from February 2017. Trade balance surplus: R17 222 million – this is a 29.3% increase in comparison to the R13 315m surplus recorded in February 2017.
South Africa is proposing to put emergency “safeguard” tariffs on imports of certain flat hot-rolled steel products from July, it said in a filing published by the World Trade Organization on Thursday. The tariff would be in place for three years, and fall from 12% in the first year to 10% in the second year and 8% in the third, it said. South Africa said the proposal was based on a final determination by its International Trade Administration Commission that domestic production had suffered serious damage from an unforeseen surge in imports.
India may soon have to phase out its export subsidy regime in the current form as WTO rules bar it from offering export incentives to any sector, including textiles, when it reaches certain thresholds that it is nearing. The deadline for ending direct subsidies to textile companies is December 2018. Under the special and differential provisions in the WTO’s Agreement on Subsidies and Countervailing Measures, least developed countries and developing countries whose GNI per capita is below $1,000 per annum at the 1990 exchange rate, are allowed to provide export incentives to any sector that has a share of below 3.25% in global exports.
Agriculture Minister Blairo Maggi has asked Brazil’s foreign trade council to impose tariffs on ethanol imports following a surge in shipments from the United States, an official said on Thursday, a move that could stir trade tensions with the Trump administration. Ethanol imports from the United States increased fivefold to a record 720 million litres in the first quarter - worth some $363m, according to official trade data. Most of that went to ports in north eastern Brazil, where ethanol producers are leading calls for the imposition of a 20% tariff.
Structural change, fundamentals, and growth: a framework and case studies (World Bank)
This essay examines how seven key countries fared from 1990-2010 in their development quest. The sample includes Brazil, India, Vietnam and four African countries (Botswana, Ghana, Nigeria, Zambia) all of which experienced rapid growth in recent years, but for different reasons. The patterns of growth are analyzed in each of these countries using a unifying framework that draws a distinction between the “structural transformation” and “fundamentals” challenges in growth. Out of the seven countries, the traditional path to rapid growth of export oriented industrialization only played a significant role in Vietnam. [The analysts: Margaret McMillan, Dani Rodrik, Claudia Paz Sepulveda] [Morten Jerven: Africa Growing? Past, present and future]
EAC to fully rollout Single Customs Territory (Daily News)
The EAC Committee on Customs has agreed on full implementation of Single Customs Territory system effective 31 July, this year, to enable faster clearance of goods and reduce the cost of doing business in the region. Through this, the respective governments look forward to cutting time and resources used in collecting custom taxes at various borders. The agreement was reached in Dar es Salaam, yesterday, by respective Commissioner Generals of Revenue Authorities from Tanzania, Kenya, Uganda, Rwanda, Burundi and South Sudan. Chairperson of the Committee, Dicksons Kateshumbwa, said the EAC was also exploring the possibility of entering into mutual recognition agreement with the rest of the world, to allow traders enjoy benefits when trading with other regions of the world. However, he said that will depend on refining operationalisation of the Authorised Economic Operator (AEO) programme with the EAC.
Region in joint effort against tax fraud (New Times)
Commissioners of tax investigation and enforcement from Rwanda, Tanzania, Kenya and Uganda say information sharing as well as deeper collaboration will be decisive in tackling tax fraud. They emphasised this, yesterday, at the opening of a two-day session of the sixth East African Regional Meeting for Commissioners of Tax Investigation and Enforcement in Kigali. The tax collectors’ last meeting, in November last year in Nairobi, Kenya, established two technical committees; one mandated to deal with the establishment of a harmonised tax investigators capacity building framework and the other to work out a technical guide on legal and administrative operational framework. The Kigali session is, among others, reviewing and validating these frameworks.
Social protection in East Africa: harnessing the future (OECD)
This strategic foresight report assesses the interaction between demographics, economic development, climate change and social protection in six countries in East Africa between now and 2065: Ethiopia, Kenya, Mozambique, Tanzania, Uganda and Zambia. The report combines population projections with trends in health, urbanisation, migration and climate change and identifies the implications for economic development and poverty. It concludes by identifying policies to address seven grand challenges for social protection planners in national governments and donor agencies which emerge from the projections.
Mozambique: New World Bank Group strategy seeks growth diversification (World Bank)
The World Bank Group Board has endorsed a new Country Partnership Framework with Mozambique for the fiscal years 2017-2021. The CPF focuses on a set of objectives reflecting the Government of Mozambique’s five-year program (Plano Quinquenal do Governo); development priorities identified in the WBG’s own diagnostic; and the institution’s comparative advantages. In line with these principles, the CPF objectives are organized into three focus areas: promoting diversified growth; investing in human capital; and enhancing sustainability. This strategy’s indicative financing envelope is $1.7bn from IDA.
The Board of Directors of the African Development Bank Group has approved the Bank’s Angola Country Strategy Paper to guide its interventions in the country in the next five years. The strategy’s first pillar involves interventions in agro poles and agro industries aligned to the Bank’s High 5s priorities to Feed Africa and Industrialize Africa that would help transform the economy. Pillar II will focus on power transmission lines, renewable energy projects, transport infrastructure all of which will contribute to the achievement of the light-up and power Africa, Industrialize Africa and Integrate Africa priorities. The strategy also places greater emphasis on gender mainstreaming through women’s empowerment in agricultural cooperatives; climate change and green growth agenda through investments in renewable energy projects; and co-financing mechanisms with key development partners to leverage resources.
Sango Ntsaluba: Rating agencies did not conspire against the government or ANC (Business Day)
These challenges have manifested themselves in an increasing fiscal burden and a widening current account deficit as the government grapples with competing needs. At one point, the government projected a deficit of R149bn, translating to 3.1% of GDP. Against a backdrop of underperforming tax revenue receipts, the government has had to rely on the debt market to raise financing. With a growth rate that has averaged 0.7% over the past three years, the downgrades have increased the possibility of recession and a larger fiscal deficit. It may well be argued that at least in the short to medium term SA cannot finance its budget commitments out of its revenue collections. [The author is a co-founder of SizweNtsalubaGobodo, is now chairman of NMT Capital and WZ Capital]
Tafadzwa Chibanguza: SA has missed the rates boat but opportunities can still be seized (Business Day)
This assessment and its implication could not be any truer than for the metals and engineering sector. The sector exports about R216bn, of which 40% (R86bn) is exported into Africa. Of the exports into Africa, 85%, or R73bn, is exported into SADC. The economic prospects of the SADC are on the rise as a function of the recent surge in commodity prices and an improving global economic environment. On a weighted average, the SADC is expected to grow 2.3% in 2017 and 2.7% in 2018. If we exclude SA, the region is expected to expand by 3.6% in 2017 and 3.8% in 2018. Although they are smaller economies, the countries have the potential to increase the scale of South African firms. For context, the 14 SADC economies (excluding SA) combined are the same size as SA’s. [The author is senior economist at the Steel and Engineering Industries Federation of Southern Africa]
Barclays takes £884m hit on African operation (Business Day)
UK banking group Barclays booked an £884m goodwill write-down of its investment in JSE-listed Barclays Africa Group in its first-quarter results released on Friday morning. Barclays said this was primarily due to the 17% drop in Barclays Africa Group’s share price over the quarter. Following the £884m impairment, Barclays valued its remaining stake in Absa’s JSE-listed owner at £8.1bn as at March 31.
Friday was the last day of Turkey-Africa First Agriculture Ministers Meeting and Agribusiness Forum. Organized by the Turkish Ministry of Food, Agriculture and Livestock, the event hosted more than 300 participants, including ministers, from 54 African countries. The deals were signed with Congo, Ivory Coast, Djibouti, Guinea, Rwanda and Gambia. [Rwanda: Agri-exporters to benefit from Export Growth Fund]
Zimbabwe: MDC backs rand adoption (Daily News)
Morgan Tsvangirai’s MDC has said it backs the adoption of the South African rand as the primary currency. In an interview with the Daily News yesterday, MDC shadow finance minister Tapiwa Mashakada said since 50% to 60% of Zimbabwe’s total trade is with South Africa, the most advantageous foreign currency to adopt is the rand.
Tanzania: Flagship projects rule the roost (Daily News)
The Ministry of Works, Transport and Communication has unveiled a massive 4.5trl/- budget, which among other things, will cover flagship infrastructure development in the 2017/2018 fiscal year. This means, the government will be spending almost 45% of its budget as development expenditure in infrastructure. However, the figure represents a drop of almost 400bn/- compared to the 2016/2017 budget, in which 4.9trl/- was set aside for the same purpose. Presenting the budget estimates yesterday, the Minister, Prof Makame Mbarawa, said that out of the amount, the transport sector will take a huge chunk, totalling 2.5trl/-, while 1.9trl/- is for works sector and the remaining 18bn/- is reserved for communication sector.
Akinwumi A. Adesina: speech to the Committee for Economic Cooperation and Development, German Parliament (pdf, AfDB)
We are focusing on co-financing more than ever before. We have corralled Japan to commit to the High 5s with $10bn over the next ten years; Korea committed to $10bn over the next five 4 years, all aligned to the High 5s; China’s Africa Growing Together Fund has committed $2bn, while we’ve signed a co-financing of Euro 1.5bn with France (AFD). We’ve rolled out Africa 50, an investment vehicle for developing and financing infrastructure, which has raised $830m and plans to attract $3bn in the medium term. And later this year we will launch the Africa Investment Forum – a totally transactional Forum – to leverage global and African pension and sovereign wealth funds to invest in Africa. That’s the way it should be: taxpayers’ money should leverage private resources.
Africa urged to tap local funds to finance mega infrastructure (Business Daily)
Two European development agencies have urged African governments to find ways to help pension schemes and local private equity firms to finance mega infrastructure. European Investment Bank and German Technical Assistance said African governments can promote use of locally available funds through Special Purpose Vehicles (SPV) at the bourse. GIZ advisor Timo Bollerhey said this could be fast-tracked via formulation of a legal framework that promote alternative infrastructural investments by pension funds, away from the restrictive regime currently governing their operations.
The China Overseas Infrastructure Development and Investment Corporation (COIDIC) this week opened its first African headquarters in Johannesburg, marking an important milestone in China-Africa relations. COIDIC director Zhou Chao said the corporation recognised the challenges of building infrastructure in Africa. “We will develop in a very short time and provide mature projects in Africa, thereby attracting more funds to invest in African infrastructure.” He said COIDIC would focus on incubation of overseas infrastructure projects in order to implement the Chinese government’s “The Belt and Road” strategy to improve Chinese enterprises’ capacity of infrastructure development in Africa and around the world, and to boost development of the projects.
Heads of African Maritime Administration from 34 nations in Africa have identified the need for member countries to adopt simple trade documentation procedures at the seaports. The action, they believe, would fast track cargo clearance and enhance delivery to warehouses. This resolution was against the backdrop of worries expressed by delegates at the third Association of African Maritime Administrations annual conference that held in Abuja. [Related: 32 African countries move against dumping of nuclear, toxic wastes, Ship owners back Dakuku to lead African maritime revival]
South Asia’s ports: expensive and slow (World Bank)
The report Competitiveness of South Asia’s Container Ports (pdf) provides the first comprehensive look at the 14 largest container ports in South Asia, which handle 98% of the region’s container traffic. It focuses on port performance, drivers, and costs. Although South Asia reduced the performance gap with East Asia, persistent inefficiencies meant that it still cost about twice as much to import a container as in competitor countries in East Asia. Average ship turnaround time for the region, at more than two days, was more than four times that of Singapore, one of the best performing ports in the world.
Many countries and economies have adopted digital development strategies. An UNCTAD survey of the investment dimension in more than 100 digital development strategies shows that almost all such strategies acknowledge the need for investment. However, hardly any strategy contains a specific ‘investment chapter’ and less than half of digital development strategies explicitly consider foreign investment as a source of finance. Investment promotion agencies mostly do not feature in the plans. [Download: Promoting investment in the digital economy, pdf; At UNCTAD’s E-commerce week: Dr Kituyi, Jack Ma highlight e-commerce opportunities for the developing world]
Please note: The next selection will be circulated on Tuesday, 2 May.
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