tralac’s Daily News Selection
Africa Integration Index: Fourth edition launched (Visa)
This index originally covered 55% of the Sub-Saharan population and three-quarters of the region’s output by measuring the depth and breadth of the connectedness of 11 African economies located in three clusters – East Africa (including Kenya, Rwanda, Tanzania and Uganda); West Africa (including Ghana and Nigeria); and Southern Africa (including Angola, Mozambique, South Africa, Zambia and Zimbabwe). With data that have recently become available, we are able to extend the coverage of the index by eight countries and refine the analysis by clustering the countries into four regions: (i) Central Africa (Angola, Cameroon, DRC);(ii) East Africa (Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Tanzania, Uganda); (iii) Southern Africa (Botswana, Mozambique, Namibia, South Africa, Zambia, Zimbabwe); (iv) West Africa (Côte d’Ivoire, Ghana, Nigeria). Extract (pdf): While low regional integration is a collective attribute, the differences across countries varies materially, with Angola, Madagascar, Nigeria and Zimbabwe displaying the lowest regional integration in the four regions, and Cameroon, Cote d’Ivoire, Ethiopia and Zambia displaying the highest regional integration in the four regions. Extending this analysis to the regional level, East Africa and Southern Africa display a significantly higher level of regional integration than Central Africa or West Africa, which has implications for economic development and growth prospects. As a collective, however, it remains the case that although the connectedness of the region is rising, the drivers are growing global connections rather than connections to neighbours. This feature is universal for the 19 countries covered in the study.
The 25 officials (from 12 Anglophone and 13 Francophone African states) took part in IDEP’s third short course so far this year on International Trade Policy for National and Regional Development. The main objective of the course is to contribute to the development of a critical mass of highly skilled middle and senior policy officials and decision makers who will be suitably or better equipped to design and manage dynamic trade policies for the development in Africa. Some of the countries represented in the course were Cameroon, Comoros, DRC, Liberia, Madagascar, Namibia, Nigeria and Zimbabwe.
Trans Kalahari Corridor: update (Southern Times)
South Africa’s Director of Regional Corridors, Segodi Mogotsi, revealed that SA’s Department of Transport has developed a Draft Regional Corridor Development Strategy that seeks to better integrate South Africa with SADC initiatives, stimulating regional economic growth and enhancing mobility across the region. “The strategy will guide the department in its role in implementing the Regional Corridor Development Strategy and infrastructure Master Plan and enhanced participation in regional infrastructure investment; and improved trade facilitation and efficient transport in the corridors,” said Mogotsi. He further revealed that South African Government intends to facilitate review of the SADC Protocol with specific reference to corridors. “We also want to ensure that every corridor is governed by a Memorandum of Understanding that subscribes to the SADC Protocol and amend the SADC Protocol and customs legislation to legalise use of e-documents and e-signatures,” he said.
South Africa: Cross-Border Road Transport Industry update (pdf, DoT)
We are equally aware of our counterparts charging exorbitant cross-border fees that only apply to foreign registered vehicles. These fees constitute unnecessary constraints that increase operational costs to all our operators. The C-BRTA has considered and acceded to appeals by freight operators to reciprocate, not with view to be punitive, but to ensure standardisation, harmonisation and fair treatment. To this end, the Agency has since conducted a study of all cross-border charges levied by our counterparts and developed a business case for Government to consider introducing similar charges as a way of equalising regulatory impacts across borders. A task team comprising of the Department of Transport and the C-BRTA has since been established to take the process forward. [The speaker: Deputy Minister Ms Sindisiwe Chikunga]
Mauritius: National Export Strategy, 2017-21 (Enterprise Mauritius)
From a mainly goods-based economy driven by the sugar and garment sectors, Mauritius has progressively shifted towards a service-oriented economy with higher value addition. The loss of preferential access for textiles and sugar in 2004, along with worsening external economic conditions and increasing oil prices, accelerated the diversification process, a vital move for the long-term sustainability of the Mauritian economy. The country has had remarkable success in developing the ‘servicification’ of its economy, boosting economic growth and reducing its reliance on sugar and garments. Tourism, financial and insurance activities are now the major contributors to GDP, and the share of services in value addition has increased steadily, reaching 71% for the period 2010-2014 (see figure 10). This shift towards services translates to profound changes in the composition of employment in Mauritius, with the participation of the labour force in services increasing steadily over the past two decades from 46.7% in 1994 to 63.5% in 2014. In contrast, jobs in the industry and agriculture sectors have fallen over the same period, with shares in total employment falling from 38.9% to 29.8% and from 13.7% to 8% respectively over the same period. Mauritius’ external trade performance: selected highlights (pdf): (i) One of the lessons learned from the decomposition of export growth is that there is an urgent need for Mauritius to diversify its export markets with a view to move from a model of preferential treatments to global competitiveness. (ii) Mauritius’ role in global production networks is limited and has not evolved. After peaking in 2005, the share of imports of parts and components in Mauritius has dramatically declined and Mauritius’ share of parts and components in global or regional supply chains has stagnated at a low level of integration. (iii) The analysis reveals that Mauritian exporters are having difficulties sustaining export relationships over a prolonged period. Mauritius’ performance is below expectations, with the probability of an export relationship surviving until the second year only 33% and maintaining a relationship for more than three years, 28%. Nevertheless, its performance has improved over time.
Angola: Country strategy paper, 2017-2021 (pdf, AfDB)
The negative impact of the oil crisis has provided even greater urgency to accelerate the government’s economic diversification agenda. One priority will be to invest in agricultural transformation and value chains to diversify exports and national revenue sources. The expansion of electricity access, water and sanitation supply, and skills development is critical to improve the business environment and private sector should have a larger role in the economy, including in the development of infrastructure through public-private partnerships and concessions. The other area vital to growth is regional integration in order to unlock the potential of local manufacturing and boost trade. Therefore, the Bank’s strategy will focus on two complementary pillars, namely: (i) inclusive growth through agricultural transformation, and (ii) support to sustainable infrastructure development, in particular, in energy and transport. Extract: Despite the huge potential for economic diversification, import dependency is also growing. Angola’s imports of food basket goods increased from $2bn in 2013 to $3.8bn in 2015 (Table 2 below), with obvious consequences in terms of the pressure on foreign exchange and vulnerability to global prices. In this context, developing the agricultural sector and agribusiness to enhance transformation of local products along the food supply chain and boost both domestic sales and exports, is central to economic diversification. Unlocking Angola’s agricultural potential requires government’s commitment and investments, closing the infrastructure gap, facilitating trade and improving financing as well as skills and technology.
Prevention of illicit financial flows: AfDB Group draft policy (pdf)
The proposed policy, not only expands the scope of the Bank’s IFFs work, it sets a clear path for future Bank interventions in this field, including the recommendation of an organizational framework for the coordination of the implementation of the policy in the Bank. The vision of the Bank Group with regard to the prevention of IFFs is to have an African continent with the requisite capacity to effectively combat illicit financial flows by 2030. The core objective of the Bank’s Anti-IFFs work is to significantly contribute to the continent’s response to the threat of IFFs. This Policy establishes the general framework for the Bank’s work in the fight against illicit financial flows, outlining clear directions and principles across four main areas: Internal control and safeguards, Assistance to regional member countries, Increasing collaboration with international partners, Capacity building for staff. [Delivering the High 5s, Increasing the Bank’s impact on development: Results Measurement Framework 2016-2025 - revised version, pdf], [Yomi Kazeem: Africa is losing billions annually to illegal capital flight (Quartz)]
Own AU reforms process – Kagame (New Times)
President Paul Kagame has called on African countries and regional economic communities to take ownership of the African Union reforms process to facilitate urgent implementation. Kagame made the remarks, yesterday, during a consultative meeting on the African Union Reforms attended by African foreign affairs ministers and ambassadors accredited to the AU, in Kigali. [Full text: President Kagame’s speech at Consultative Meeting]
Managing capital flows: challenges for developing countries (IMF)
On 5 May, the IMF hosted a conference on “Managing capital flows: challenges for developing countries” in Zambia. The Hon. Felix Mutati (Minister of Finance, Zambia) and David Lipton (First Deputy Managing Director of the IMF) opened the conference. Paul Krugman, Nobel laureate and Distinguished Professor of Economics at the City University of New York, delivered a keynote address. Participants agreed that capital flows to developing countries are generally beneficial - particularly in the current context of a much leaner environment - by providing an important source of financing for investments and by helping to maintain foreign exchange reserves. Sound policies and macroeconomic stability were considered key to help reignite high-quality capital flows. Some lessons drawn from the shared experience of participants are that (i) the composition of capital flows matters for financial stability and growth, and (ii) that effectively managing the inflow phase of the capital flow cycle is the best protection against challenges that arise when capital flows reverse. [IMF paper: Can they do it all? Fiscal space in low-income countries]
Brazilian Foreign Minister Aloysio Nunes Ferreira arrived in Namibia yesterday morning to kick off his round of diplomatic discussions with southern African countries over the next eight days. From Namibia, Ferreira is expected to visit Botswana, then Malawi, before travelling to Mozambique, the only country that would receive an extended visit of two days, on 11-12 May. Ferreira will also witness the inauguration of Mozambique’s Nacala Logistics Corridor, an important investment of Vale in partnership with the state-owned Portos and Railways of Mozambique. The project, which has given Brazil the status of the country’s largest foreign investor, is expected to contribute to the development of the Mozambican and Malawian economies.
Uganda: Protests over Chinese retailers (The Independent)
Hostility towards Chinese petty traders appears to be growing in Uganda but so is the dependence on Chinese imports. On April 19, the hostility erupted once again as hundreds of traders in the capital city, Kampala, staged a closed-shop protest and marched along some streets brandishing placards telling the Chinese to “Leave our country.” The protests were led by the Kampala City Traders Association. KACITA which boasts of close to 200,000 traders says over the last seven years the traders have been complaining to the government over aliens doing petty trade but with little success, hence the street protests. What is at stake, it appears, is the control of the growing trade in imports from China into Uganda. [China’s Uganda envoy pleads for Chinese traders]
Research busts China myths on investment in Africa (Business Day)
McKinsey found about 30% of the 10,000 Chinese firms operating in Africa are in manufacturing, 86% of their employees are local – as are 40% of their managers – and 85% of the firms are privately owned. China is by far Africa’s largest economic partner, ranking in the top five for trade, infrastructure finance, foreign direct investment and aid, but the managing partner of McKinsey’s Africa office Georges Desvaux said the study found almost all perceptions of its role were false. “It [China] is creating an industrial footprint in Africa, creating jobs and bringing in new technology and new processes to Africa,” Desvaux said. McKinsey plans to launch the full version of the study, Dance of the Lions and Dragons, at the WEF’s Asia meeting later in 2017. It will include details on individual countries, including SA.
AGOA: Meeting the competition in Africa (Pittsburgh Post-Gazette)
AGOA ensures African entrepreneurs can take advantage of access to the US market at no cost to US taxpayers. As good as the program has been, it is not enough. Changing circumstances and impressive investments by China necessitate the United States increase its economic engagement in sub-Saharan Africa. This means broadening eligibility, opening additional sectors of the US market and strengthening programs that encourage sustainable economic growth. Efforts like these have their skeptics, but here are three reasons increased economic investment in Africa matters for the United States: [The authors: Natalie Gonnella-Platts is deputy director of the Women’s Initiative at the George W. Bush Institute. Laura Collins is deputy director of the institute’s Economic Growth Initiative]
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13th CAADP Partnership Platform (31 May - 2 June): concept note