Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Transnet

CFTA update: President Issoufou Mahamadou calls upon AU Ministers of Trade to stick to the deadline establishing the CFTA

According to the Champion of the CFTA process (Pres. Mahamadou), negotiations are about “give” and “take”. With that spirit, he expressed his confidence that the draft agreement establishing the CFTA can be delivered by the stipulated deadline. “While my task is to prod you to move with speed while producing tangible and substantive progress, as I am doing now, your task is also to push the Technical Working Groups and the Negotiating Forum to move with speed and produce tangible results. Let us not lose the momentum that we have built” he encouraged. President Mahamadou underscored the issue of Rules of Origin and indicated that they should be kept as simple as possible to enable Africa to compete with the rest of the world. He also urged AU Ministers of Trade to adopt adequate flanking measures and flexibilities within their national and sub-regional contexts that would ensure that the burdens and benefits associated with the CFTA are distributed more equitably among all the AU member states. Amb Albert M. Muchanga, Commissioner for Trade and Industry, recommended that ministers liaise with their respective foreign ministers to be part of national delegations to the July 2017 Summit of the African Union so that they can provide appropriate policy advice to their respective Heads of State and Government when they receive and consider the report of the CFTA’s Champion on 4th July 2017. [A report from Windhoek: Tempers fly at African ministers of trade meeting]

Liberia: Intra-national trade costs and economic isolation (IGC)

In 2011, the Government of Liberia partnered with the World Bank on a 10-year collaboration to build and maintain a road along the main axis of the country. However, intra-national trade costs remain high, and most markets are still isolated. Why do intra-national trade costs remain so high? What are the policy implications for the government? To understand the challenges of the transport industry in Liberia, we interviewed more than 70 companies and 200 drivers based in Liberia’s main transport hubs. [The analysts: Golvine de Rochambeau, Jonas Hjort]

The impact of remittances in Lesotho, Malawi, Zimbabwe (Finmark Trust)

Given these insights, we examined evidence of the impact of remittances on the communities and economies of Lesotho, Malawi and Zimbabwe. The research combined a review of existing literature, primary research among remittance senders and recipients, and original data analysis; and explored the mechanisms by which remittance receipt affects developmental outcomes.

Cross-border remittance pricing: Does market structure drive the prices for cross-border remittances in South Africa?

Using a new approach based on conducting actual cross-border transactions, the report verifies the pricing offered to customers in the market and compares this cost to other studies conducted by the World Bank and Eighty20. The majority of remittance flows from South Africa (90% of all transfers) are destined for neighbouring Zimbabwe, Mozambique and Lesotho, with 85% of all migrants originating from these countries. Estimates by the FinMark Trust suggest that the bulk (almost 70%) of transfers to these countries are conducted informally and that the high cost of formal money transfers is a major barrier to accessing formal remittance bank and non-bank channels. According to the World Bank, as at the end of the second quarter of 2016, the global average cost of $200 remittances was 7.43% of the amount sent by remitting customers. For remittances sent from South Africa, the average cost was 16.71%; more than double the global average. Contrary to World Bank estimates, Genesis found that the total cost of remitting $200 from South Africa to Zimbabwe, Mozambique and Lesotho is lower than the global average, with an average cost of 6.7% of the amount sent.

Scaling up remittances and financial inclusion in Uganda (IFAD)

IFAD, Postbank of Uganda, and Posta Uganda have signed a grant agreement aimed at expanding the role of postal networks in the delivery of remittances and access to financial inclusion across the country. The new project will provide remittances services in poor rural communities as well as in refugee settlements, many of which are taking in those fleeing conflict and food insecurity in neighbouring South Sudan. The project is an outcome originating from the African Postal Financial Services Initiative.

Breaking the pattern: Getting digital financial services entrepreneurs to scale in East Africa, India (CNBC)

A new financial inclusion report from the Bill and Melinda Gates Foundation, carried out by venture capitalist firm Village Capital, with the participation of 55 entrepreneurs and 23 investors has found that wider and deeper support is needed to encourage more mobile money firms to launch in India and East Africa. Not enough other digital financial services firms outside of the big names like M-Pesa are getting early seed investment money or, crucially, scale up investment to allow their fintech-enabled financial inclusion projects to achieve wide scale adoption. According to the Breaking the Pattern report, funded by the Gates Foundation, 72% of venture capital in East Africa for the last two years went to only three start-ups. “The market hasn’t reached any kind of meaningful scale,” said Ross Baird, CEO of Village Capital, in a statement. “We need hundreds of companies to truly improve the financial health of communities in India and East Africa.” [Downloads]

Related: Egypt: Remittances from expatriate Egyptians rise by 11.1% since float; Zimbabwe: Diaspora remittances decline in 2017 First Quarter

Ilan Strauss: Understanding South Africa’s current account deficit: the role of foreign direct investment income (pdf, UNCTAD)

This article highlights the prominence of net investment income payments made to foreign direct investors in South Africa’s current account deficit. After a brief history of SA’s balance of payments, we describe several factors driving the growth of South Africa’s direct investment assets and liabilities, including the roles of China and Africa as investment destinations and the relisting of major South African companies abroad. The slow accumulation of direct investment assets by South African firms before 2006, coupled with the higher returns on South Africa’s direct investment liabilities, has contributed to an imbalance in the country’s net FDI income, while a compositional shift in the stock of non-FDI liabilities has helped to decrease its payments to non-direct investors. If SA firms continue to invest productively abroad, net FDI income may contribute less to SA’s current account deficit in the future. The trade deficit remains a major area of concern. [Posted in the journal: Transnational Corporations]

Nigeria: Only 20% of 69.9m economically active Nigerians pay tax - Adeosun (ThisDay)

Minister of Finance, Kemi Adeosun, has said only 14 million out of the 69.9 million economically active Nigerians pay tax, reflecting a low compliance of 20.03%. Adeosun, who disclosed this at the NSE-Bloomberg CEO Roundtable at the weekend, lamented that, even among the tax payers, there was widespread malpractice that resulted in only part of the actual income being subjected to tax. This, she added, had degenerated to an unfortunate situation whereby out of the 14 million tax payers only 214 individuals in the entire country pay N20 million or more annually. “We must amend Nigeria’s low level of tax compliance. A tax to GDP ratio of just 6%, suggests widespread ignorance of our tax laws. We are working to amend this. Just yesterday, we announced plans to recruit and train 7,500 Community Tax Liaison Officers under the N-Power scheme. These young people will be subjected to a rigorous and intensive education on the tax system, sales, communication skills and civic education before being deployed to their communities to provide tax education and enroll new tax payers.” [Nigerian Gross Domestic Product Report: Expenditure and Income Approach Q3 2016]

Migration Institute in West Africa: update (ThisDay)

The Comptroller General of the Nigeria Immigration Service, Mohammed Babandede, said the NIS is partnering with the National Universities Commission to establish the institute, to be situated in Tuga, Kebbi State, adding that it will be affiliated to universities in Nigeria and few West African countries. He said the service plans to develop the country’s intellectual capacity, adding: “Our idea to reform the NIS is with the support from the NUC on roadmap to start an institute. We are envisaging migration institution for West African countries. Nigeria immigration is committed to tackling the challenges of Migration management in West Africa.”

Tanzania: Cashews boost traditional exports by $120m (The Citizen)

A rise in cashew exports boosted the value of traditional exports by 16.75% in the year ending April 2017. According to the Bank of Tanzania economic review for May, traditional exports improved to $863.6m from $739.7m in the year that ended in April 2016, largely powered by cashew nuts. While the exports of cloves, sisal, tea and tobacco declined, that of cashew nuts improved from $185.9m to $341.1m, the report has shown. The improvement in exports of cashew nuts occurred in both volume and price. Extract (pdf): In the year ending April 2017, the deficit in the current account significantly narrowed by 50.1% to $1,601.8 million from the level reached in the year ending April 2016. (Table 4.1). Total export value of goods and services amounted to $8,753.3 million in the year ending April 2017 compared with $9,333.2 million in the corresponding period in April 2016 (Chart 4.1). Annual import bill for goods declined to %7,834.7 million in April 2017 from $9,305.2 million in the year ending April 2016. Noteworthy, with the exception of food and foodstuff, all categories of goods import declined (Table 4.2 and Chart 4.5).

Companies benefit from the Fourth Industrial Revolution, but do countries? (WEF)

Developing countries like Kenya, Argentina, and Brazil have local enterprises that are taking full advantage of innovative business models enabled by advanced technologies. Kenya - often referred to as the ‘Silicon Savannah’ - is home to the influential M-Pesa that has revolutionized sectors like banking and retail in Africa with its use of digital and mobile technology. Yet Kenya as a nation has seen their competitiveness rank fall over the past two years. Similarly, Argentina is home to the majority of Latin America’s tech unicorns. But again, their national competitiveness ranking has gone from 94 in 2013 to 104 in 2017. Brazil is the largest manufacturer of regional jets in the world and among the top five manufacturers globally in this high-tech field. But its national competitive ranking has dropped from 48 in 2013 to 81 in 2017. Even in more mature economies, innovative companies are not necessarily a harbinger of national competitiveness. Korea - where Samsung is considered an innovation leader - has lost national competitiveness over the past few years, going from 19 in 2013 to 26 currently. China, which is home to 6 of the top 50 most innovative companies on Fast Company’s 2017 list, is still having difficulty cracking the top 25 when it comes to the national competitiveness index. [The analyst: Gary Coleman, Deloitte]

World Population Prospects: The 2017 Revision

From 2017 to 2050, it is expected that half of the world’s population growth will be concentrated in just nine countries: India, Nigeria, the Democratic Republic of the Congo, Pakistan, Ethiopia, the United Republic of Tanzania, the United States of America, Uganda and Indonesia (ordered by their expected contribution to total growth). The group of 47 least developed countries (LDCs) continues to have a relatively high level of fertility, which stood at 4.3 births per woman in 2010-2015. As a result, the population of these countries has been growing rapidly, at around 2.4 % per year. Although this rate of increase is expected to slow significantly over the coming decades, the combined population of the LDCs, roughly one billion in 2017, is projected to increase by 33 % between 2017 and 2030, and to reach 1.9 billion persons in 2050. Similarly, Africa continues to experience high rates of population growth. Between 2017 and 2050, the populations of 26 African countries are projected to expand to at least double their current size.

Today’s Quick Links:

ICTSD: As Hamburg Summit approaches, G20 members prepare for debate on trade

Gateway House: BRICS inching towards complementarity

Zimbabwe takes investment drive to South Africa

AfDB: Draft Bank Group’s new policy instrument on results-based financing (pdf)

Uganda, UN convene ‘solidarity summit’ amid fast-growing refugee emergency

DRC: Full text of yesterday’s UNSC resolution

FATF Plenary Week: address by Christine Lagarde

Autonomous trucks by Tesla, Uber, Google will change trucking industry


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