tralac’s Daily News Selection
Ban on Dar’s products in Nairobi sparks trade, diplomatic dispute (The EastAfrican)
Presidents John Magufuli and Uhuru Kenyatta have stepped in to stem an escalating trade war that has seen Tanzania and Kenya exchange import bans on several commodities. The EastAfrican has learnt that President Magufuli wrote to his counterpart in Nairobi early last week to complain about Kenya’s ban on its gas and wheat exports and other trade barriers. “The Tanzania presidency has officially complained to Kenya. However, we have received communication from them banning our exports of tyres, margarine and fermented milk products. We hope this trade war is nipped in the bud before it gets out of hand,” a source said. Kenya is digging in, saying it will only allow wheat flour and other products that are milled from grain wholly produced in Tanzania, or whose full Common External Tariff rate has been applied.
US urges Tanzania to lift ban on chicken (The EastAfrican)
Tanzania has maintained a hardline position on its ban on imports of chicken and poultry products from the US, which it imposed in 2006, and now Washington is pushing discussions on the matter to the regional level, demanding that Dar give a justification for the ban through a process that is above board. The US says Tanzania’s reasons for the ban should be consistent with Word Trade Organisation requirements. But the EAC’s Sectoral Council of Ministers Of Trade, Industry, Finance And Investment (SCTIFI), meeting in Arusha early last month, resolved that the US pursue the matter on a bilateral basis with the concerned partner states. The US government officials said that despite correspondence with Tanzanian government institutions, there has been no light shed on the matter. [Related: Togo to host 2017 AGOA Forum (8-10 August); Trump administration invites public comment for review of existing trade agreements]
Tea plays an important role in Kenya’s socio-economic development. Tea is the leading industrial crop in terms of its contribution to the GDP. In 2016, tea accounted for 40% of the marketed agricultural production and contributed 25% of total export earnings amounting to $1.25bn. In addition, tea provides livelihoods to approximately over 600,000 smallholders who contribute approximately 60% of total tea production. This notwithstanding, only 14% of tea exported is value added and the remaining is sold in bulk form. The low level of value addition results to an estimated loss of $12 per kilogram of tea. As a result despite Kenya being the leading exporter of tea in terms of volumes, the country receives low earnings compared to other exporting countries due to low value addition. For instance, in 2013, Kenya’s exported 131 metric tonnes more than Sri Lanka but it earned $0.3bn less.
The objective of this study therefore was to identify capacity challenges that are critical in agribusiness and trade to enhance the competitiveness of the tea sub-sector. Specifically, to review national strategies, policies, practices and challenges with respect to agribusiness, trade and leadership. Secondly, provide sound situation analysis of the Kenya agri-business sector in relation to trade and leadership capacity. Thirdly, provide baseline data for assessing Kenya’s capacity development progress and finally, assess and analyse the status and gaps of Public Sector Transformation Division and other relevant institutions’ capacity to implement the reforms in the tea value chain.
The idea of having a common Kerala-Africa brand, jointly owned by Kerala and cashew-growing African nations, for cashew products to move together in the value chain was also mooted. Both Africa and Kerala are keen on exploring the possibility of technological collaboration, which would help in increasing the productivity in African countries. “Both sides have decided to explore the best value-chain results for all stakeholders in the cashew industry – producers, farmers and sellers (co-operatives and boards) in Africa, and buyers (the state of Kerala), processors and consumers,” said the MEA officials. It was agreed that a detailed proposal will be prepared by the state government on the price agreement and transportation of raw nuts. Then it will be submitted to the external affairs ministry which will discuss with Kerala and the African nations to take it forward.
Tanzania’s parliament passed two laws on Monday allowing the government to force mining and energy companies to renegotiate their contracts, despite pleas from the mining association for more time. Businesses have complained that they feel President John Magufuli is unfairly squeezing them through a strict interpretation of tax laws, increased fines and demands they rapidly list on the local stock markets. Magufuli has said the reforms will increase transparency and revenues. There are three bills in total covering natural resources contracts, sovereignty and amendments to existing laws and they could allow the government to renegotiate or dissolve contracts.
Australia: Tanzania’s mining agreements plan rocks Cradle (The West)
Sovereign risk fears in Tanzania have torpedoed a $55m takeover bid for Ian Middlemas’ Cradle Resources and yesterday forced a swag of other ASX-listed companies into trading halts. Cradle advised yesterday that a deal under which its joint venture partner, private equity-backed Tremont Investment, would acquire the company had been terminated. Tremont had sought the takeover to get full control of the Panda Hill niobium project in Tanzania but was spooked by proposed legislative changes around mining to be debated in the country’s Parliament this week.
Using the detailed data available for the minerals sector, an analysis is carried out of the current situation for 2014, and of trends in mining’s contribution to economic development for the years 1996–2014. The contribution of minerals and mining to gross domestic product and exports reached a maximum at the peak of the mining boom in 2011. Although the figures for mining’s contribution had declined for most countries by 2014, the levels were still considerably higher than in 1996. The results of this survey contradict the widespread view that mineral resources create a dependency that might not be conducive to economic and social development. [The authors: Magnus Ericsson, Olof Löf]
Tanzania: Success as Sagcot initiative expands (The Citizen)
The government plans to roll out the Southern Agricultural Growth Corridor of Tanzania (Sagcot) initiative countrywide to ensure agriculture plays a pivotal role in the country’s industrialisation process, a senior government official has said. Sagcot Centre chief executive officer Geoffrey Kirenga said during the past seven years of implementing the first phase of ASDP – from which the Sagcot initiative was born – Tanzania managed to remain a relatively hunger-free nation. “Much as there have been some challenges, this is quite unusual to most African countries. So, there have great strides to be proud of.”
The participants in the workshop (3-4 July) are drawn from the governmental authorities of IGAD Member States with mandates relating to immigration, legal affairs, and legislative bodies including selected international partners and stakeholders. According to the Ambassador of Ethiopia to Djibouti, H.E. Amb Shamebo Fitamo Adebo, “free movement of persons is one of the basic tenets for regional economic integration process”. The Director of Health and Social Development-IGAD, Ms Fathia Alwan, clarified that the This Protocol was aimed at ensuring that migration in IGAD region was safe, orderly and beneficial to the citizens of this Region. “A Free Movement Regime will facilitate higher volume of regional trade, improved access to basic social services, access by governments to unreached marginal communities as well as improved governance of rural areas”.
Addressing trans-boundary cooperation in the Eastern Nile through the water-energy-food nexus: insights from an e-survey and key informant interviews (IFPRI)
Respondents also identified a wide range of desirable cross-sectoral actions and investments - both national and regional - chiefly, joint planning and operation of multipurpose infrastructure; investment in enhanced irrigation efficiency; joint rehabilitation of upstream catchments to reduce sedimentation and degradation; and investment in alternative renewable energy projects, such as wind and solar energy.
Uganda: Shs140b logistics master plan awaits Cabinet approval (Daily Monitor)
Cabinet is yet to endorse Uganda’s first logistics master plan that will take effect this month. According to the director of transport at the ministry of Works and Transport, Mr Benon Kajuna, Cabinet is eager to endorse the $39m (Shs140b) logistic master plan which the ministry has finalised. He said the approval of the 15-year logistic master plan will pave way for its funding and implementation. The 15-year logistics master plan prepared by the government of Uganda, with support from Japan International Cooperation Agency.
2017 Africa-China Poverty Reduction and Development Conference: update (GoM)
Mauritius will host the 2017 Africa-China Poverty Reduction and Development Conference, on the theme “Joining hands to meet new challenges in poverty reduction”, in September 2017. Some 100 participants from African countries are expected to attend the Conference. The Conference, organised by the State Council Leading Group Office of Poverty Alleviation and Development of the People’s Republic of China, in collaboration with the Ministry of Social Integration and Economic Empowerment, will address the following issues: poverty reduction challenges, strategies and practices in African countries, and progress and challenges of poverty alleviation in Africa. It will also address the role of local governments in promoting China-Africa cooperation and the role of society engagement (businesses and civil societies) for China-Africa poverty reduction cooperation.
In the first four months of the year, China exported $9.755bn (+19.56%) to the eight Portuguese-speaking countries and imported goods worth $24.416bn (+50.93%), leading to a trade deficit of S$14.661bn. China’s trade with Angola increased 61.83% to $7.602bn, with the country buying goods worth $597m (+ 27.71%) and placing products with Chinese companies worth $7.005bn (+65.60%). Trade with Mozambique reached $564m (-0.80%), following Chinese exports of $377m (-8.03%) and imports of $186m (+17.99%).
Investing in skills for inclusive trade (ILO/WTO)
The authors of the report point to four main mechanisms through which trade affects the relative demand for skills: (i) Trade raises demand for products in which countries have a comparative advantage. In countries with a comparative advantage in skill-intensive sectors, trade thus increases the demand for skilled workers; (ii) International trade leads to the expansion of the most productive firms, which tend to employ relatively more skilled workers; (iii) As the costs of offshoring fall, the least complex stages of production tend to relocate from high income to low-income economies; (iv) Lower trade costs may be a catalyst for changes in production technology, including automation, which increase productivity and favour high-skilled labour in exporting and import-competing firms in both developed and developing countries. Addressing the need for developing a more competitive workforce is a long-term process, according to the study (pdf).
The International Chamber of Commerce Banking Commission has released its 2017 report entitled Rethinking Trade and Finance (pdf). Based on the Global Survey on Trade Finance – with 255 responses from banks located in 98 countries, as well as insight and commentary from expert contributors – the report is the most comprehensive gauge of the trends and outlook of the global trade finance industry. It focuses on the state of the trade finance market; trade and supply chain finance; policy, advocacy and inclusiveness around global trade; and digitalisation and the state of FinTech. The 2017 Survey’s findings show that:
Today’s Quick Links:
Tunisia: AfDB’s country strategy paper 2017-2021 (pdf)
Africa Carbon Forum: summary of outcomes