tralac’s Daily News Selection
UNCTAD’s Mukhisa Kituyi: The road to inclusive e-commerce in Africa
According to UNCTAD’s e-commerce index, Africa is trailing far behind in terms of readiness to engage in and benefit from e-commerce. The index is composed of four factors: (i) Internet use, (ii) credit card penetration, (iii) postal reliability, (iv) the number of secure, encrypted internet servers per capita. The average score for developed countries is 71, for Africa it is 24. And even in comparison to other developing regions, Africa is at the bottom in all four areas. On top of this, Africa’s inadequate regulatory framework is not conducive to foster trust on line, which is an essential element of any well-functioning market. In fact, less than 40% of African countries have established data protection and consumer protection laws. As more and more consumers and firms turn to the internet, to buy and sell goods and services, online presence becomes vital. And in a few years, if firms do not exist on the web, they will not exist at all. In Africa, under the current circumstances, e-commerce can exacerbate exclusion rather than inclusion, putting African entrepreneurs at a disadvantage in the evolving digital economy. This is something we have to avoid.
ECA’s Stephen Karingi: comments at Africa Session of the Aid for Trade Global Review 2017
Mr Karingi said key initiatives on the continent for boosting intra-African trade include the on-going Continental Free Trade Area negotiations, which are set to be concluded this year, and the Boosting Intra-African Trade initiative (BIAT). BIAT, he said, is a useful framework for addressing connectivity issues in Africa while the CFTA aims to, among other things, create a single continental market for goods and services, promote the free movement of business persons and investments and expand intra-African trade. The CFTA is also expected to enhance competitiveness at the industry and enterprise levels. Mr Karingi also spoke about the Action Plan for Boosting Intra-African Trade which has seven priority clusters: trade policy, trade facilitation, productive capacity, trade-related infrastructure, trade finance, trade information and factor market mobility. “For Aid for Trade to deliver on Africa’s priorities, it should be aligned with these frameworks and the continent’s priorities.”
The role of Aid for Trade in boosting intra-African trade: executive summary (pdf, WTO)
E-commerce was also seen by the African respondents as an emerging opportunity. However, significant challenges remain for African countries to connect. Going forward, Aid for Trade is likely to play a larger role in addressing the physical and regulatory constraints to digital connectivity. Digital connectivity intertwines with physical connectivity, and there are clear links between closing the digital gap and the priority clusters of the Action Plan for Boosting Intra-African Trade.
Given the ongoing CFTA negotiations, there is scope to extend support to trade policy. The proportion of regional and sub-regional projects in trade policy is approximately 34%, which is higher than for many other areas of Aid for Trade. Support for this area in general and in regional initiatives, however, has been falling in the recent years. Going forward, it is important that adequate support be guided towards Africa’s regional integration and global agendas, both at the regional and national levels. In the context of the CFTA, technical assistance is required for addressing limited capacities in negotiating and implementing commitments on services trade, investment frameworks, competition and intellectual property rights. Aid for Trade could also play a role in addressing the short-term adjustment costs that are likely to be experienced by some countries in the CFTA process.
Aid for Trade at a Glance 2017: Promoting trade, inclusiveness and connectivity for sustainable development. The publication reviews action being taken by a broad range of stakeholders to promote connectivity for sustainable development, including by governments, their development partners and by the private sector. One message that emerges strongly is that participation in e-commerce requires much more than a simple Internet connection. Table of contents:
Chapter 1: Overview
Chapter 2: Setting the scene
Chapter 3: Digital connectivity and trade logistics
Chapter 4: The contribution of services trade policies
Chapter 6: Improving the e-trade environment
Chapter 8: Closing the small business and gender gap
Chapter 11: Financing connectivity
Chapter 12: Aid for inclusive trade and poverty reduction
Germany’s new AfT strategy is posted. The key themes are (pdf): integration and trade policy, quality infrastructure, trade facilitation, productive capacities, promotion of investment and competition, and economic infrastructure.
Sub-Saharan Africa to see huge mobile subscriber growth: GSMA presentation
The latest State of Mobile Money in Sub-Saharan Africa presentation (pdf) reveals that the number of live mobile money schemes in the region had reached 140 across 39 countries at the end of last year, accounting for more than half of the 277 mobile money deployments worldwide. The study points to a decade of growth in mobile money services in the region following the launch of M-Pesa in Kenya in 2007. It notes that there are now seven markets in the region where more than 40% of adults are active mobile money users: Gabon, Ghana, Kenya, Namibia, Tanzania, Uganda and Zimbabwe. There were 277 million registered mobile money accounts across Sub-Saharan Africa at the end of 2016, plus 1.5 million registered agents. Mobile money users have historically been concentrated in East Africa. However, the latest data suggests that user growth is now being driven by other markets in the region, notably West Africa. Almost 29% of active mobile money accounts in Sub-Saharan Africa are now based in West Africa, compared to just 8% five years earlier.
Huawei Technologies Co. said it will partner with British money-transfer operator WorldRemit Ltd. to enable African expatriates to send cash home to more than 100 million users of the Chinese company’s mobile-money service platform. The deal will let Huawei and WorldRemit tap into growing demand for money transfers from Africans living abroad using mobile-payments services, which are popular in places where banks are scarce or unreliable. All carriers that are Huawei partners will be able to use the service, the two companies said in an emailed statement Tuesday.
The industrial zone will cover an area of 2 million square meters in the east of Suez Canal city of Port Said, according to the memorandum. Russian car makers, petrochemical enterprises, energy and medical companies are expected to build production facilities within the zone, which is planned to start operations in late 2018. He added that it is expected to become the first step to build infrastructure to bring Russian products to the African markets, while African markets will be more actively cooperating with Russian firms following the formation of an industrial zone.
The Minister of Industry, Trade and Investment, Okechukwu Enelamah, said: “We have identified five top priority areas of critical infrastructure, financing, trade, skills and capacity building. Those are the five areas the committee will focus on and we have divided ourselves into groups. Next time we meet you, we will be telling you the priority areas we have focused on and the implementation solutions we have focused on.” The minister stated that members of the committee had committed to making sure that both the private and public sectors collaborate to solve the most pressing problems and challenges facing industries and industrialisation in Nigeria. [Related: Nigeria’s Aliko Dangote to invest $4.6bn in agriculture, Adeosun: Nigeria can no longer afford to borrow to fund its budget, EU, Nigeria to facilitate trade, investment dialogue]
Kenya moves to ease trade dispute with Dar (Business Daily)
Kenya has announced plans to buy new equipment for testing cooking gas entering the local market by road at border points in a move that could end the raging trade dispute with Tanzania. The Energy Regulatory Commission said yesterday it was procuring two test machines - gas chromatography-mass spectroscopy - for the inspections. This came after Ministry of Energy officials in May banned gas imports from Tanzania through land border due to failure to meet safety standards that exposed Kenyan consumers to the risk of cylinder explosions.
Great Lakes region: How trade is essential to regional peace and prosperity (UNCTAD)
Special Envoy Said Djinnit highlighted the need to ensure that political engagement goes hand-in-hand with multi-sectoral approaches. “More than ever, the Great Lakes Region requires predictable, coordinated and coherent support to avoid reversing the progress achieved to date,” he said. Discussions at the meeting (11 July) focussed on the Great Lakes Regional Strategic Framework – a multi-agency, regional and cross border coordination mechanism which fosters collaboration between stakeholders working towards solving and preventing conflicts and crisis in the region. The GLRSF also outlines the coordinated UN response in support of the implementation of the Peace, Security and Cooperation Framework for the Democratic Republic of Congo and the Great Lakes region. [Summary: UNSC debate on DRC, electoral process]
Rural electrification: How much does Sub-Saharan Africa need the grid? (World Bank)
This level of investment in grid extension is politically popular in many donor organizations and national governments, including those in Africa. It is seen – rightly – as a key part of the infrastructure development needed to achieve the economic transformation required for achieving the standard of living of industrialized countries. Moreover, there is some empirical evidence that electrification has contributed to economic growth and modernization in India, Southeast Asia, and Brazil, among other countries in Asia and Latin America. But to what degree can that experience apply to Africa? [The authors: Michal Tolman, Jörg Peters]
Arm’s-length trade: a source of post-crisis trade weakness (World Bank)
Trade growth has slowed sharply since the global financial crisis. US trade data highlights that arm’s-length trade —trade between unaffiliated firms—accounts disproportionately for the overall post-crisis trade slowdown. This is partly because arm’s-length trade depends more heavily than intra-firm trade on emerging market and developing economies, where output growth has slowed sharply from elevated pre-crisis rates, and on sectors with rapid pre-crisis growth that boosted arm’s-length trade pre-crisis but that have languished post-crisis.
This paper explores the question of how trade agreements affect inequality using two levels of analysis. The first is at the national level. A sovereign State can join an existing RTA or create a new one with its trading partners. The introduction of new trade relationships will affect between-household inequality in member States mostly through the impacts on the labour markets and wage earnings, akin to the general links between trade and poverty, although the direction is unclear. The second level is regional. Not all neighbouring States have RTA relationships. Yet where an RTA exists, even non-member States are impacted by changes in trade flows. That is, there are potential impacts for a country that is not in a formal RTA but trades extensively with countries that are highly exposed to regional agreement with other countries. This feature is incorporated into the analysis by estimating the effects of RTAs enacted by trading partners of a country with third parties. To differentiate this from the direct benefits of being a party to an RTA, this indirect measure is referred to as external exposure to regionalization.
Today’s Quick Links:
Mitsuhiro Furusawa: The international tax dimension of economic growth in Asia
International Taxation in Asia conference: issues and the way forward
Peer Pressure: Tax competition and developing economies