Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
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In Addis, today: Ms Vera Songwe assumes office as the new UNECA Executive Secretary

From the tralac e-Newsletter: Call for papers for the Monitoring Regional Integration in Southern Africa Yearbook 2017/18 (and more)

CCRED’s Barriers to Entry and Competition project: South African case studies, policy briefs

Baseline Agricultural Outlook report for 2017: Is Africa moving towards integrated agricultural food markets? (BFAP)

Extract (pdf): As a first step to facilitating regional integration, the level of applied duties on food imports faced by African exporters are relatively low and declining over time (Table 20). Over the past 11 years the average ad valorem equivalent tariff rate on food products faced by African exporters fell by 3.2%. Across the 19 food product categories traded intra-regionally, Vegetable & Roots and Cereals were the only two categories that experienced an increase in the applied import duties between 2005 and 2016. The actual realization of intra-regional trade is the growing share of total food imports supplied to SSA by Sub-Saharan African exporters. To date, though imports from non-SSA markets still dominate, the share of SSA imports coming from other SSA countries has risen; averaging an annual growth rate of 12% over the past fifteen years (Figure 126). The commodities accounting for the rapid growth are high-value products with some degree of processing. In 2015, of the $8.09bn in intra-regional trade of food products, cereals were the second largest product traded, accounting for 11% of the total imports. However, over the past 15 years, trade in vegetables, fi sh, and meat (fresh, semi-processed and processed) realized average annual growth rates above 13% compared to cereals, which grew by 10.4% per annum (Table 21). [An extract from the chapter, Regional Market Dynamics, from the Bureau for Food and Agricultural Policy’s Baseline Agricultural Outlook report for 2017]

Kenya: Illicit financial flows and political institutions (AfDB)

This paper explores the political economy view as an alternative explanation to the illicit financial outflows for one African country, Kenya. It aims to specifically answer two related questions: Why has Kenya continued to be characterized by corruption and debt-fueled capital outflows, even though these conditions stifle its economic development? Are these outflows a result of weaknesses in political institutions that leave the Executive unchecked? These questions remain very pertinent not only for Kenya but for other developing countries that are faced with the development challenge of debt-fueled, illicit capital outflows. To this end, this study assesses empirically the role of arbitrary powers of the Executive as a proxy for the influence of weak political institutions on illicit financial outflows. The evidence from this exercise supports the view that the extent of arbitrary executive powers is positively associated with illicit financial outflows. Thus weaknesses in political institutions matter for illicit financial flows (rent extraction) from Kenya. As robustness checks, this research uses constraints on the Executive from Polity IV Indicators as an alternative indicator of institutions. Using these alternative indicators, the study finds a strong support that constraining the Executive’s powers is likely to reduce the magnitude of illicit financial flows from Kenya.

Migration Dialogue for COMESA Member States: Investing in modern technologies will address the fear of free movement

The full integration of the economies of Eastern and Southern Africa will be realized if it is accompanied by the free movement of people in the region. According to the Minster for Home Affairs of Zambia Hon. Stephen Kampyongo, the fear of migrants was holding back the gains of social and economic integration that come through free movement of people. Speaking during the Regional Consultative Process meeting (28 July), the Minister said inherent security fears such as transnational crimes can be managed by investing in security institutions based on research and empirical evidence. Assistant Secretary General of COMESA Dr Kipyego Cheluget called upon Member States to sign and ratify the Protocol on Free Movement of Persons, Services, Labour and Right of Establishment. “Without ratifying the Protocols on Free Movement and implementation of Council Decision, there really is not free movement of people or process to talk about.”

COMESA Protocol on Free Movement of People: Chiefs of immigration meet to review status of free movement

The officials reviewed (26 – 27 July) the status of the signing and ratification of the Free Movement Protocol and the status of implementation of the Council of Ministers’ Decisions on the implementation of the Protocol. They also approved an information toolkit that has been developed to raising awareness on the implementation of the Protocol. Currently, three COMESA member States namely Mauritius, Rwanda and Seychelles are in the lead in the removal of visa requirements for almost all African countries. Rwanda and Kenya are implementing some of the aspects of the protocol. So far, Burundi is only State that has ratified it. Rwanda is in the process of doing so. Ambassador Kipyego Cheluget, the Assistant Secretary General for COMESA, called on member countries to build on the work done by eight member states that have started compiling and harmonizing data on migration. This, observed, will promote a regional approach to issues of migration. [Global Compact for Migration: East African Consultative Meeting]

ECOWAS steps up efforts at Management of Free Movement and Curbing Irregular Migration

The Migration Dialogue for West Africa Border Management Working Group began its two-day meeting in Abuja, preparatory to the Heads of Immigration Meeting being convened to review and make recommendations on the implementation of the Protocol of Free Movement of Persons, migration and irregular migration management as well as regional data sharing. The meeting, co-chaired by Togo and Nigeria, featured reviews of previous recommendations, country presentations, and an examination of the existing coordination groups at the national levels. The on-going exercise would lead to the finalisation of a Border Management Manual aided by expert contributions from heads of training schools and senior training personnel from all ECOWAS Member States. The Heads of Immigration meeting is meant to help arrive at a harmonised position by the immigration chiefs on the region’s pressing migration issues, including the stand to take at the upcoming Global Compact on Migration.

IGAD’s 9th Regional Consultative Process on Migration: climate change and human mobility

The RCP is aimed at increasing awareness around issues related to displacements caused by natural disasters as well as at forging a common understanding on the protection gaps and opportunities for IGAD member states. The participants to the dialogue are IGAD member states heads of immigration and labour departments dealing with climate change, as well as Academia, NCM focal points, UN agencies, civil society, Members of National Platforms for Disaster Risk Reduction (specifically those dealing with droughts, floods and environmental changes) and Experts on Disaster Risk Reduction. Mrs Fathia Alwan, speaking for the Executive Secretary of IGAD, underlined that climate change was “one of the leading causes of forced displacement in IGAD Region”.

China-Africa trade surges 19% in H1 (Xinhua)

Trade between China and Africa reached $85.3bn in H1, surging 19% year-on-year as the two sides strengthened cooperation in a wide range of areas, official data showed Thursday. The data reversed the negative growth trend since 2015, according to Gao Feng, spokesperson with the Ministry of Commerce. During January-June, Chinese imports from Africa, including minerals, agricultural products and fruits, amounted to $38.4bn, jumping 46% from the same period last year, while exports gained 3% to $47bn. Transport equipment has become a bright spot in China’s exports to African countries, with that of ships, trains and aerospace equipment up 200%, 161% and 252% respectively, thanks to stronger project construction cooperation.

Renminbi use continues to fall in international trade (GTR)

The Rmb fell from being the fifth most used global currency in June 2015 to the sixth in June 2017, while its share of international payments declined from 2.09% to 1.98% over the same period, according to new data from Swift. [Swift: Can the Belt and Road revitalise the RMB?]

Steven Gray: Can the West compete with the Asian dragon in the African infrastructure space? (Blavatnik School)

This model has led to a relatively low capacity and appetite for the Chinese financial institutions to undertake deep quantitative and qualitative analysis of commercial risks in more market-orientated infrastructure projects. This lack of capacity/appetite is evident through the fact that only a couple of Chinese-funded infrastructure projects with no government guarantees have achieved financial closure. Looking ahead, this infrastructure spending may result in a number of African governments defaulting on their debt obligations forcing China into yet another round of debt forgiveness. Will that force China into rethinking its approach to lending to African infrastructure projects and if so, what models are out there for them to compete with the wider market of infrastructure providers? A quick scan of the continent shows up three main alternatives, namely:

Turkish construction giant eyes more Africa projects after Ethiopia, Tanzania railways (Daily Sabah)

Turkish construction giant Yapı Merkezi hopes a $3bn modern railway-line project it is building in Ethiopia and Tanzania will showcase its skills and make it a “trusted development partner” in Africa. The consortium, which prides itself on successfully building some 2,600 kilometers of line (1,615 miles) and a dozen rail systems in different parts of the world, first set foot in the African infrastructure market with its Casablanca and Algiers light railway networks. The latest Ethiopian and Tanzanian standard-gauge railroad contract is the first African mega project for the company. The 3,910 km (2,430-mile) Awash-Kombolcha-Hara Gebya single-line railway project which began in 2015 at a cost of $1.7bn will link northern and eastern Ethiopia and also connect to a central rail network which stretches to the port of Djibouti. Construction of the first phase between Awash and Kombolcha, which consists of dozens of tall bridges and long tunnels, has been successfully completed, according to Öcal. When the project is totally completed in 2020 as planned, the company will have constructed 12 tunnels, 51 bridges, 14 overpasses and one underpass.

Yapı Merkezi’s Tanzanian project, which was signed in April 2017, is worth $1.2bn and its first 250-km (155 mile) section, will connect Dar es Salaam to Morogoro. According to a company document, the railroad will provide a ground speed of 160 kilometers per hour (99 mph). The project actually consists of five phases – the first won by Yapı Merkezi – totaling 1,224 kilometers that would link the Democratic Republic of Kongo and Uganda to the Indian Ocean. “Our model will be the same, in Ethiopia, Tanzania, and other future projects,” said Öcal. “We will provide durable European-standard technologies, empower local professionals with knowledge, and try to attract multiple financers.”

Abebe Aemro Selassie: A common cause for sustainable growth and stability in Central Africa (IMF)

Six countries in central Africa have been hit hard by the collapse in commodity prices. Oil prices dropped, economic growth stalled, public debt rose, and foreign exchange reserves declined. A delayed response from policy makers, and a regional conflict have worsened the situation further for people in the region. The countries of the Central African Economic and Monetary Community are Gabon, Cameroon, Chad, the Central African Republic, the Republic of Congo, and Equatorial Guinea. They share a common currency - the CFA franc - that is pegged to the euro, and have a common central bank that holds the region’s pool of foreign exchange reserves. In response to their current acute economic difficulties, the countries have devised a strategy to turn their economies around. Success depends on countries’ implementation of well-coordinated policies within and across their borders. The countries have also approached the IMF for support. In recent weeks, the IMF has approved new Fund-supported programs for Gabon, Cameroon, and Chad, and an increase in funding for the Central African Republic. Discussions are ongoing with the Republic of Congo and Equatorial Guinea.

Nigeria: IMF staff concludes visit

However, near-term vulnerabilities and risks to economic recovery and macroeconomic and financial stability remain elevated. At 0.8%, growth in 2017 will not be sufficient to make a dent in reducing unemployment and poverty. Concerns about delays in policy implementation, a reversal of favorable external market conditions, possible shortfalls in agricultural and oil production, additional fiscal pressures, continued market segmentation in a foreign exchange market that remains dependent on central bank interventions, and banking system fragilities represent the main risks to the outlook. Acting on an appropriate and coherent set of policies to enhance an economic recovery remains urgent. This includes: [IMF staff completes staff visit to Gabon]

Freedom of Investment Roundtable 26: summary of discussions (pdf, OECD)

Participants included representatives of governments of the 35 OECD members as well as the EU, of other governments that have adhered to the OECD Declaration on International Investment and Multinational Enterprises (Argentina, Brazil, Colombia, Costa Rica, Egypt, Lithuania, Morocco, Tunisia) as well as government representatives from P.R. China, the Russian Federation, South Africa and Thailand. The International Centre for Settlement of Investment Disputes and UNCITRAL also participated in the Roundtable. The discussions at Roundtable 26, held on 8 March, addressed several topics including:


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