tralac’s Daily News Selection
Starting today, in Maputo: Mozambique hosts Tokyo International Conference on African development
The meeting, which is taking place for the first time in Mozambique, has already confirmed the participation of 31 African ministers, including 24 Ministers for Foreign Affairs, seven other ministers and vice ministers, according to the Mozambican Minister of Foreign Affairs and Cooperation, Oldemiro Balói. The TICAD process consists of five co-organisers, namely the Government of Japan, the African Union Commission, the Office of the United Nations Special Adviser on Africa, the United Nations Development Program and the World Bank.
World Bank Group TICAD Seminar Series: Toward TICAD VII in 2019, we will continue organizing the seminar series mainly for Japanese private sector looking into business opportunities in Africa. Seminar No. 11: Africa as a fast-growing and economically diverse continent: the opportunities and outlook for private investment; Presentation by Thomas O’Brien (pdf). Seminar No. 10: Agribusiness in West Africa; Presentation by El Hadj Adama Toure (pdf). Seminar No. 9: Doing business in Africa.
A review of the UNCTAD report on trade misinvoicing, with a full counterfactual on South African exports: final report (Eunomix)
The counterfactual studies conducted by Eunomix (pdf), and focused on South Africa, have easily demonstrated that the UNCTAD study’s findings are both theoretically and empirically incorrect: (i) In the case of gold, the trade data discrepancy figure of USD 78.2 billion (in the July 2016 report) or USD 57 billion (in the December 2016 report) was shown to actually be only USD 9.8 billion, according to other reliable data sources in South Africa. (ii) In the case of silver and platinum, the trade data discrepancy figure of USD 24 billion was shown to be only USD 15 billion, according to other reliable data sources in South Africa; iii) o In the case of iron ore, the trade data discrepancy figure of USD 620 million for iron ore was shown to be lower than the figures compiled by the DMR and DTI.
Eunomix rejects the UNCTAD study’s conclusion that trade misinvoicing is substantial, and that underinvoicing is preponderant in misinvoicing. It is our view that the UNCTAD study mainly, and perhaps exclusively, documented trade data discrepancies rather than actual trade discrepancies: (i) The core proposition Trade Discrepancy = Trade Misinvoicing if greater than 10% appears false. (ii) In reality, Trade Data Discrepancy imperfectly reflects Actual Trade Discrepancy, which may or may not indicate Trade Misinvoicing. [Related analysis, by Maya Forstater: How big is the transfer pricing prize for development?]
African Tax Outlook 2017: second edition (ATAF)
The African Tax Outlook publication is intended to be used for improved cross-country or regional comparisons and benchmarking; provide evidence-based recommendations to reform tax policies and tax administrations; provide an analysis of the data in terms of taxation trends around the continent, identification of good practices, and inferences on the heterogeneity of the tax data over time and across countries; provide comparable data on tax policy, tax administration and tax legislation. [Downloads in English and French]
Mozambique, South Africa revise double taxation agreement (Club of Mozambique)
The Tax Authority of Mozambique and its South African counterpart have both submitted for legal assessment clauses that will guide a revised mutual double taxation agreement. According to the Director General of the Customs of Mozambique, Ally Malá, it is in the interest of Mozambique and South Africa to improve the quality of services provided at the borders and avoid tax evasion. South African counterpart Jed Michaletos said the two countries also agreed that the upgrade of the Ponta do Ouro border post should be finished before December in order to reduce year-end pressure on the Ressano Garcia crossing.
Singapore High Court exempts Lesotho from arbitral award (Mining News)
The High Court of Singapore has set aside an arbitral award issued to Swissbourgh Diamond Mines and South African investors who claim their mining leases had been expropriated by the Kingdom of Lesotho. The claimants state that their mining leases were unlawfully expropriated in breach of Lesotho’s obligations under the treaty of the Southern African Development Community. The case, according to international law firm, Hogan Lovells, is an important one as it concerns whether investors can use arbitration to resolve cases that were pending before the SADC Tribunal when it was dissolved by the SADC Summit in 2014.
Special Report on Investment in Africa 2017 (Hogan Lovells)
The report provides potential investors with easily comparable country-by-county analysis and an overview of the local legal framework on matters such as local content rules, real estate ownership, taxation, dispute resolution, and employment. In addition, it also breaks down the legal framework of four investment sectors that are of particular importance in Africa – finance, natural resources, power and infrastructure, and private equity. Of particular note to investors is the guidance on Public/Private Partnerships.
Mauritius: The gate for Chinese investment into Africa (Mondaq)
Tax planning should be one of the significant elements when Chinese investors are considering an ODI decision. Mauritius has concluded 50 Double Taxation Agreements with other countries, 43 of which are in force, and seven are waiting for ratification. There are another five DTAs waiting for execution, and 18 DTAs are under negotiation. 29 African countries are the parties to these DTAs. Utilizing the DTAs in force are states like Egypt, Zambia, the Republic of Congo, Botswana, Madagascar, Uganda and Zimbabwe; Chinese investors may have tax savings of 10.5% for dividends from Congo and of 30% for capital gains from Uganda. Mauritius has concluded 45 IPPAs with other countries, 23 of which are with African countries. For those African countries which have not concluded Bilateral Investment Treaties with China, such as Burundi, Zambia and Senegal, Mauritius is highly recommended in the shortlist of holding companies’ destination for African investment. [The author: Edwin (Zhiguo) Li, Dentons]
Ethiopian Prime Minister Hailemariam Desalegn who is in neighboring nation Sudan for a three-day official state visit has revealed his country’s interest to use Port Sudan for 50% of Ethiopia’s import needs. The premier also indicated that preparatory works are being done between the two countries toward that regard. Desalegn, who held discussion with Sudanese President Omar Hassan al-Bashir on ways of strengthening ties between the two neighboring countries, indicated that Port Sudan is geographically convenient for Ethiopia’s northern region.
The vice president admitted that the country was aware of the numerous challenges confronting the bank in recent times, arising from limited resources, which had limited its capacity to function optimally as a true financial arm of the community. “So, clearly it is in our interest as member states to do more to address the Bank’s funding challenges, as the bank seeks to innovatively mobilise resources from across the continent and beyond, in line with its corporate objectives. Clearly, a well-resourced EBID could play a pivotal role in financing the achievement of the objectives of Vision 2020. Which envisages the transformation of the ECOWAS Space from an ECOWAS of States to an ECOWAS of People, in which the people are prosperous, properly governed and have the capacity to access and harness the enormous resources of the Community.” [Nigeria’s Mrs Kemi Adeosun appointed Chairperson, ECOWAS Bank for Investment, Development]
Cooperation in International Waters in Africa: programme overview, selected outputs
(i) Cooperation in international waters in Africa: opportunities for impact – partnership framework. This document, the CIWA Partnership Framework (pdf), summarizes the current state of transboundary water management and development in Africa, the objectives and methods of the CIWA program, and opportunities for partnership. Tapping into Africa’s tremendous, but currently underutilized, water resources will help improve livelihoods, strengthen water security, and fuel economic growth
(ii) Economic rationale for cooperation in international waters in Africa: a review. This paper provides a review of the challenges to transboundary water cooperation, pathways for overcoming those challenges, and the role of economics in facilitating the discovery of those pathways. While it is written to focus on African transboundary waters, the report draws from broader transboundary water literature. Appendices include case studies on both game theory and hydro-economic analysis in transboundary cooperation for several river basins, including some from Africa. Key findings include the following: [The authors: Regassa Ensermu Namara, Mark Giordano]
(iii) Political economy analysis for transboundary water resources management in Africa: practical guidance note. The transboundary nature of Africa’s rivers, lakes, and aquifers add considerable political, technical, environmental, and financial complexity to their sustainable development, often resulting in stalled investments or the adoption of sub-optimal development choices that have a real and significant cost. The note explores how to carry out problem-driven analysis for complex regional, multi-sector development challenges. This requires setting a clear and focused scope. It involves describing the relevant technical, structural, and regional historical issues, as well as the institutional arrangements at basin, national, and sector levels, drilling down to the underlying drivers. Analysis concludes with concrete recommendations for the design and implementation of development solutions. [Download the full report, pdf]
(iv) Okavango River Basin: multi-sectoral investment analysis for shared prosperity. The Cubango-Okavango River Basin is one of the world’s most unique, near pristine free-flowing rivers, and is central to sustainable economic development within the arid landscapes of southern Africa. The complex flood pulse cycle provides important services for local communities while supporting a rich and unique biodiversity that makes it a wetland of international importance and World Heritage site. However, the commitments to peace and prosperity among the three countries – Angola, Botswana, and Namibia – and the broader efforts of the Southern African Development Community to facilitate greater regional integration provide prospects for increasing and improving development.The Multi-Sector Investment Opportunities Analysis (MSIOA) is part of a systematic strategy by the Permanent Okavango River Basin Water Commission (OKACOM), a body established in 1994 by Angola, Botswana, and Namibia, to promote coordinated and sustainable water resources management, while addressing the legitimate social and economic needs of the member states.The environmental integrity and long-term protection of the basin depends on addressing the underlying drivers of poverty.