Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: UN | Abdul Fatai

In this week’s tralac’s e-Newsletter: Talkmore Chidede discusses a recent suit filed by Zimbabwe invoking the SADC Finance and Investment Protocol

Yesterday’s African Union G7 Ministerial (CFTA) Consultative Meeting in New York: tweeted updates

(i) @TradeOfficeNG (Nigerian Office for Trade Negotiations): CFTA consensus-building informal consultations by Minister Enelamah (Nigeria), Chairman of African Ministers of Trade; (ii) @ChieduOsakwe1 (Ambassador Chiedu Osakwe, Chief Trade Negotiator Nigeria): Meeting in New York on resolving differences raised by some countries on CFTA modalities on liberalization in trade, goods and services; (iii) @Ccikokwu (Constance ikokwu‏, Adviser to Nigeria’s Minister of Industry, Trade & Investment): Djibouti, Ethiopia, Madagascar, Malawi, Sudan, Zambia, Zimbabwe, Niger, Nigeria had an open discussion on reservations on modalities of CFTA trade and goods liberalization earlier raised during negotiations. Meeting is aimed at resolving differences in order to enable conclusion of CFTA negotiations. Deliberation was chaired by Nigeria’s Minister Okechukwu Enelamah.

From last week’s African Union trade finance and trade information systems conference: recommendations, background papers

Recommendations: In trade finance, workshop participants stressed the need for financial institutions to find appropriate means of mitigating trade finance risks by allocating and pricing each type of risk to those better positioned to deal with them. Participants also suggested that financial institutions should leverage ICT tools to reach a larger sector of the African trading community. On issues relating to trade information, particularly regulatory aspects, participants recommended that providers of trade information ensure that information is presented in a user-friendly manner that is accessible and understandable by all levels of the private sector. To further pan-African uptake of recommendations on trade information and trade finance, workshop participants suggested that the AUC collaborate with pan-African business councils and chambers of commerce to develop proposals for implementation. These proposals could then be sent to partners for consideration, including USAID, UNECA, RECs and development financial institutions.

Trade finance background paper (prepared by Kefa Nyakundi): This report has attempted to chronicle the challenges affecting the financing of intra-Africa trade. It has attempted to benchmark with other regions to show that it is feasible to increase intra-Africa trade. Some of the recommended actions variously captured in the body of this report include, but are not limited to: (v) On regulatory collaboration: For intra-Africa trade to flourish, the regulatory regime across the continent needs harmonization within the Basel framework. This will ensure that Banks that have a ‘home’ regulator face less onerous requirements from the ‘host’ regulator.

Trade information systems background paper (prepared by Daniel J. Plunkett): Building a coherent and effective system will in fact require the participation and bringing-up-to speed of all African countries. In addition, each of the RECs will need to ‘up their game’ in terms of collecting statistics from Member States, organizing them into REC-wide aggregates, transmitting the information to the African Union Commission, and working on areas of weakness and “gaps” such as in trade in services. Figure 1 provides a graphic display of how the system ideally would work. The initiative to improve Africa’s trade information system, as represented by the African Charter on Statistics and creation of the AU’s Trade Information Observatory, appears to be gaining momentum. The harmonization process inherent to negotiation of the Tripartite FTA is another strong factor promoting modernization of each country’s statistical systems. But the AU’s efforts represent a “top-down” approach that will only truly lead to a better system if the “bottom-up” actors do their part. Table 4 provides some discussion of national-level institutions involved in the collecting, validating, analyzing, disseminating and using trade-related information.

Comoros joins Afreximbank as participating state; Chad, South Sudan conclude ratification

Membership of Afreximbank has moved closer to full coverage of the African continent with the decision by the island of Comoros to join the continental multilateral trade finance institution as a participating state. Comoros activated its membership as Afreximbank’s 46th participating state on 12 September when Said Ali Said Chayhane, the Minister of Finance and Budget, signed the instrument of accession to the Agreement Establishing the Bank, committing Comoros to take all necessary steps for the ratification of the Agreement. In a related development, Chad and South Sudan have completed their Afreximbank membership procedures with their ratification of the Agreement Establishing the Bank. Current Afreximbank participating states include: [Africa can buck protectionist trend and thrive: Afreximbank’s Oramah]

South Africa: Business’ input to the Nedlac Trade and Industry Chamber Strategic Session 2017 (AbBiz)

The Nedlac Trade and Industry Chamber held its annual strategic session with Minister Rob Davies on 22 September 2017. The strategic session focuses primarily on the Industrial Policy Action Plan and the trade environment. Dr John Purchase (CEO of Agbiz and as Convenor for Business in the Trade and Industry Chamber), presented the Business position on challenges in both the IPAP space and trade environment. Extract from the latter:

Current trade negotiations – additional considerations: (i) Business broadly supportive of TFTA and CFTA process and encourages the DTI to further publicise information relating to developments so as to position SA business to take advantage of opportunities. EPA an example, but early publicising important. Often, large capital and /or marketing commitments are required on the part of businesses. (ii) To take advantage of opportunities upon conclusion of TFTA and eventually CFTA, many companies have requested export credit guarantees. More affordable export credit insurance offered by State would solve problem of expensive credit insurance (particularly onerous for emerging and / or small business. (iii) In many cases, companies cannot buy export insurance on sales to certain African countries due to high country and customer risk profiles. Limits potential for export growth.

Customs fraud and illegal imports: (i) Trade and industrial policy, protection of domestic industry and maintenance of policy space is only as effective as its enforcement. This is particularly apparent in customs fraud & illegal imports. It is critical for enforcement agencies and the DTI to pick up on potential early signs of customs fraud. (ii) One example, and which requires examination is in clothing imports: In January-June 2017, volumes have grown 5% but averages prices have declined by 18%. The total value of clothing imports declined by 14% to R10.7 billion – a significant change from trends in recent years where volumes were declining and average prices rising. (iii) Cooperation of SARS customs in enforcing strict monitoring through risk engine critical. In this regard, business eagerly awaits the commencement of the work of the Nedlac task team on customs fraud & illegal imports.

AMREC: Development of an African mineral resource classification system now underway (Rwanda News Agency)

The workshop that will bring about the establishment of AMREC will be held 2-6 October in Cairo. The meeting is set to bring together professionals from African extractive industries and international experts in resource classification. The meeting is also expected to: (i) encourage robust discussion and proposals in harmonizing, adapting, implementing, and developing unifying system for the classification and reporting of fossil energy and mineral reserves and resources in Africa based on the UNFC; (ii) frame the requirements of developing detailed guidance for application of UNFC in Africa in line with the requirements of AMV; (iii) set up modalities for the setting up of Pan African Competent Person system, including the elaboration of a training programme; (iv) reach out to functional professional bodies in mineral, petroleum and renewable industries in Africa for collaborations on the proposed activities.

Income inequality trends in SSA: divergence, determinants, consequences (UNDP)

This book is timely and long overdue. Indeed, with rare exceptions (Anyanwu, Erhijakpor and Obi, 2016), as in the case of the typical debate on the ‘rural-urban income gap’, the inequality issue in SSA has received limited attention historically from a research, policy and political perspective. As elsewhere, in the early post-independence decades, the policy imperative was to modernize the economy and grow, whereas in the 1980s and 1990s, the focus shifted to managing the foreign debt and stabilising the macroeconomy. More recently, with the adoption of the Millennium Development Goals (MDGs) in 2000, priority shifted to reducing poverty and meeting the predominantly social MDGs. In addition, in September 2015, reducing poverty and inequality became the overarching goal of the 2030 Agenda for Sustainable Development. Yet, interest in income and asset distribution increased gradually over the course of the 2000s, including in Africa, for a variety of reasons. What explains this change in focus for both research and policy design? The editors: Ayodele Odusola, Giovanni Andrea Cornia, Haroon Bhorat, Pedro Conceição] [Downloads: 17 chapters, in English and French]

Development and poverty in sub-Saharan Africa (UNU-WIDER)

Our paper discusses where SSA has come from, and where it might now be going. It is structured as follows. After this introduction, Section 2 sets the scene by presenting some of the trends in SSA’s economic growth, and reviews what has come to be known as the ‘poverty-growth inequality triangle’. This is followed in Section 3 by an overview of a selected set of non-monetary welfare and human development indicators. Section 4 turns to the structural weaknesses in the region’s development process to date. Section 5 addresses the evolving governance, economic policy, and general societal framework of SSA. In Section 6, we identify and discuss a set of core challenges for the future, while Section 7 concludes on an optimistic yet cautious note. [The authors: Tony Addison, Ville Pikkarainen, Risto Rönkkö, Finn Tarp]

Third Industrial Development Decade for Africa: Industrialization can drive growth, sustainable development in Africa, stress UN officials

“We all have to acknowledge a simple fact: Africa is growing,” Miroslav Lajčák, President of the General Assembly, said at a high-level event focusing on the Third Industrial Development Decade for Africa. Mr Lajčák noted that this is true for the continent’s economy, with successive growth recorded since the early 2000s. It is also true for its population, particularly in relation to its youth. By 2050, Africa will be home to 38 out of the 40 youngest countries in the world. “This growth presents great opportunity. It could lead to the eradication of poverty and an improvement in livelihoods. But, for this to happen, growth must be inclusive. And it must be sustained,” he stated. “Industrialization has the potential to drive this kind of growth.”

A unified and assertive Africa Union will benefit everyone – Kagame (New Times)

President Paul Kagame who is currently leading the African Union reforms process called for support towards the initiative noting that a more effective and efficient African Union is not only ideal for the continent but international partners as well. Kagame was speaking at the Brookings Institution, a Washington DC based think tank which conducts research on topics such as economics, governance and foreign policy. Understanding the objectives of the reforms, he said will put to an end some efforts and attempts that have been seen to derail the process. “Efforts that we have seen to stall or even derail the reform process are counterproductive and should be reviewed. One concrete example is the attempt, through official channels, to characterise the 0.2 per cent levy on eligible imports as a violation of World Trade Organisation commitments, which is not true,” he said.

Zimbabwe shelves Botswana pipeline sharing deal (NewsDay)

Zimbabwe has effectively shelved plans to extend its Feruka pipeline to Francistown, Botswana, citing viability concerns over the project, an official has said. The deal had been proposed in attempt to make the pipeline, which runs from Beira to Harare, more profitable by opening it up to the region and increasing traffic volumes. In January, the government reduced the pipeline tariff from 8,05 cents to 6,50 cents per litre to lure fuel dealers who otherwise opted to use road transport. “We are in talks with Botswana, but the deal is not happening anytime soon. The (Botswana) market is not that big to warrant the deal,” Energy and Power Development permanent secretary, Partson Mbiriri said yesterday.

WCO-SACU Connect Project: update

Under the auspices of the WCO-SACU Connect Project financed by Sweden, monitoring and evaluation visits were carried out from 20th July to 4th August 2017 in South Africa, Namibia, Botswana, Lesotho, and Swaziland. The monitoring and evaluation visits were conducted according to the Project’s Annual Work Plan for 2017, and were in line with decisions taken at the Project’s Steering Committee meeting held in November 2016, which outlined a number of activities to be undertaken to plan, implement, monitor and evaluation the WCO-SACU Connect Project towards delivery on the set objectives, results and outcomes. The outcomes of these monitoring and evaluation visits will serve to inform the Project’s Progress Report that will be presented at the next Steering Committee meeting due to take place in November 2017.

Fourth round of political consultations between Chinese, African foreign ministers: joint communiqué (MoFA)

Bearing in mind the new situation of transformation and upgrading of China-Africa cooperation, the two sides agree to actively explore multiple forms of cooperation, including PPP and BOT, to promote China-Africa cooperative development and the progress of industrialization and economic diversification in Africa. The Chinese side encourages African countries to make use of the favourable financing model as pledged at the Johannesburg Summit of FOCAC. The African side appreciates the positive progress made by China in developing industrial parks and special economic zones in several African countries.

The two sides believe that the improvement of Africa’s agricultural value chain and agricultural processing are essential in the promotion of agricultural modernization in Africa. The two sides agree to strengthen agricultural cooperation, support implementation of the Comprehensive African Agriculture Development Programme, help Africa promote agricultural industrialization and modernization and enhance its capacity for food security. The two sides will strengthen capacity building cooperation on African livestock development especially in the related areas such as feed, health and quarantine. The two sides express their concerns over the serious drought in parts of Africa caused by El Nino. The African side expresses appreciation to the Chinese side for its timely food assistance to affected African countries.

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