Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Rediff

UNCTAD’s first Non-Tariff Measures Week concludes today in Geneva: an overview; an interview with Dr Manish Pande (Director of Quality Council of India)

The WTO Public Forum 2017 – Trade: Behind the Headlines, also concludes today in Geneva: “We need to adjust and react”. Profiled sessions: (i) Challenges and opportunities for small-scale fishers in fish trade; (ii) Can gender-sensitive trade policies hinder the spread of the anti-globalization movements?; (iii) How can agricultural and fisheries trade contribute towards achieving the SDGs?

WTO’s 2017 World Trade Report: trade, technology and jobs

The report, released this morning, finds that although trade and technology are vital sources of economic growth, certain types of workers and/or regions may sometimes be adversely affected. It also finds that, although the two are interrelated, it is technology and not trade that bears the greatest responsibility for the decreasing share of manufacturing jobs and for the declining number of middle-skill jobs relative to low- and high-skill jobs in developed economies. Looking ahead, the prospects for increased automation suggest that technology may have an even greater impact on the future of jobs. While drawing firm conclusions about what this could mean for the labour markets is problematic, we can be sure that technological progress is likely to have an increasingly disruptive impact, rendering some skills obsolete but enhancing others and leading to the development of new skills and new jobs.

More than ever before, the ability of workers to move from lower- to higher-productivity jobs – and from declining sectors to rising ones – is the main mechanism through which trade and technological progress contribute to growth, development and rising living standards. Through a mix of adjustment, competitiveness and compensation policies, governments can help workers to manage the cost of adjusting to technological change and trade, while making sure that the economy captures as much as possible the benefits from these changes. While today’s labour market problems are largely traceable to domestic policy shortcomings, a failure to find answers could have global ramifications. [Download: Executive summary]

The Global Competitiveness Report 2017-2018 (World Economic Forum)

On average, sub-Saharan Africa’s competitiveness has not changed significantly over the past decade: while a little ground was gained between 2011 and 2015, it has been partially lost again over the past two years. Only four countries (Ethiopia, Senegal, Tanzania, and Uganda) have improved their performance for five consecutive years since 2010. Africa’s recent decline in overall competitiveness is reflected in subdued growth rates - only 1.4% in 2016 and a modest 2.6% projected for 2017. Gross capital formation is now lower than at any other point in the last 10 years.

Continued deterioration in the macroeconomic environment (Figure 9) is behind most of this year’s fall in competitiveness. Average inflation grew to double digits in 2016 and remains above 10%. Public finances are still being affected by past slower global growth and commodity prices, which - although picking up somewhat - remain well below the commodity price levels of the 2005–14 period. As a consequence, African public revenues fell from an average of 26.5% of GDP in 2006 to 17% in 2016, and many countries are running deficits. In just two years public debt has risen from an average of 31.5% to 42.5% of GDP, and 22 of the 31 countries assessed by the GCI this year report higher debt than last year.

These challenges are affecting the banking sector, with financial market efficiency continuing to decline. In addition, after four years of improvement, performance in the institutions pillar has worsened this year - particularly in South Africa, Lesotho, and Zambia - while elections in 2017 in Rwanda, Kenya, Liberia, and the DRC have increased volatility and uncertainty in the African business environment. These negative trends have been partly compensated by improvements in infrastructure, health, technological readiness, and business sophistication, although Africa remains below the global average in these areas. There is significant variation across countries. Mauritius is again the most competitive country in Africa, at 45th in the overall GCI, with its main rivals falling back: South Africa drops 14 places to 61st and Rwanda drops seven places to 58th. The most improved African countries year-on-year are Madagascar (121st, up seven), Gambia (117th, up six), Kenya (91st, up five), and Senegal (106th, up six), thanks either to an improved macroeconomic environment (Madagascar and Senegal) or to the efficiency of goods, labor, and financial markets (Gambia, and to a lesser extent Kenya).

Trade facilitation and the global economy: state of play in 2017 (OECD)

The 2017 iteration of the TFIs shows that in early 2017, implementation of measures falling under significant portions of the TFA is well under way. The evolution from the worldwide trade facilitation performance observed in 2015 to the performance in 2017 confirms the positive momentum generated by the negotiation and adoption of the TFA. The most challenging areas across the board remain those related to internal and external border agency co-operation, which remain work in progress around the world. Deepening the TFIs in these areas enabled the identification of more specific implementation challenges, such as sharing results of inspections and controls among agencies involved in the management of cross-border trade, control delegation, or coordinated and shared infrastructure and equipment use at the domestic level. Significant progress has been achieved on cross-border cooperation since 2015 in the alignment of working days and hours and the alignment of procedures and formalities, but other areas remain difficult for most countries around the world. Progress on a number of policy areas, such as advance rulings or automation, appear to be closely related to income, with less advanced economies faring less well than more advanced ones, suggesting that investments in extensive capacity building in these areas are likely to yield considerable benefits. On the other hand, worldwide performance is relatively even in areas such as disciplines on fees and charges and the streamlining of border procedures.

Rwanda: Economy grows 4% in second quarter of 2017 (New Times)

In the second quarter of the year (April-June), GDP was estimated at Rwf1,869 billion up from Rwf1,636 billion in the same quarter last year. The latest figures come against the backdrop of a sluggish 1.7% growth rate registered in the first quarter, which had caused concerns on the feasibility of the targeted 6.2% growth rate for the year 2017. Agriculture sector grew by 6% in the second quarter owing to good harvest season, according to figures released by National Institute of Statistics of Rwanda. A good harvest enabled a 22% increase in export crops dominated by coffee and tea. The services sector posted an even stronger growth rate of 7% thanks in large part to the hotels and restaurants subsector which grew by 9%.

Dar pulls the plug on non-EPZ Kenyan goods (Business Daily)

Tanzania has blocked preferential access for Kenyan textile goods manufactured outside the Export Processing Zone, citing unfair competition for its own manufacturers. “This is informed by the fact that Kenya has allowed textile and apparel manufactures operating in the EPZ to off load their final textile products in the Kenyan market duty free,” Tanzania stated in a communiqué from a joint meeting on September 2 in Dar es Salaam to iron out trade wrangles between the two countries. “This in effect may hinder similar products from Tanzania from being competitive when sold in the Kenyan market.” Kenya in May cleared firms operating in its EPZs to sell up to an expanded 40% of their products in the local market as part of strategy to boost sales and help prop the struggling industry. The EPZ firms were initially only allowed to sell 20% of their products in the Kenyan market with the rest sold under the African Growth and Opportunity Act – a trade pact that allows US buyers to import goods from a number of sub-Saharan African countries without paying taxes.

The trade reform of SACU: country case studies on regional integration (GEG Africa)

This discussion paper draws on the perspectives of business and researchers in the BLNS to identify the main infrastructure and regulatory barriers to the development of intra-SACU value chains, and to assess how the alleviation of these impediments might contribute to improved regional economic outcomes. In doing so, it seeks to inform current discussions within SACU on the type of projects that may serve as a basis for cross-border value chains, and to assess the possible contribution of a SACU development fund in growing, deepening or diversifying economic linkages in the region. This paper presents the results of eight case studies in the BLNS, describing the experiences of eight different firms in operating across SACU borders.

SA’s Trade Minister Rob Davies: Breaking the grip of commodity dependence (Independent Online)

What is clear is that our neighbours in the SADC see South Africa as a critical player in realising their industrial ambitions. Currently Africa as a market represents more than 28% of South Africa’s exports, a high proportion of which are manufactured and value-added products. The SADC region, however, is by far our lead African trade partner, accounting for the overwhelming majority of our exports, at 86.5% in 2016. If one adds in our services exports - for which data is notoriously weak, and not currently included in the trade figures - “Africa as a whole” now figures as the most important regional trading bloc for South Africa. But we cannot continue to export in the manner we have been doing up to now. Our neighbours are increasingly making their position clear: they are looking to South Africa to partner and invest in productive capabilities that will create catalytic local and regional multiplier effects. With South Africa taking over as SADC chair for the year ahead, I will personally be meeting with the secretariat in the next month to start unpacking the immediate areas of action that can be developed within the framework of the plan, to ensure that they are practical, bankable and implementable.

Afreximbank announces development of African Trade Centres

The African Export-Import Bank has embarked on a concept to transform its buildings into iconic business complexes with integrated one-stop trade services shop, the President, Dr. Benedict Oramah, announced in Harare on 23 September 2017. “I am pleased to note that Zimbabwe will be the first beneficiary of this concept,” he said. “The project, when completed, will transform Zimbabwe into an intra-African trade hub; a centre of knowledge and information about markets; and a centre where major deals can be struck.” The project will also accelerate the transformation of the neighbourhood into a business district and will enable Afreximbank to expand its operations in Southern Africa in size, scope and complexity, added the President.

Update on CFTA negotiations: presentation by AUC’s Prudence Sebahizi (AUC)

Challenges of the CFTA: (i) Different speed and priorities and membership in different Regional Economic Communities; (ii) Overlapping membership: most African countries are parties to more than one REC, and convergence between different RECs should be made compatible with the goals and timelines set for the CFTA; (iii) Multitude and varied trade commitments undertaken by African countries; (iv) Institutional, organizational, and productive capacities; (v) Sensitive issues such as RoO, Level of ambition, Services regulations, etc. [Download]

AU trade ministers hold informal consultations on the matter of reservations made on CFTA modalities on liberalization of trade in goods (AU)

At the backdrop of the 72nd UN General Assembly, Ministers of Trade and Industry from Djibouti, Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe held Informal Consultations on the matter of reservations made on the CFTA Modalities on liberalization of Trade in Goods. The meeting was chaired by H.E. Dr. Okechukwu E. Enelamah, Minister for Trade and Industry of the Federal Republic of Nigeria and Chairman of the African Union Ministers responsible for Trade. The consultative meeting was convened in line with the AU Assembly Decision that mandated the CFTA Champion to engage with the concerned countries in order to find an amicable solution to the reservations made on the level of ambition for tariff liberalisation in the CFTA.

The future of global value chains: “Business as usual” or “A new normal”? (pdf, OECD)

Overall, the impacts of individual factors – “Business as usual” as well as “A new normal” – appear to be rather moderate, particularly when comparing these with the explosive growth of GVCs in the 2000s. But the results further show that it is the confluence of the different structural factors that will affect the future growth of GVCs: international sourcing of intermediates (in percentage of production) and the trade/GDP ratio are estimated to drop to the levels of 2005-2006. At the same time, a structural reallocation of global trade and production is expected to take place towards developed economies, as especially digitalisation will help to restore the competitiveness of these countries. The estimates presented give a clear indication that the future of GVCs may look quite different from the past but the results should not be interpreted as exact forecasts, but rather scenarios.

Today’s Quick Links:

Rusumo border post to start 24-hour operations on 2 October

Ecobank on Africa’s electricity market: China’s dominance is unchallenged

The World Development Report 2018: Learning to realize education’s promise

Third Industrial Development Decade for Africa (2016-2025): communiqué

Airports Council International: (i) Growth in airport traffic reaches new highs in July, with freight volumes recording robust increases; (ii) Mature market hubs achieve emerging market growth rates

How does port efficiency affect maritime transport costs and trade? Evidence from Indian and western Pacific Ocean countries


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