tralac’s Daily News Selection
Profiled trade and regional integration editorial commentaries: (i) New Times: EAC could achieve more if all member states moved at the same pace; (ii) Business Day: Catch-22 of trade surplus
Remittances to low- and middle-income countries are on course to recover in 2017 after two consecutive years of decline, says the latest edition of the World Bank’s Migration and Development Brief. The Bank estimates that officially recorded remittances to developing countries are expected to grow by 4.8% to $450bn for 2017. Global remittances, which include flows to high-income countries, are projected to grow by 3.9% to $596bn. Among major remittance recipients, India retains its top spot, with remittances expected to total $65bn this year, followed by China ($61bn), the Philippines ($33bn), Mexico (a record $31bn), and Nigeria ($22bn). In keeping with an improving global economy, remittances to low- and middle-income countries are expected to grow modestly by 3.5% in 2018, to $466bn. Global remittances will grow by 3.4% to $616bn in 2018.
This section analyses the growth trends of Ghana’s trade flows along EPA, AGOA, and ETLS trade routes. Comparisons are made with trends in Cote D’Ivoire and in some cases with West African averages. Cote D’Ivoire is selected for comparison because not only does she trade along EPA, AGOA and ETLS trade routes, she also has similar characteristics as Ghana – both Ghana and Cote D’Ivoire export mainly agricultural products and are both lower middle income countries with per capita income (2016) of $1,380.00 and $1,520.00 respectively. This section also explores the market share of some selected NTEs – cocoa paste, tropical fruits, bananas and processed fish. The selected products fall within the priority products of the National Export Strategy and also represent the top most traded NTEs by Ghana along EPA and AGOA trade routes. A product destination analysis – an analysis of Ghana’s market share in the major export destinations, and the competition faced in those markets will also be conducted in this section.
Oil discovery and macroeconomic management: the recent Ghanaian experience (World Bank)
This paper analyses the evolution of fiscal and monetary variables in Ghana, from the discovery of oil in 2007 through to 2014. It documents the deterioration of fiscal and monetary discipline over this period, which resulted in a rebound of debt, a deterioration of the external balance, and a decrease in public investment. The paper goes on to analyse the potential causes of this deterioration, including the political economy context, and the fiscal and monetary institutional framework. The suggested causes include the politics of Ghana’s dominant two-party system. Finally, the paper discusses what Ghana could have done differently to avoid the various damaging effects associated with the oil discovery. It does not aim to provide specific fiscal policy recommendations for Ghana, but rather to give an empirical account of Ghana’s experience that may be useful for other countries that discover oil.
Visa-free Africa by 2018: Where does Rwanda lie? (New Times)
All holders of African passports travelling to or transiting through the country are issued an entry visa upon arrival at any Rwandan entry point. And, some countries do not require visas at all. For Rwandans, however, of the 53 African countries, only 29 allow holders of the Rwandan passport to enter without a visa or issue it on arrival. The Chief Executive of Rwanda Convention Bureau (RCB), Frank Murangwa, said opening borders to Africans has contributed to the growth of the economy, especially in terms of increasing in-bound delegate numbers.
SA-Zimbabwe Bi-National Commission: Beitbridge OSBP, trade update
Having noted the developments on the One Stop Border Post at Beitbridge, they welcomed the establishment of a Joint Technical Committee whose mandate, among other things, will be to develop the necessary legal framework for the Project. The two Heads of State reaffirmed the strategic importance of the OSBP and directed the relevant Ministers to fast-track its operationalisation. The two Heads of State noted the existence of more than 40 bilateral Agreements and MoUs between the two countries and directed that these Agreements be fully implemented. They further emphasised the need to finalise all outstanding Agreements and MoUs. The two Heads of State reiterated their commitment to improving and strengthening the economic relations between the two countries by facilitating trade and removing impediments constraining bilateral trade and investments. President Zuma: I wish to underscore the strategic significance of a One Stop Border Post at the Beit Bridge Border. This border post is the busiest border post on the Continent. Much of our goods and services go through it. We cannot afford to continue to have unnecessary delays at that border. It is therefore important and urgent that we start in earnest the process of establishing a One Stop Border Post. Our two countries took a decision to do so as far back as 2009. In this regard, we direct the relevant ministers and officials to move with speed and report progress at the next BNC.
Kenya retains import tax to fund regional rail network (Business Daily)
Kenya has retained the railway development tax in its budget plan for the next four years, indicating its continued gamble on the Mombasa-Malaba route as a major trade highway for years to come. The National Treasury projects that the railway development levy (RDL), which generated Sh18.2 billion in the financial year to June 30, will grow gradually over the period, netting Sh31.8 billion in 2020/21. The RDL is collected at the rate of 1.5% on imports from non-East African Community states. When Kenya first introduced the RDL in its 2013/2014 budget, the target was to raise Sh10 billion annually for the Mombasa-Nairobi -standard gauge railway. ”We will continue to implement the previously announced tax measures,” Treasury secretary Henry Rotich says in the Budget Review and Outlook Paper published last week.
Moody’s places Kenya’s B1 rating on review for downgrade (Kenyan Wall Street)
Moody’s Investors Service has placed the B1 long-term issuer rating of the Government of Kenya on review for downgrade. The decision to place the rating on review for downgrade was prompted by the following key drivers: (i) Persistent, large, primary deficits and high borrowing costs continue to drive government indebtedness higher; (ii) Government liquidity pressures risk rising in the face of increasingly large financing needs;(iii) Uncertainties weigh over the future direction of economic and fiscal policy, in part due to evolving political dynamics.
Tanzania: Tightening of screws on Tanzanite yields positive results (Daily News)
The government’s recent move to tighten the noose on Tanzanite mining and trade in the country has started paying off, with the production of the gemstone increasing more than 30 times in the country. President John Magufuli noted yesterday that the success was a result of measures taken to control the Tanzanite mining in the past few days, including tasking the armed forces to strengthen security. The measures also include erection of a fence, to cost 6bn/-, surrounding the Tanzanite mine in Mirerani, Dr Magufuli said when officially opening the 33rd Annual General Meeting of the Association of Local Authorities of Tanzania. President Magufuli told the participants that just after strengthening control of the mining activities and trade, there was a day when the production reached over 18 kilogrammes. “This has never happened since the start of Tanzanite mining in the country,” he stated.
The Mauritius Container Terminal is now a leading container port in the region with the completion of the extension of the quay to a length of 800 metres. This project, to the tune of Rs 6.5 billion, is in line with Government’s vision to make the Port Louis Harbour the preferred maritime gateway in the Indian Ocean. This project will transform the harbour, the principal gateway of the country handling about 99.5% of the total volume of external trade representing 7.3 million tons of cargo annually. Furthermore, the Prime Minister announced another important development project in the port area, namely the construction of an Island Container Terminal opposite the MCT. This facility, he said, will undoubtedly be the most important container port in the region with a capacity of over 1.5 million TEUs.
The Federal Government on Tuesday pledged to support the West Africa Monetary Institute to enhance trade, create wealth and ease the flow of capital and growth in the region. Foreign Affairs Minister Geoffrey Onyeama said this when the new Director General of WAMI, Dr Ngozi Egbuna, paid courtesy call on him in Abuja. The director general had earlier requested the ministry to provide political support for the Institute to enhance its operations in the region.
The links between global value chains and global innovation networks: an exploration (pdf, OECD)
Following the international fragmentation of production, goods and services are nowadays produced and heavily traded in international production networks or Global Value Chains (GVCs). More recently, innovation activities have also become increasingly internationalised thereby giving rise to global innovation networks (GINs). The networks typically consist of own R&D facilities abroad as well as collaborative arrangements with external partners and suppliers. The nexus between these two types of networks in the global economy has not really been explored, although strong interdependencies between GVCs and GINs are likely. This paper takes a first attempt to analyse the linkages between both types of networks and identify a number possible government implications. The motivation for this analysis is that concerns are raised in policy discussions that countries are not able to capture the value of their innovative activities.
The innovation paradox: Developing-country capabilities and the unrealized promise of technological catch-up (World Bank)
Economists have long argued that developing countries have the potential for high productivity growth if they adopt existing technologies and apply them to the local context. This report brings to bear a battery of new data sources to explore the innovation “paradox”: despite the potential for very high returns, developing countries invest far less in adopting and inventing new processes and products than advanced countries. The report posits three broad factors underlying this paradox. [Ashraf Patel: Will the App Economy be throttled in South Africa too?]
World trade data shows globalisation is alive and kicking (The Conversation)
That said, while intra-regional trade is important, and there remains much truth in the idea that global value chains are primarily regional, it appears this may be in decline. We have pulled this out into the graph below which gives the change in the intra-regional trade share for each of the regions. The only grouping which sees a rise in trade with itself is the RoW, and it’s fair to note that this is not a regional grouping geographically. More generally, the heat map table above shows a rise in the importance of the RoW countries as destinations for the exports of other groupings. Their share in the exports of East Asia has gone up from 8% to 18% between 2002 and 2016. For Europe it rose from 19% to 22%; for North America from 8% to 13%. [The authors, Peter Holmes and Michael Gasiorek, are attached to the University of Sussex]
Richard Manning: Multilateral development aid - assessing the major replenishments of 2016 (UNU-WIDER)
This survey of the 2016 replenishments of three multilateral development bank soft funds and of the Global Fund for AIDS, TB and Malaria shows that a significant re-set of the multilateral development finance system is taking place, with grant funding from traditional donors generally in decline (the Global Fund is an exception), but with the accessing of the ‘hidden equity’ in soft loan-based funds offering a large increase in such funding (most notably in the World Bank’s soft fund, the International Development Association). ‘Graduation’ of countries away from eligibility for highly concessional multilateral finance is also changing the context. This paper underlines the need for more consideration of these wider structural issues.
Today’s Quick Links:
SA’s wheat import tariff has been revised up to R752 per ton, a 98% increase from the previous rate of R379 per ton
Guinea-Bissau: IMF completes 2017 Article IV and ECF review mission
Tobacco tax reform: At the crossroads of health and development