Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Bloomberg

Africa and the 11th WTO Ministerial Conference: four updates

(i) Yesterday in Marrakech: Ministerial meeting of the KENSA Group (trade ministers from Kenya, Egypt, Nigeria, South Africa)

(ii) The WTO Informal Ministerial, hosted by Morocco, is part of a series of preparatory meetings leading to the 11th WTO Ministerial Conference to be held in Buenos Aires in December 2017. The meeting, now underway, will provide a platform for exchange of views and guidance on possible outcomes at MC11. This meeting follows the Informal Africa Ministers of Trade meeting that was jointly hosted by South Africa and the AUC on 18 September in Addis Ababa.

(iii) South Centre, ATPC: MC11 in the context of Africa’s Agenda 2063 and the Continental Free Trade Area. This present policy brief (written in May, pdf) has been made available by the African Trade Policy Centre to provide background information on the key issues expected to be discussed at the eleventh World Trade Organization Ministerial Conference. It is based on a series of discussion papers developed by the African Trade Policy Centre in collaboration with the South Centre. Full papers are available upon request. Section II of this background brief outlines the key issues posed by the rise of the digital economy. Section III discusses the background and implications on Africa of the current discussions on the new issues. Section IV outlines the developments in and implications of the remaining Doha Development Round issues and discussions. Section V presents recommendations on process issues for the eleventh Ministerial Conference and section VI provides conclusions and discussion points. Update (15 September, pdf). The huge gaps in positions amongst Members makes the process issues at the Ministerial critical. Will the Ministerial be a caucus of 5 Members whilst others are kept waiting? Even if 5 is enlarged to 15, is this sufficient? Will it be prolonged an extra day so that most African Ministers would have left town? When will the final text be given to all Members? Can any country or even a few African countries say no in the face of blame from the world? The following principles and guidelines are important. The context of what can be brought to MC11 must be the Nairobi Ministerial Declaration and its priorities, which are: ‘the remaining DDA issues’. The Nairobi Declaration also reflected differences around new issues and agreement that consensus is needed to move forward on new issues.

(iv) Members of 300 civil society organisations from over 150 countries have sent an urgent letter to the Members of the WTO, raising concerns about a dangerous new agenda being pushed by some WTO members under the rubric of ‘e-commerce’. The letter was organised by the global Our World Is Not for Sale network and signed by the Australian Fair Trade & Investment Network. The letter urges trade ministers not to support proposals on e-commerce, trade in services and fishing subsidies which would benefit global corporations but reduce the ability of governments to regulate in the public interest.

Later this month (26-27 October, in Bulawayo): Senior government officials and experts to discuss trade facilitation in Southern Africa

Specifically, the delegates and participants will discuss (pdf): (i) The nature of trade in the region - the commodities, volumes and direction of the trade; (ii) The regional, continental and international frameworks for promoting and facilitating trade, including bilateral and multilateral agreements; (iii) The trade facilitation challenges for both coastal and land-locked states in Southern Africa; (iv) The gaps in both physical and non-physical infrastructure and the assessment of specific regional mechanisms to address the infrastructure-related impediments to smooth trade; specifically, the focus will be on; the gaps in physical infrastructure such as ports, roads and rail infrastructure, inter modal facilities, ICT and roadside facilities and the impact of these gaps of trade (the gaps in non-physical infrastructure such as policies, documentation and procedures, institutions and capacities, regional transit regimes, transit stops and customs and immigration procedures and the impact of these gaps on trade; and recommendations to address the gaps in the short, medium and long-term for all stakeholders); (v) The impact of and progress in the roll-out of regional strategies to address the infrastructure gaps; and (vi) The progress and prospects on deepening regional integration in Southern Africa through the TFTA. The 23rd ICE will be preceded by the ad-hoc expert group meeting on Deepening regional integration in Southern Africa: the role, prospects and progress of the Tripartite Free Trade Area (23-24 October, Bulawayo) at the same venue.

Trade finance in Africa: overcoming challenges (AfDB)

Building on the findings of the maiden 2013 survey, this new report (covering the period 2013-2014) goes even further to gauge other aspects of bank-intermediated trade finance, such as the challenges encountered by SMEs and first time trade finance clients. The report is therefore based on the combined data from the 2013 and 2015 surveys. Trade finance continues to be a relatively low-risk activity for commercial banks in Africa. The estimated default rate on trade finance transactions in 2011 and 2014 were 4 and 5%, respectively, compared to 9 and 12% Non-Performing Loan ratios for all bank asset classes. The trade finance default rates are lower for banks in Southern (2%), East (3%), and North (4%) Africa compared to banks in Central (9%) and West (7%) Africa. SMEs account for only 28% of banks’ total trade finance portfolio.

Roads, belts and corridors: what is happening along Africa’s eastern seaboard? (The Zimbabwean)

A more integrated corridor development may yet emerge, however, as the corridor becomes an attractor for economic activity that spreads out as a network, rather than an isolated, linear connector. For this to happen, as in the old ‘growth pole’ model, other economic activity has to be attracted, and the benefits of infrastructure development shared locally, and also more widely. In this case to the hinterlands of the eastern seaboard, across regions to the landlocked countries of Malawi and Zimbabwe, for example. But, even if such wider activity happens, some will appropriate the spoils more than others. As in other areas where rapid economic transitions happen through land investments, there is plenty of room for speculation, patronage and deals that create new elites, excluding others. Political economy really matters, and in contrast to much existing research on growth corridors that focuses on the ‘business case’ and the sequencing of infrastructure, this is the emphasis of our research in Mozambique (Nacala/Beira), as well as Kenya (LAPSSET) and Tanzania (SAGCOT). [The author: Ian Scoones]

Agricultural growth corridors on the Eastern seaboard of Africa (APRA)

This working paper describes and critically reviews the recent emergence of agricultural growth corridors and other types of corridor with a prominent agricultural component. It offers a descriptive overview and poses some political economy questions. It focuses on four projects on the eastern seaboard of Africa: the Southern Agricultural Growth Corridor of Tanzania (SAGCOT); the Beira Agricultural Growth Corridor (BAGC); the Nacala development corridor in Mozambique; and the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor based in Kenya. It identifies three major influences on the current popularity of corridors: the evolution of logistics corridors into tools of development policy; new thinking among donors on infrastructure, agriculture and the role of private sector development; and the needs of private sector actors for investment to support production and secure their supply chains in a globalised world. The paper notes some key differences between the four corridors: [The author: Rebecca Smalley]. [Related: APRA at IESE in Mozambique]

EAC trade policy updates

(i) Regional cargo transporters find reprieve in e-tracking. Through its five-month pilot of the electronic tracking system, the URA, which has the highest bulk of transit goods, has been the biggest beneficiary. It has saved more than $2.5 million in revenue on goods that would have probably been diverted into the Kenyan market. Police on patrol at different check points on the Northern Corridor respond to violations triggered by the system. Over the past five months, URA has recorded 65,860 alerts on transit cargo, with going off-route topping the list, followed by tampering with the tracking device. The majority of the alerts occurred within the Kenyan territory. So far, 20,785 consignments have been tracked using 2,700 seals, with plans to have all transit cargo tracked within the next three years. “We have handled 57 cases so far, with the help of this system. Out of these, nine were attempted robberies, 16 attempted diversions, 17 procedure breaches, nine accidents and six cases of transshipment,” said Mr Kateshumbwa.

(ii) AfDB seeks funding for Tanzania-Kenya highway. The African Development Bank is currently looking for a co-financing partner to fund the 445-kilometre Tanzania-Kenya highway that is expected to cost $785 million (about Sh 1.8 trillion), officials said. AfDB Chief Regional Programme Officer Lawson Zankli told Xinhua in Nairobi in a recent interview that his bank has tentatively set aside $300m towards the road project that runs along the East African coastline from Malindi in Kenya to Bagamoyo town in Tanzania. The project will consist of rehabilitation of 215 kilometres of bitumen road on the Kenyan side and upgrading from gravel to bitumen standard of 230 kilometres on the Tanzanian side.

(iii) Tanzania’s electric rail half the price of Kenya’s SGR. Last week Tanzania, which has upped its silent rivalry with Kenya as it races to compete for the top spot as the economic powerhouse in East Africa, awarded a $1.92bn contract to a Turkish firm to build 422 kilometres of its SGR. Though this will cover just a fifth of the total line that Tanzania plans to build, the deal has shone a new spotlight on costs of building railways in the region. It is also set to reignite debate on the viability of big infrastructure projects as each nation fights for the title of the transport hub of the region. Tanzania said its electric railway has been designed to support a maximum speed of 160km per hour for passenger trains and 120km per hour for freight. It is expected to be complete within 30 months. This pales in comparison to Kenya’s line whose passenger’s train has a maximum speed of 120 kilometres per hour, and its freight will be doing 80 kilometres per hour at best.

(iv) EA Entrepreneurship Conference (14-16 November): A critical look at harmonization of financial laws and regulations within the EAC bloc will be among key issues that will dominate talks during the EA Entrepreneurship Conference slated for Dar es Salaam early next month. Integration of financial market infrastructure and the regional bond market which are essential to achieve functioning of a single market in financial services will also feature. The conference will also host session highlights on Information Communication Technology, Urbanization, Cotton and Textile, Patents and Copyrights in the Creative Industry, Trade and Gender, Health, agri-business, E-Commerce plus a “Start-up Corner” in bid to boost entrepreneurship and investments in the region.

(v) Kenya, Dar trade spat cuts gas vendor’s market share. A leading Tanzanian cooking gas vendor saw its share market in Kenya shrink by 4.7 percentage points in the second quarter of the year as an import ban from its home country into Kenya took a toll. Latest data from the Petroleum Institute of East Africa (PIEA) shows Lake Gas commanded 17.6% of the Liquified Petroleum Gas market in the three months ending June, second to KenolKobil with 18.4% share. In March, it held the largest share at 23.1%, having jumped from 14.1% in December 2016.

EAC’s MASE Programme showcased at a conference of African states bordering the Atlantic Ocean (18-19 September, Tangiers).

Held under the theme Maritime piracy off the African Atlantic coast: extent and approach for a more effective fight, the objective of this international workshop was to provide a thorough review of maritime insecurity issues and to get feedback of the initiatives undertaken by each regional organization to combat piracy. Several experts from different international organizations participated in this event, namely representatives of the Member States of COMHAFAT, the AU, the Indian Ocean Commission, the African sub regional organizations (CCPO, COREP), the OECD, universities and maritime training institutes as well as experts in operational fight against maritime piracy. [Downloads: presentations, conference report; Profiled presentation: Trust and Maritime Crime in Africa, by Alex Vines]

Reforming logistics services for effective trade facilitation (ITC)

Reforming the logistics regulatory framework will make the industry competitive and productive. The private sector will only be able to provide better quality logistics services and become competitive nationally, regionally and globally once governments tackle the regulatory fragmentation of logistics supply chains and improve access to strategic infrastructure. Harmonized regulatory interests and reduced market restrictions in the logistics services sector represent an untapped potential in the international trade facilitation agenda. By going beyond the requirements of the WTO Trade Facilitation Agreement, this wider emphasis on revamping the logistics sector complements efforts to ease cross-border movement of goods and services and connect MSMEs to overseas markets. Policymakers should ensure that the policy reform agenda adheres to a ‘whole of supply chain’ approach towards cooperation, so that barriers in one country do not hamper businesses in a partner country. This is especially crucial for landlocked developing countries that often rely on their neighbours for transit of goods.

Trade and investment in the multilateral trading system: how has it evolved? (CUTS)

This study provides a historical recollection of trade and investment in the multilateral trading system. It also highlights approaches taken under regional trade arrangements so as to reflect on recent trends on the issue. The study includes contemporary views with regard to investment facilitation, which highlights WTO Members proposals and differing views in this regard.

Today’s Quick Links

@GATFnews: Congo becomes the 23rd of 44 African WTO member countries to ratify the TFA - over half way there

Résultats de l’enquête Juillet 2017 sur les tracasseries routières au Sahel et en Afrique de l’Ouest

UNECA: update from recent Southern African consultations on the Global Compact on Safe, Orderly and Regular Migration

World Council of Churches intervening to try to end Eritrea-Ethiopia border dispute

FAO urges more countries to join treaty against illegal fishing

US agricultural trade data updates

Kenya: Moody’s set to downgrade 3 top banks


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