Africa Week 2017 is underway at the UN: update, downloads

SADC-EU Economic Partnership Agreement: updates from yesterday’s regional conference in Johannesburg. (i) Minister Davies, Cecilia Malmström mark first anniversary of the EPA, (ii) Cecilia Malmström speech on monitoring of EPA, impact, (iii) Peter Fabricius: South Africa fails to exploit free trade agreement access to massive EU market

ACP Parliamentary Assembly: last week’s meeting, statement by Dr Patrick Gomes

Later this week, in Rome: 13th annual meeting of the Infrastructure Consortium for Africa. Summary of background paper (pdf): Toward smart and integrated infrastructure for Africa – an agenda for digitalisation, decarbonisation and mobility: In this perspective, the Next Production Revolution (NPR) represents a potential opportunity and a big challenge for Africa and its socio economic development, also due to the traditional leapfrogging attitude that has already characterized the straight and successful diffusion of a number of smart or clean innovations in the continent. Indeed, NPR entails a confluence of technologies ranging from a variety of digital technologies to new materials and processes. Moreover, in the 2030 Agenda of the United Nation, the 5 clusters of emerging technologies (bio-tech, digital-tech, nano-tech, neuro-tech and green-tech) are considered crucial for the achievement of the Sustainable Development Goals (SDGs). Among the five clusters it emerges that Digital and Green Tech appear as the most relevant for the achievement of the SDGs like Health, Water, Energy, Ecosystem, Land, Ocean Management, Climate Change, Sustainable Production and Consumption patterns. Recognizing this relevance, Digital and Green Tech, broken down into digital infrastructure, sustainable energy infrastructure and smart mobility have become the core of ICA 2017.

Africa’s $110bn migrant resources could fund continent’s infrastructure – Oramah (Afreximbank)

In a keynote address to the Frontier 100 Forum organized by the Initiative for Global Development, President Oramah said that those resources, composed of $53bn of savings and $63bn of annual remittances, were well in excess of the continent’s annual infrastructure financing requirements, currently estimated at about $93bn. He noted that since the early 2000s, migrant remittances had become the most important source of foreign currency inflows for many African countries and had become more important than FDI as a source of foreign exchange in many. Dr Oramah regretted that many Governments were yet to put in place policies and programmes to effectively harness the many significant benefits offered by the Diaspora, saying that lessons could be learned from the experience of countries like the Philippines, Israel, Bangladesh, India, and Mexico that had robust programmes to improve Diaspora participation in national economic activities.

Can Sub-Saharan Africa be a manufacturing destination?: Vijaya Ramachandran blog (CGD)

It is always risky to speculate on the future, especially considering evolving trends in technology which will shape the evolution of comparative and absolute advantage in manufacturing. However, a new paper co-authored by Alan Gelb, Christian Meyer, Divyanshi Wadhwa, and myself suggests that Africa is not, in general, poised to embark on a manufacturing-led take-off, stepping into the shoes of emerging Asia. Africa, including those countries that have come to be regarded as leaders in development, has high manufacturing labor costs relative to GDP as well as high capital costs relative to low-income comparators. Using a newly-constructed panel of firm-level data from the World Bank’s Enterprise Surveys, we look at labor costs in a range of low and middle income countries in sub-Saharan Africa. We then compare these with labor costs in low-cost countries outside of Africa such as Bangladesh as well as a wide range of other countries. We estimate labor costs—both actual and hypothetical: [Even Africa’s poorest countries are too expensive to be the world’s next manufacturing hub (Quartz Africa)]

Joseph Stiglitz: From manufacturing led export growth to a 21st Century inclusive growth strategy for Africa (Babacar Ndiaye Lecture, Afreximbank, 15 October)

South Africa: Economic overview – with a focus on exports (Industrial Development Corporation)

(i) Significant shifts in the global reach of South Africa’s export sector. The geographical reach and sectoral spread of South Africa’s merchandise export basket have improved over time, but high degrees of concentration prevail. Export trade has been shifting towards emerging market economies such as China and India, with the advanced economies’ combined share of the overall export basket having declined. The rest of Africa has become one of the largest markets for South Africa’s merchandise exports, accounting for 27.8% of the overall export basket in 2016, up from a 25.4% share in 2010. The extent of South Africa’s trade concentration is higher at the sectoral level, but has also been improving. The manufacturing sector accounted for 60% of the merchandise export basket in 2016, compared to 57.1% in 2010. Exports play an important role in terms of economic activity and employment creation. An estimated 1.23 million jobs in the South African economy, or more than 10% of total employment, are directly related to exports. The figure jumps to 2.53 million, or 21.4% of overall employment, if indirect exports (i.e. through linkages of export producers with input suppliers across the economy) are also taken into account. The European Union as an external market has contributed positively to the overall growth (in real terms) in South Africa’s merchandise exports from 2014 to the 1st semester of 2017 (refer to Figure 5). In contrast, the drop in exports to the United States and some members of the Southern African Customs Union (SACU) in 2016 as well as in the 1st half of the current year implied negative contributions, or detractions from overall export growth.

(ii) Changing composition of South Africa’s export basket. The product composition of South Africa’s export basket has also been changing, with the normalised Herfindahl-Hirschman Index improving from 22.1 in 2010 to 21.2 by 2016 – that is, exhibiting increased diversification. Nevertheless, the export basket is still highly concentrated on a few sectors, especially within manufacturing, as well as heavily reliant on the mining sector for its foreign exchange earnings (refer to Figure 6). Mining exports accounted for approximately one-third of total merchandise exports in 2016, down from 38.4% in 2010. During the course of last year, weaker global commodity demand, especially from China, together with relatively low commodity prices and operational challenges in the domestic market took a toll on South Africa’s mining exports and consequently production across most segments. Over time, the historical reliance on gold has been substantially reduced, whereas iron ore and coal exports have come to the fore, as illustrated in Figure 7. The platinum group metals (PGMs) have also contributed to diversifying the composition of South Africa’s mineral export basket. Despite rising export volumes since the recent trough in 2012, the lower platinum price, which fell from an average of USD1 613 per ounce in 2010 to USD985 per ounce by 2016, contributed to the share claimed by PGMs within the country’s overall export basket declining from 10.1% in 2010 to 8.2% in 2016. As shown in Figure 6, the manufacturing sector accounted for 60% of the overall export basket in 2016, up from 57.1% in 2010. The composition of the manufacturing export basket has changed significantly, with a substantial rise in the relative contribution made by the motor vehicles sub-sector. This domestic sector is reaping the benefits of increased integration in global supply chains and is providing opportunities for domestic production (and exports) of parts and accessories for motor vehicles. The combined shares of the motor vehicles, parts and accessories sub-sectors in the total export basket rose from 11.3% in 2010 to 14.7% by 2016.

Mozambique: Economic transformation and job creation (SET)

The SET report on economic transformation and job creation in Mozambique synthesises 30 recent studies to understand commonalities and differences on promising sectors and value chains in Mozambique, binding constraints to developing these activities, and policies that have been suggested to achieve these. Thus, rather than undertaking new analysis, this synthesis paper reflects on existing analyses broadly related to industrialisation and economic transformation in Mozambique in order to provide a base from which to move forward on the specifics of how to transform the economy. [The authors: Neil Balchin, Peter Coughlin, Phyllis Papadavid, Dirk Willem te Velde, Kasper Vrolijk]

Dangote, Mbeki launch Africa Champions Initiative in Lagos (ThisDay)

Prominent African leaders under the aegis of the Afrochampions Initiative, at the weekend, charted a course to transform the continent with the aim to make it a destination for international investments. The initiative, jointly chaired by African’s richest man, Alhaji Aliko Dangote, and former President of South Africa, Thabo Mbeki, called for greater integration of African economies to enable the continent develop free trade among African Union member nations. Present at the launch were the Vice President Yemi Osinbajo, former President Olusegun Obasanjo,Commissioner for Trade and Industry of the African Union, Ambassador Albert Muchanga, Aig Imokhuede, Executive Secretary of Nigerian Export Promotion Council, Segun Awolowo among others. Dangote promised to work with his colleagues to make the club a unique platform on which “We as African business leaders, can overcome our differences and speak with one voice, to foster reforms facilitating trade between our states with investments in strategic projects and synergies between our countries.”

Nigeria: Some take ways from the NESG summit (Business Day)

For three days, players in the public and private sector gathered in Abuja to brainstorm and proffer solution to the many challenges of the Nigerian economy. They have been doing this for 23 years now and some sceptics say that it has not changed much in the Nigerian economy. Organisers of the of the Nigeria Economic Summit, the Nigeria Economic Summit Group disagree, noting that these annual discussions have done much good to Nigeria and that the economy would have been much worse off without these annual discussions. The annual summit has become Nigeria’s version of the World Economic Forum. [Osinbajo: FG attains 70% success in ease of doing business action plan]

No policy on visa on arrival for Africans – Nigeria Immigration Service (Business Day)

Nigerian Immigration Service, on Monday, dismissed trending report on issuance of ‘visa on arrival’ for Africans by the Federal Government. “As the Federal Government of Nigeria’s lead and foremost agency saddled with the responsibility for the regulation and enforcement of migration laws of the country, the Nigeria Immigration Service states clearly that; no such decision was in place, it is an unconfirmed and yet to be considered policy of the government of Nigeria.”

Call for new momentum to fast-track free movement in Africa (New Times)

Policies that govern movement of persons and services on the continent must be tailored to the current needs of Africans, experts have urged. The call was made yesterday in Kigali at the opening of a weeklong meeting on the adoption of an African Union procedure on Migration, Refugees and Internally Displaced Persons, seen as a critical forum to advance the continent’s goal on free movement of persons and their goods. The gathering kicked off yesterday with a meeting of the AU’s Specialised Technical Committee on Migration, Refugees and Internally Displaced persons, who have a duty to deliberate on and draft several critical documents that will be adopted by African Ministers in charge of migration matters during their meetings on Friday and Saturday.

Ghana to open up borders to West African neighbours (Graphic)

The Minister for Business Development, Mr Ibrahim Mohammed Awal has said the country will soon open up its borders to its West African counterparts in a bid to foster trade between the country and its neighbours. He said plans were far advanced to open up the country’s borders to Benin and Niger, as it had already opened up to Togo. This he said formed part of plans to expand business operations through regional integration. The Managing Director for Emerging Markets and Africa of Deloitte, Dr Martyn Davies, also in an interview with the GRAPHIC BUSINESS called on the need to have a business hub for the West African region. He said every region needed a hub and “just like Nairobi is the hub of East Africa and Johannesburg is the hub of South Africa, I think Ghana can also be the hub for West Africa.”

Africa vs the USA: a secondhand clothing showdown (BoF)

Linda Calabrese argues that halting the trade of second hand clothing isn’t the right approach and won’t enable the development of textile industries in developing countries alone. “The garment sector [in developing nations] needs more investment to expand production capacity. The sector is currently not receiving a lot of new investment to expand production capacity, and costs are outweighing profits. Transport is expensive, getting skilled workers is expensive, the energy supply is unreliable and costly compared to other regions, such as Southeast Asia.” It could also have undesirable effects, like promoting illegal trade and smuggling in banned imports, if the population has to choose between buying new imported garments, or buying domestically produced second-rate goods. “Clothes are an essential item and if they become more costly, poor families will suffer the most,” says Calabrese, but adds: “To be fair, I think that East African governments already have a very good understanding of the existing challenges and are trying to address them.”

Dubai Africa business forum to host 5 heads of state (TradeArabia)

The upcoming fourth Global Business Forum on Africa in Dubai, UAE is set to welcome five African heads of state, 12 ministers, and more than 1,000 top-level government and corporate decision-makers and industry experts. The forum, organised by the Dubai Chamber of Commerce and Industry, will be held under the theme “Next Generation Africa” on 1-2 November. The event will bring together high-profile attendees such as Paul Kagame (Rwanda); Danny Faure (Seychelles); Yoweri Museveni (Uganda); Ameenah Gurib-Fakim (Mauritius); and Edgar Lungu (Zambia); along with a long list of ministers, senior government officials, young African entrepreneurs, economic and industry experts. [Reposted: Bridging the Red Sea – how to build an Africa-Gulf partnership]

Alarm bells as more developing countries become commodity-dependent (UNCTAD)

The new UNCTAD report The State of Commodity Dependence 2016 highlights that between 2010-2015 developing countries saw their revenue from commodity exports jump 25% to US$ 2.55 trillion. The rise in commodity dependence was most noticeable in Africa, where seven new countries entered the category in 2014-2015, bringing the total to 46. Over the same period, the number remained stable at 28 in Latin America and the Caribbean, while the region of Asia and Oceania saw its total increase by two to 17. Regarding the type of exports, dependence was predominantly on agricultural goods. This was the case for 41% of the countries, while 30% depended on fuel exports and 23% on minerals, ores and metals. More than half of the countries depending on agricultural commodity exports were African, while the region of Asia and Oceania was home to two thirds of those relying on minerals, ores and metals, and almost half of those dependent on the export of fuels.

Today’s Quick Links: Stephen Karingi: 2017 breakthrough year towards implementation of CFTA Bruce Byiers, San Bilal: ‘Making Africa work’ – what not to do Mary Kawar, Siddharth Chatterjee: Can Kenya become the South Korea of Africa? The State Department and USAID FY 2018 Africa Budget: hearing submissions 10 years on from the financial crisis: co-operation between competition agencies and regulators in the financial sector (pdf) International Monetary and Financial Committee: communiqué, statements Development Committee: communiqué World Bank Blog: Trade agreements as public goods India’s international trade in services: RBI August 2017 data BIMSTEC-FTA: a new hope for enhanced regional trade