Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Arne Hoel | World Bank

A reminder: The Doing Business 2018 report was released today. Read more here.

South Africa’s September trade statistics: another surplus (SARS)

The R4bn trade balance surplus for September 2017 is attributable to exports of R101.76bn and imports of R97.76bn. Exports decreased from August 2017 to September 2017 by R1.61bn (1.6%) and imports increased from August 2017 to September 2017 by R0.36bn (0.4%). Exports for the year-to-date (1 January to 30 September) grew by 5.4% from R818.59bn in 2016 to R862.61bn in 2017. Imports for the year-to-date of R815.49bn are 1.2% less than the imports recorded in January to September 2016 of R825.25bn, leaving a cumulative trade balance surplus of R47.12bn for 2017.

South Africa: Better trade terms will improve access to Asia for citrus exporters (Business Day)

Southern hemisphere countries such as Chile, Peru and Australia enjoy trade agreements with up to nine Asian countries – a grave illustration of SA’s problematic position. These countries enjoy partial and even free trade agreements, which are invaluable when it comes to maximising opportunities in a given market. They enjoy significant savings and are spared a lot of the bureaucracy that SA has to endure. The absence of required trade agreements – compounded by restrictive import tariffs – makes seamless exports to countries like China, Indonesia, Japan, South Korea, Philippines, Thailand and Vietnam much more difficult. But we need to up the ante on initiating and concluding trade negotiations that will make for ease of trade. The Citrus Growers’ Association’s relationship-building and maintenance efforts with Asian countries cannot replace robust collaboration and effective communication between governments and industry to increase market share in Asia. [The author, Justin Chadwick is CEO of the Citrus Growers’ Association of Southern Africa]

Olu Fasan: Africa needs a single market but lacks the will to create it (BusinessDay)

The CFTA is, of course,a laudable initiative, but, truth be told, it can’t, as currently envisaged, deliver the kind of regional integration that I have been discussing here. And, for me, there are three reasons for this. Extract: The aim of any serious regional trade agreement is tariff elimination and not tariff reduction. It is deep and comprehensive liberalisation. But the discussions in the CFTA negotiations are fixated on the modalities for designating sensitive products and exclusion lists. And, of course, the more exemptions, exclusions and sensitivities are reflected in the CFTA, the more it becomes a shallow FTA. It is not clear how far the agreement will go on services. What about intellectual property rights and competition rules?

3rd STC on Finance, Monetary Affairs, Economic Planning and Integration: update

For a Chinese company building Central Africa’s first auto plant it’s been a bumpy road (Quartz)

But the difficulties the manufacturer has had in setting up show the complications of doing business in Cameroon. Parts for the Star of Africa prototypes have already been made in China and are waiting the green light to be delivered to Kribi, Cameroon. Already manufactured parts of the car plant, made in China, are also awaiting delivery to Kribi. The company has yet to get access to 500 hectares of land offered by the government of Cameroon for building the plant. The company is also yet to reach a conclusion in negotiations with government over customs duties. Cameroon’s National Anti-Corruption Commission is investigating claims that government officials have delayed the plant over demands for shares in the company and kickbacks. Officials of the company say top ranking government officials have impeded the process. Yonguet said that Cameroon’s president Paul Biya, with whom Lu has personally met, has had to intervene.

The role of China in Africa’s industrialization: the challenge of building global value chains (Journal of Contemporary China)

The inherent asymmetries that flow from these dynamics highlight the extent to which resource extraction has developmental limits, and any dimension of external relations that is built on this shaky economic foundation is bound to subject the continent to external vicissitudes over which it has little political, policy and managerial control. Such a fraught scenario thus has the potential to undermine Africa’s long-term developmental prospects. One of the critical challenges for African countries – and this should be the basis for their engagement with external actors such as China – is managing structural change through industrial policies and value chain development in a manner that is salutary for beneficial and growth- and welfare-enhancing integration into the global economy.

The key argument of this article, therefore, is that there is a need to rethink the terms of Africa’s future growth and development not only in terms of industrialization – often conceived narrowly as manufacturing – since there are fewer possibilities for the continent to undertake industrial development along a trajectory similar to earlier industrializers. Rather, going forward a strategic trade and industrial policy perspective should be the thrust of China-Africa relations in order to take advantage of the calculus of opportunity that currently exists. Thinking in terms of value-addition and value chains broadens the sectoral focus to encompass aspects of manufacturing, services and innovation in agriculture. The authors do not suggest here that this should be brought to fruition through a big-bang approach. Instead the locus of Africa’s relationship with China should be a policy approach that aims to promote structural diversification. [The authors: Mzukisi Qobo, Garth le Pere]

China-Africa: High time for a common integrated African policy on China (IGD conference proceedings)

EAC places donor funds under tight control (Daily News)

EAC Secretary General Ambassador Liberat Mfumukeko told the first EAC Development Partners Consultative Forum that the secretariat has already recruited the manager for the Partnership Fund, with the view of enhancing fund management and efficiency. “The Partnership Fund is key in coordination of EAC development partner support. It has continuously played critical role in supporting activities to accelerate EAC agenda since its inception a decade ago,” Ambassador Mfumukeko said, hinting that the fund manager has already reported for work. Head of Corporate Communications and Public Affairs Department at the EAC Secretariat Owora Othieno said the new unit will deal with administration of the fund, communication with fund members, monitoring and evaluation of the achievements, budgeting, financial control, auditing and supervision of work-plan execution. [EAC pushing for secured medical drugs]

Hector R. Torres: An opportunity for the WTO (Project Syndicate)

One key problem that must be addressed relates to “special and differential treatment” (S&D). About two thirds of the WTO’s 164 members have declared themselves developing countries – a label that entitles them to S&D provisions, including the authority to maintain trade tariffs for a longer period of time. With the WTO lacking any benchmarks or indicators to determine when a country should be weaned off S&D, it is no surprise that no developing country has ever “developed.” To be sure, since S&D was first introduced in 1979, many developing countries have grown richer. But they have shown no indication that they are ready to relinquish the benefits of S&D, even for industries that have become internationally competitive. It is hard to argue that all developing countries should enjoy the indefinite privilege of opting out of the WTO’s general obligations for all sectors of their economies. And with so many of their WTO partners claiming preferential status, developed-country members often resist trade concessions within the organization, preferring to conduct negotiations in other forums. The dynamic in the WTO stands in stark contrast to that within the International Monetary Fund and the World Bank.

Roberto Azevêdo: Global trading system has constructive role to play to help drive inclusivity (WTO)

While the basis of this system was established 70 years ago, I think that its architecture - underpinned by principles such as transparency, predictability and non-discrimination - remain fundamental to the proper functioning of the global economy today. At a more fundamental level, we all saw the value of the trading system during the financial crisis. In the 1930s, protectionist measures wiped out two-thirds of trade flows – with devastating consequences. In the crisis of 2008 we did not see the same escalation – precisely because governments knew they were bound by common rules. They held each other to the agreed standards. And these agreed standards are quite clear. We know when red lines are crossed – which we did not see in the 1930s. Our monitoring shows that trade restrictions imposed by the G20 economies since the 2008 crisis cover just 4.25 percent of world trade. This shows that the system is doing what it was created to do. At the same time, I think that we can do more to ensure that the system is more inclusive, that it addresses the challenges of our times – while also upholding these essential principles. This is, ultimately, in the hands of members. And I think we have some good foundations to build on.

A court to fix all investor-state rows? (The Hindu)

Embroiled in 22 arbitration proceedings against it in disputes with prominent global investors, including Vodafone and Cairn Energy, India has cautiously welcomed a proposal to establish a ‘World Investment Court’. The World Court, a plan pushed mainly by the EU, is to be a “permanent, independent, legitimate, accountable, consistent and effective” global body framework with a mechanism for appeal as well, to resolve the current and future investor-State disputes including the ones that India is/could be involved in. The matter is coming up for discussion next month at the UN Commission on International Trade Law (Uncitral), of which India is a member along with 59 other nations representing ‘various geographic regions and the principal economic and legal systems of the world’. The Uncitral works on the ‘modernisation and harmonisation’ of international business rules. Responding to a questionnaire sent by an Uncitral Working Group mandated to look into issues including the proposed WIC, India said it “welcomes the move to have discussions and deliberations on the proposal, and further comments could be provided in due course.” However, it said, “The legal and practical challenges to establishing a WIC should not be underestimated.” It added, “one of the most critical areas in designing a permanent investment court relates to its composition, structure and certainty.”

Trade Policy Forum update: US pushes India on trade deficit, price caps on medical devices

Ibrahim Assane Mayaki: Banking on African infrastructure (Project Syndicate)

Yet, if the recent past is any guide, the capital needed will be difficult to secure. Between 2004 and 2013, African states closed just 158 financing deals for infrastructure or industrial projects, valued at $59 billion – just 5% of the total needed. Given this track record, how will Africa fund even a fraction of the World Bank’s projected requirements?

Today’s Quick Links:

Facebook launches its first African Small Business Council in Nigeria

Malawi lifts ban on maize exports

Towards an IGAD strategy on HIV, TB and Malaria

Uganda’s textile industry is picking up the threads

Democratic Republic of Congo: UNSC press statement; UN warns of ‘looming humanitarian catastrophe’ in strife-torn Kasai region

Intergovernmental Group of Experts on Financing for Development (8-10 November, Geneva). The background papers: Scaling up finance for the SDGs: experimenting with models of multilateral development banking (Ricardo Gottschalk, Daniel Poon, pdf), Blended finance for development (Javier Pereira, pdf)

Steps to increase cooperation between national development banks, the private sector and multilateral banks

London 2018 Illegal Wildlife Trade Conference: update

Annual Bank Conference on Development Economics: call for papers on the theme Political Incentives and Development Outcomes


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