Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: John Hogg | World Bank

Today, in Arusha: Review of draft concept note, TOR, Roadmap and budget estimates for development of EAC Political Confederation Constitution

Starting today, in Abuja: ECOWAS Commission constitutive meeting of support structures for Regional Quality Infrastructure

Assessing Regional Integration in Africa VIII: bringing the Continental Free Trade Area about (ATPC/UNECA)

After providing a status update of regional integration in Africa, this report considers how to ensure that the potential of the CFTA is fulfilled. It has long been known that a major challenge in Africa is not a lack of good policies or strategies, but a lack of their effective implementation. Crucial to implementation is an understanding of the political economy underpinning economic integration in Africa. Conceptual issues in this area form the theoretical basis of the report. The insights from this perspective can help to frame the policy choices and institutional arrangements required for effective implementation. The report demonstrates that the CFTA potentially embodies a “win-win” approach to sharing its benefits, so that all countries in Africa benefit and the interests of vulnerable communities are carefully addressed. To this end, the CFTA will require “flanking policies” that governments can use to smooth the impact of the CFTA and a strong focus on achieving tangible outcomes from the Boosting Intra-African Trade Action Plan at national, regional and continental levels. Recommendations are made to assure mutual gains for all countries, irrespective of their current level of development. Extract (pdf) from Chapter 10: Phase 2 Negotiations - competition and intellectual property rights and e-commerce. Key findings:

Competition and intellectual property will be part of phase 2 of the CFTA negotiations and there is scope for also introducing issues of e-commerce and the digital economy. Negotiations in these policy areas are expected to be launched after the conclusion of the negotiations in goods and services. As African countries are affected in different ways by anti-competitive practices, a regional approach is needed for dealing with cross-border cartels, mergers, acquisitions and abuse. National competition laws operate on a “territorial” basis and are incapable of addressing cross-border anti-competitive practices. The CFTA can be used as a vehicle to address such cross-border competition issues. In doing so it can draw on the successes of COMESA approach to cross-border competition challenges. Procedural and substantive failures around intellectual property issues have contributed to a backlash against trade agreements, notably the WTO’s Agreement on Trade-related Aspects of Intellectual Property and EAC’s early experience.

Innovation in Africa is different, occurring mostly in the informal sector and in the absence of strong intellectual property institutions: an intellectual property framework in the CFTA must reflect this. Traditional, formal IP protections cannot exist in the absence of strong IP institutions and may be ill-suited to the African context in which industries operate successfully without IP. E-commerce and the rise of the digital economy is causing a shift in traditional economic sectors and the emergence of new digital products and services. The scale of this process is considerable and this will alter Africa’s trade and industrialization pathway. Policy recommendations:

Table of contents: Chapter 1: Introduction; Chapter 2: Status of regional integration in Africa; Chapter 3: Conceptual issues in the political economy of integration and the CFTA; Chapter 4: Revisiting the case for the CFTA; Chapter 5: A win-win approach to the CFTA: sharing the benefits; Chapter 6: A win-win approach to the CFTA: critical policies; Chapter 7: Financing for bringing the CFTA about; Chapter 8: CFTA governance; Chapter 9: The CFTA in a changing trade landscape; Chapter 10: Phase 2 Negotiations: competition, intellectual property rights and e-commerce

SADC Transport and Meteorology Ministerial: documentation (SADC)

On OSBPs: Martins Drift/Groblers Bridge: Ministers noted that this border crossing, which is an alternate route on the NSC, is fast becoming a bottleneck and confirmed programme to upgrade the bridge and border facilities. SADC Deputy Executive Secretary: Regional Integration, Dr Thembinkosi Mhlongo, said in his opening remarks (pdf) that “the implementation of the cross-border infrastructure projects should be a major preoccupation of the SADC’s political leaders, policymakers and other stakeholders because it may compromise the targeted regional integration, industrialization and structural transformation agenda of our community.” However, “the current approach to managing regional transport infrastructure programmes does not sufficiently emphasise the importance of national ownership of the regional projects.”

Communiqué (pdf): Ministers analyzed the sluggish implementation of the cross-border infrastructure projects through the lens of national ownership of the regional programmes. They concluded that regional cross-border infrastructure, particularly in the areas of transport, and meteorology, has the potential to facilitate intra-regional trade and investment; unlock national and regional comparative advantages. Ministers underscored the need to address the special needs of landlocked countries to access the rest of the world. The Ministers concluded that partnership is the main strategy to implement these regional projects. They also agreed that placing regional projects on the national agenda is the core of creating an enabling environment, because these projects only kick off after they get attention of national politicians and policy makers.

Are regional value chains a myth in Southern Africa? (SAIIA)

When delving into the reasons behind the failure of SADC to create regional value chains the answers found sound all too familiar – lack of infrastructure, cost of transportation, lack of access to financing, restrictive government policies but also the lack of production efficiency that essentially prohibits basic exports let alone participation in complex regional or global value chains. The stumbling blocks to the creation of true regional value chains are the same that were offered for the lack of Foreign Direct Investment into the region, when this was still the buzz word du jour. So, is all the recent hard work to understand how sectors operate in the various SADC states all in vain? [The authors: Talitha Bertelsmann-Scott, Chelsea Markowitz], [Today’s SAIIA/KAS workshop: Driving value chains in agro-processing in SADC]

Cross-border shopping in Joburg’s CBD (JICP)

This report examines the nature of cross border trade in the inner city of Johannesburg. The study maps the centre of cross border shopping, the goods purchased and the density of affected trade in the inner city. It provides an indication of the contribution of cross border trade to the economy of the inner city. And it scopes the critical factors that contribute to or threaten the successful operation of cross border trade in inner city Johannesburg. The study offers recommendations for appropriate responses from state authorities to these challenges and opportunities that the study will define. Extracts: The extent of this cross border shopping hub is significant. Over 3000 shops, located in a relatively small part of Johannesburg, service this trade. The sample survey indicates that some 70% of the shoppers contributing to these profits are cross border shoppers. The City should acknowledge this and plan for it. It has been dubbed the Dubai of South Africa by some retailers. That ambition – that it be a global retail centre – should be embraced in strategy and in physical plans to upgrade the area. The scale of cross border shopping is extremely high. This is evidence by the large numbers of bus companies that service this trade. On one day 51 bus companies were operating from 19 sites. In that same week, a moderate shopping season of the year (mid August), 465 buses left Johannesburg to neighbouring countries. A large percentage of passengers on those buses were cross border shoppers. Qualitative interviews at the bus depots reveal that in peak seasons these numbers double and then up to 80% of passengers are shoppers.

Zimbabwe gets SADC nod to apply for tariff reprieve (Southern Times)

The SADC Council of Ministers of Trade has given Zimbabwe the greenlight to seek a special dispensation for derogation on outstanding tariff commitments in line with the regional trade protocol. Zimbabwe’s Competition and Tariff Commission: “The country was supposed to have completed the tariff phase down for Category C products by December 2014, but is yet to fully comply. This is largely due to the fact that Zimbabwe is still tackling its economic challenges, hence the need for the extension of the derogation. A proposal was tabled by Zimbabwe to the Council of Ministers of Trade for it to apply for a special dispensation for derogation, outside the set criteria so that it could regularise its commitments under the SADC Protocol on Trade. The Council of Ministers of Trade has given the country the greenlight to submit an application for a special dispensation for derogation on the outstanding tariff commitments. If granted, this will allow Zimbabwe time and policy space for local industry to retool and build production capacities to enhance competitiveness.”

Namibia: Medium term budget speech, MTEF

(i) FY2017/18 Mid-Year Budget Review speech. As a small and open economy, Namibia’s best hopes lies in economic transformation, regional integration and leveraging regional and global value chains. We enjoy a relatively good enabling environment, with political and macroeconomic stability and a predictable policy environment. It is, therefore, material and timely for policy interventions to improve the productive capacity of the economy, diversify economic activities, generate much needed jobs and bolster resilience to shocks. We need to improve the range of finished goods Namibia can trade with in SADC and the African continent. [Presented by Calle Schlettwein, Minister of Finance

(ii) 2017/18 Mid-year budget review and medium-term budget policy statement for FY 2018/19-2020/2021 (pdf). Total exports are estimated to record 7.9% growth in 2017, a slight upward revision from 7.8%, based on the anticipated increases in the production of most minerals due to the prospects of improved commodity prices (zinc, lead, and gold prices) as well as improved infrastructure in diamond mining. In 2018, growth is expected to slow down to 3.2% (downward revision from 3.5%) as diamond production reached full capacity the previous year and, consequently, diamond exports start to slow down. In 2019 and beyond, exports are envisaged to grow by an average of 2.8% riding on increased uranium production and processed zinc. Imports are estimated to contract by 2.4% in 2017 (upward revision from 7.8%) on the back of reduced spending by government, the completion of major investment projects as well as subdued final consumption expenditure. In 2018 and beyond, imports are expected to grow marginally by 1.9% average on the prospects of improved private consumption and investment growth.

Tanzania: Tourists, transit goods up foreign inflows (Daily News)

Rise in the number of tourist arrivals and increase in transit goods to and from neighbouring countries pushed up foreign exchange receipts in the year ending July by 3.0% and 10.4 per cent respectively. According to the Bank of Tanzania monthly economic review for August (pdf), foreign exchange receipts from services increased to over 8.2tri/- ($3,608.4m) from 7.9tri/- ($3,443.1m) in the corresponding period last year. Travel receipts increased following a rise in the number of tourist arrivals, while for transport receipts were on account of an increase in transit goods to and from neighbouring countries,” read part of the statement. The overall balance of payments was a surplus of $1,492.5m in the year ending July compared to a deficit of $275.7m in the year ending last year. A large decline occurred in travel and transportation payments. Travel payments, which accounts for about 40.4% of total services payment, declined by 25.6%, while payments for transportation that account for 41.9% decreased by 10.9% owing to the fall in goods imports.

Tunisia aims to strengthen trade relations with ECOWAS region

Tunisia plans to increase its trade with other African countries in general, and with ECOWAS in particular. This was stated by the Tunisian Minister of Commerce, Omar Behi, after the courtesy visit he paid to Marcel de Souza, President of the Commission of the West African Organisation, on 2 November in Abuja. Mr de Souza and Mr Behi also discussed some of the decisions of the 51st Ordinary Session of the ECOWAS Authority of Heads of State and Government, held in June 2017 in Liberia. The decisions relate to the request addressed to Mauritania, inviting it to submit a request for re-admission into ECOWAS. They also relate to the observer status granted to Tunisia and the agreement in principle given to Morocco for its accession to the West African organisation. Marcel de Souza and Omar Behi stressed the need for Tunisia to adopt a gradual approach to the country’s accession to ECOWAS.

ECOWAS and common currency illusion (editorial comment, ThisDay)

What this plan presumes is a degree of economic sanity and progressive integration of extant national interests that are nowhere near what is needed to create a common currency. Yet, as we have repeatedly canvassed on this page, West African leaders should face the common challenge of poverty before thinking of a common currency that is no more than mere pipe dream. Development and regional integration are, first and foremost, about the nurturing and use of human capital to create a hub of capacities. We must also remind West African leaders that it was this recourse to hasty and ill-digested decision making which led to the introduction of ECOWAS Travellers Cheque some years ago with the result that it could not survive beyond one year. Therefore, while the ECOWAS regional currency plan may not be a bad idea in terms of its perceived linkages with the commission’s broader goals of regional integration, it is best shelved for now. Working towards the creation of a common currency in West Africa by 2020 is an exercise in futility.

Services in global value chains: trade patterns and gains from specialisation (pdf, OECD)

From these findings, the first policy implication is that all countries, including emerging and developing economies, specialise in services. Therefore, services trade policy and market openness are a topic of importance and a potential driver of economic growth and employment for all countries. The second policy implication is that trade in goods and services are intertwined, therefore barriers to both must be addressed in a coherent manner. Countries that specialise in services value chains are well placed to derive benefits from provisions found in the services chapters of trade agreements and sector specific chapters dealing with final services. Countries exporting services mainly through goods, on the other hand, will have a greater propensity to gain from domestic reforms addressing the barriers they face. In addition, higher levels of productivity are achieved through GVCs. The report provides new evidence on the gains from GVCs by introducing the concept of GVC productivity, thereby providing insights which are not always clear when looking at traditional productivity measures. The report also highlights that there is a positive correlation between specialisation in services and productivity growth and job creation.

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