News
tralac’s Daily News Selection
The African Ministers of Trade ministerial concluded over the weekend in Niamey. The UNECA has released this summary of progress towards the CFTA: “Substantial progress was made, paving the way for legal scrubbing to begin on the CFTA text and an AU Heads of State and Government Summit to adopt the CFTA Agreements in March”
Profiled African trade and development conferences now underway:
(i) In Addis: The 12th African Economic Conference on the theme Governance for structural transformation. Download the conference papers. Twitter updates: #2017AEC
(ii) In Arusha: AERC bi-annual research workshop on the theme Governance for Development in Africa
(iii) In Djibouti: Djibouti Forum on the theme Investing in infrastructure for regional integration in East Africa. Download the programme (pdf)
(iv) In Accra: UONGOZI Institute regional forum on the theme Enhancing value addition in the extractive sector in Africa
Tomorrow, in Cairo: Afreximbank’s Trade and Development Seminar will be presented by the AU’s Commissioner for Trade and Industry, Amb Albert Muchanga on the topic The CFTA in an era of pessimism over multilateralism: critical success factors and prognosis
On Friday, in Johannesburg: WITS Colloquium on the theme Chinese engagements with Africa: setting a collaborative research agenda on the Belt and Road Initiative
Africa-US trade law analyses posted in the American Journal of International Law: James Thuo Gathii: Introduction to the Symposium on Africa and the Future of International Trade Regimes; Kathleen Claussen: The next generation of US-Africa trade instruments; Stephen Lande and Dennis Matanda: Defining and redefining US-Africa trade relations during the Trump Presidency; Joy Kategekwa: Rethinking the AGOA model: how to create a pro-structural transformation of the US-Africa trade partnership
Ha-Joon Chang’s Joseph Mubiru Lecture: Ambition, pragmatism, and imagination - rethinking the role of the state in economic development (pdf, Bank of Uganda)
How about India? (extract): India’s service trade success story is vastly exaggerated. Between 2008 and 2016, India recorded service trade surplus equivalent to 1.1% of GDP, which covered only 14% of its merchandise trade deficit (7.6% of GDP). This means that, unless it increases its service trade surplus by 7 times, India cannot maintain its current pace of economic development without a serious balance of payments problem. [Note: The lecture was delivered on 1 December in Kampala)
African regional trading bloc affiliate set to meet in Kenya over supply chain (Xinhua/CBC)
More than 60 delegates are set to meet in Nairobi on Wednesday to discuss ways of fostering business and trade within the supply chain networks along the Eastern and Southern Africa transport corridors, organizers said today. The meeting, organized by the COMESA Business Council, will also validate the study carried out in the transport corridors (north and north south corridors) in 2017. It said the key outputs of the study will be an Assessment Report and a Business Guide that will facilitate sustainable business partnerships between the potential buyers and existing supplier enterprises operating along the targeted corridors. The meeting will have the participation of more than 60 regional delegates, where the players in the agro-industry sector will engage in the dialogue to highlight and address various issues affecting the sustainability and growth of the agro-industry sector.
Kenyans in US push remittances to Sh19.2bn (Business Daily)
Kenyans in North America continue to send home the bulk of the remittances, accounting for 56% of the total last month ahead of Europe at 30% and the rest of the world at 14%. In September, the amount sent home from North America topped the $100m mark for the first time (at $101.05m), and continued to grow in October to hit a record $104.5m. Diaspora remittances account for the largest source of foreign currency inflows into Kenya, ahead of tea, tourism, horticulture and coffee exports.
Open door policy could raise Nairobi’s status as African economic hub (Business Daily)
Together with the policy to provide visas on arrival for African passport holders, the president’s proposals can be interpreted through the futuristic lens of making Nairobi an international financial centre as well as the region’s foremost conference destination. The fact that we will be able to attract EAC’s top talent to work makes us an even more attractive destination for foreign direct investment as the talent gene pool just got that much more enriched. Multinationals and international agencies operating in Africa looking to do their conferences should now consider Kenya as their first choice of conferencing due to the ease of visas for conference attendees. [The author: Carol Musyoka]
Kiprono Kittony: TZ hostility hurts EAC unity (The Star)
In the first five months of 2017, Kenyan exports to Tanzania declined to Sh8.2bn, from Sh12.5bn a year earlier, according to the Kenya National Bureau of Statistics. This represents a 33% decline in trade volumes in a span of barely one year, which is alarming considering Tanzania is one of Kenya’s largest export destinations. Such a sharp decline in trade volumes over a notably short period of time suggests that there may be political undercurrents at play. Tanzania and Kenya need to embrace a collective vision for economic prosperity in the region by facilitating free movement of goods and pursuing stronger trade relations. We need to move past recent issues. The future of the EAC depends on this as any new spat may be the straw that breaks the camel’s back. [The author is national chairman of the Kenya National Chamber of Commerce and Industry], [Richard Mshomba: EAC mustn’t rush into a monetary union]
EAC: Agricultural investment blueprint on the cards (The Citizen)
The EAC has started working on a major investment plan in the agricultural sector through the support of a range of development partners that would help improve the livelihoods of millions of people. “The process leading to the validation of Regional Agricultural Investment Plan has been lengthy, rigorous, inclusive and consultative,” said the EAC deputy secretary general in charge of Productive and Social Sectors, Mr Christophe Bazivamo in Kampala on Friday. Speaking at the commencement of the three-day talks on revamping the sector within the framework of EAC Comprehensive Africa Agriculture Development Programme, the deputy SG said the programme is anchored to increase agricultural productivity. “The RAIP is designed to facilitate coordination of regional and cross-cutting programmes that are best handled regionally and those that compliment interventions in the national agriculture investment plans,” he pointed out.
China-Africa Joint Arbitration Centre conference: Building a China-Africa jurisprudence (GCIS)
In China, time is clearly of the essence – and arbitrators are expected to distil the key issues in a matter and to then ask the parties to focus on those. While there may be some cross-examination, this is limited only to the key issues. Proceedings rarely last for more than a day. Only evidence that is strictly relevant to the key issues is presented orally. Whilst the emphasis is on the relevant documents, there is, however, no process of discovery. The parties put up documents supporting their case as part of their statements of claim in the reference. The Chinese participants to the discussions also emphasised that arbitrations conducted under the auspices of the CAJAC would have to “be efficient and produce speedy resolutions”. The parties would have to focus on the key issues and it was stressed that lengthy hearings would not be acceptable to the Chinese commercial community. It reminds one of 2016’s World Economic Forum in Davos where one of the speakers remarked that “speed is the new currency of business”.
It therefore also makes good sense that the CAJAC is establishing itself as a one-stop-shop. Besides acting as arbitrators, the various CAJACs - being Johannesburg, Shanghai, Nairobi, Beijing and Shenzhen - would also function as business advisers by providing information to those wishing to set up business in Africa or China. [Text of speech delivered by SA dep minister of Justice, John Jeffery]
KRA says Kenya risks losing billions in China tax agreement (Business Daily)
The Kenya Revenue Authority has poked holes in the tax agreement which Kenya signed with Beijing in September cushioning Chinese firms from paying tax on interest they earn. The taxman says the country risks losing billions of shillings in tax exemptions if the deal, signed in Nairobi on 21 September 21 but yet to be enforced, is not amended. KRA’s chief manager in international tax office with a key focus on transfer pricing, Mr George Obell, said the agreement should be amended to include a binding clause that compels China to collect tax dues on behalf of Kenya. “China has capital. So they will bring capital into the country and when they are paid interest, it is not subject to tax. That’s a big loss because they have got a lot of money. That must be addressed.”
Adjusting to rising costs in Chinese light manufacturing: what opportunities for developing countries? (SET/ODI)
Optimists maintain that this presents an opportunity for low-income countries (LICs) in Africa and elsewhere in Asia to attract foreign direct investment and jobs from China and help drive growth and structural transformation. However, a positive outcome for LICs remains uncertain. Country-level constraints such as poor infrastructure tend to turn-off foreign investors, alternative strategies to relocation exist for coping with rising wage costs, and there remain low-cost location options within China itself. This research report presents the findings of a large-scale survey, undertaken by ODI in partnership with the Center for New Structural Economicsat Peking University, of 640 Chinese light manufacturing firms in the regions of the Yangztse River Delta and Pearl River Delta, across four sub-sectors: garments, footwear, household appliances and toys. Key findings: [The authors: Jiajun Xu, Stephen Gelb, Jiewei Li, Zuoxiang Zhao]
Is Zambia’s mining tax the best approach to an uncertain future? (NRGI)
The challenge facing the Zambian government is not unique. Like many mineral-rich countries facing the prolonged commodities slump, Zambia is stuck. The country must preserve government revenues from the mining sector to fund the budget. At the same time, it must avoid further mine closures and a drop in investment required to drive growth in the sector. Facing these challenges, the government has already changed the tax regime three times in the last 12 months, and nine times in the past 15 years. Now, a new reform is underway. It contains three significant changes: the removal of the 9 percent royalty on copper; the introduction of a “price-based royalty,” the rate of which varies according to the copper price; and the removal of the variable profit tax. The Zambia Chamber of Mines supports the proposed tax regime and had initially proposed the idea of a price-based royalty. However, industry watchdogs Publish What You Pay Zambia and Zambia Tax Platform oppose the changes and have urged the government to “consider engaging in a more consultative and participatory process in developing taxation regimes.” [The author: David Manley]
South Africa: Ebrahim Patel seeks to open door for small business (Business Day)
The proposed amendments to the competition legislation will extend the commission’s existing market enquiry powers, setting out the triggers for it to investigate the structure of markets, and giving it the power to impose “reasonable and practicable” remedies tailored to the findings if it finds that the level of concentration is leading to anticompetitive outcomes. Companies will, however, have the automatic right to appeal against the commission’s findings to the Competition Tribunal. The legislation will also impose more discipline on the market enquiries conducted by the commission, which tend to become lengthy affairs mired in legal contestation. [South Africa: Competition Commission, ITAC 2016/17 Annual Report presentation to NCOP]
India’s merchandise exports limp along even as global trade picks up (The Wire)
India’s merchandise exports have turned negative in October, with a surprising 1.12% drop, and are expected to fall further in November as exporters turn away clients and new orders due to the difficulty of complying with the Goods and Services Tax regime. The fall in exports comes at a time when global trade is booming. The timing of India’s export drop is equally perplexing given that the WTO upgraded its earlier world trade growth forecast of 2.4% on September 21. Experts say that the the decline is also surprising given that exports are usually strong in the months leading up to Christmas as retailers in Western markets build stocks. India’s October export performance contrasts with those of its Asian trade rivals like Bangladesh, Vietnam and China who reported positive growth. Vietnam reported nearly 21.3% growth in monthly exports, China nearly 7% and Bangladesh 6.4% during the month. India had reported impressive export growth of 25.67% in September. The precipitous drop in the October exports shows that the feared disruption in MSME supply chains has now started taking its toll on the country’s export performance.
The internet and Chinese exports in the pre-Alibaba era (World Bank)
The paper combines firm-level production data with province-level information on Internet penetration to examine how the rollout of the Internet across Chinese provinces between 1999 and 2007 influenced firms’ export behavior. The econometric strategy enables identifying the impact of the Internet on firm performance in China. The paper shows that the rollout of the Internet boosted manufacturing exports of firms in China, even before the rise of major e-commerce platforms in the country such as Alibaba. The paper takes a closer look at why, focusing on three questions:
