Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Reuters

ECDPM has, today, launched a series of policy briefs on the Political Economy Dynamics of Regional Organisations in Africa

Launching, on Thursday, in Nairobi: East African Cross-Border Traders Association. Some context to the launch.

The WTO Director-General’s annual overview report on trade-related developments was presented to members yesterday

Nigeria moves to update CFTA modalities; Vera Songwe cautions on CFTA exclusions (The Nation)

She however lamented that “there are two key areas that could delay the CFTA and where smart approaches should be used to avoid these risks.” The first she said is the rule of origin. According to her, “negotiating this specific rules of origin could take several years, to overcome this challenge, we can use interim rules to allow us to begin implementation pending the finalization of a more comprehensive annex on rules of origin, which can be developed during an agreed period.” Adopting interim rules of origin - even if they are imperfect - she said “would enable us to promptly begin implementing the CFTA pending the conclusion of more refined rules of origin.” The second area where Africa can take a smart approach is the modalities for goods. Songwe stated that “it could take years to finalize the request and offer negotiations. What we suggest is for implementation to begin for those products already covered in the 90% level of ambition while awaiting the conclusion of the request and offer negotiations. This would enable an early harvest of goods.”

Intra-African trade, she said, “remains concentrated on only a limited number of products. As such, ECA research shows that even a exclusion list of 52 products – equivalent to 1% of tariff lines – would have the potential to exclude from liberalization 74% of intra-Africa imports for the average African country.” Songwe called for caution “in ensuring that even small exclusion list do not erode the value of the CFTA. If due care is not taken on this matter, it is clear that we will fail our objective of doubling intra-African trade. To ensure the meaningful liberalization of goods, we must keep exclusion list to a minimum. The best way to do this is by double-qualifying any exclusion lists so that they cannot be used to exclude all of the most valuable imports.”

UNECA’s Vera Songwe: EPA negotiations with the EU require a pause (Modern Ghana)

Dr Vera Songwe, United Nations Under-Secretary-General, has called for a pause on the Economic Partnership Agreements negotiation processes with the EU until the finalisation of the Continental Free Trade Area framework was completed. She said the ‘strategic pause’ would allow countries already implementing their EPAs to continue honouring their commitments but help to avoid a situation where divergent provisions in the different Agreements provide for a fragmented trading arrangements between the EU and different African regions. ‘The CFTA should be the priority for African countries, in terms of trade,’ she said at the official opening of the fourth Meeting of African Ministers of Trade in Niamey, Niger.

AEC2017 updates:

(i) Prof Richard Joseph’s keynote address: Governance for structural transformation in Africa – leadership and partnership opportunities (pdf). How, we must ask, can African countries advance politically and economically in this uncertain environment? Are there windows of opportunity for African organizations, and their external partners, to provide dynamic leadership despite the head- and crosswinds. I will identify several key opportunities and challenges: first, sharply reducing warfare; second, promoting institutional efficiency; third, enhancing electoral integrity; fourth, scaling back corruption; five, protecting the environment; six, guaranteeing basic incomes; and seven, widening access to knowledge. This cluster of commitments are embraced by the rubric, “Life More Abundant”, a mantra of the late Chief Obafemi Awolowo of Nigeria. The time has come to establish a transnational Center for the Study of Governance and Development. It can begin with a Governance & Development Learning Network. While its primary focus will be Africa, it can draw on the experiences of other regions. I am willing to work with my large network in academia, policy making, and philanthropy – and many of the organizations represented here – to help create such a Center.

(ii) Premier Hailemariam Desalegn’s opening address (pdf). And there are what we call success traps. Periods of rapid growth and structural transformation are inevitably underpinned by crisis and social tensions and conflicts. The process of transformation, therefore, involves intertwined strategies of capital accumulation, technology acquisition, and strategic and careful management of social conflicts that come with the creation of the new wealth and the emergence of new social classes and actors. In such cases and processes, an autonomous state apparatus and a competent political leadership must be ready and able to walk a very tight rope projecting balance and adequacy. As such, African states and policy makers need a working space to experiment their policies, and perfect them in their own ways as they see it fit within their real world. The state should be both inclusive and independent so as to be able to devise and implement painful decision in a socially contested situation for the greater good and greater number. That’s what defines an inclusive, democratic and embedded autonomy.

(iii) Statement by Dr Vera Songwe (pdf): Africa also needs to strengthen the governance of its regional integration processes, especially as the continent is increasingly pursuing continent-wide integration through initiatives such as the Continental Free Trade Area negotiations which stands to create the single largest trade area in the world with over 1.3 billion people. Given growing the emphasis of Pan-African integration, Africa will need strong Pan-African institutions to set the terms of integration, ensure implementation and resolve disputes. These institutions should take lessons from Africa’s successful regional trade agreements, such as those in COMESA, EAC, ECOWAS and SADC, which all saw regional growth accelerate following their entry into force. To give one example of a successful experience that can be replicated at continental level, COMESA’s non-litigious approach to dispute settlement has worked and could therefore be extended to the Pan-African level with the CFTA.

Zambia Economic Brief: how Zambia can borrow without sorrow (World Bank)

The tragedy is not the rapid build-up of debt, but the lack of productive assets Zambia can show from the borrowing. A new approach, that closely links managing investment and responsible borrowing, is required going forward. This special section of the Brief is focused on these issues and how such an approach could be pursued:

There is consensus that Zambia’s debt levels have soared recently, but there has been an absence of precision on what the exact numbers are. Debt numbers differ across publications, causing confusion. This is because there has been a lack of debt reporting and there are different ways of measuring debt. A recent World Bank and IMF debt sustainability analysis puts Zambia at high risk of debt distress, indicating that there are heightened vulnerabilities associated with public debt. This indicates that Zambia is accumulating too much debt too quickly and a calmer and more sustainable pace is now required. As debt levels soared in 2015, the government’s response was to stop publishing debt reports or mentioning the overall debt levels in their speeches and official documents. Some numbers were provided, but they were never aggregated. It was left to the reader to solve the puzzle. This led to a range of narratives, at times more negative than the reality. Annual debt reports were last made public on the Ministry of Finance website in 2012, and since then, no quarterly debt reports have been published. Since 2012, the only published debt numbers have been found in government speeches and other economic reports. However, the external debt was often mentioned in US$, the domestic debt in kwacha, and the total ratios never summed or announced. Furthermore, other debt sources, such as guaranteed debt, are excluded from the discussion of total public debt. [The authors: Gregory Smith, Zivanemoyo Chinzara, Lars Jessen]

Uganda Economic Update (World Bank)

The composition of Uganda’s export partners is changing, with new export markets in Asia and the Middle East opening up. Until recently, Uganda’s three biggest markets were the East African region (including Burundi, DRC, Kenya, Rwanda, South Sudan, and Tanzania); the EU and the Middle East. During FY 2016/17, the value of Uganda’s exports to the Middle East amounted to $505m, around the same as its exports to the EU. The vast majority of the exports to the Middle East were to the United Arab Emirates, which accounted for 96% of the total. The value of exports to Asia reached $195m, with more than 80% of these exports going to India, Malaysia, China, Singapore, Hong Kong, and Indonesia. Following the unrest in South Sudan, the share of exports to regional markets declined dramatically. However, since FY 2016/17, a recovery has taken place, largely due to the diversification of ICBT trade to other destinations, particularly to DRC and Kenya, which now accounts for 50% and 25% of the value of ICBT export trade respectively. As a result, the value of ICBT exports to regional markets is estimated to have increased to $484m, up from $390min FY 2015/16.

While the bulk of Uganda’s imports comes from Asia, the share of imports from the Middle East and Africa is increasing. In FY 2016/17, the share of imports from Asia (i.e. China, India, Japan, and Indonesia) declined to 45%, down from the figure of 51% recorded in the previous year. An increasing proportion of Uganda’s imports come from within Africa, with the share of imports from COMESA increasing from 15.5% to 17% over this time period. While Kenya and South Africa together account for 60% of Uganda’s imports from within Africa, the value of imports from DRC increased from $22m to $148m, while those from Tanzania increased from $76m to $169m over the period. The increase in imports from DR Congo has been mainly driven by an increase in the import of raw gold for use by a gold refinery commissioned during FY2016/17 to process gold for re-export. [See Figure 10 (pdf): Uganda’s exports still dominated by coffee, as Middle East takes larger share of exports]

Kenya: Open borders will do more good than harm, say experts (Daily Nation)

President Uhuru Kenyatta’s directive to open up Kenyan borders for East Africans will have a more positive than negative impact, players in various sectors have said. The players see the president’s move as “a soft and direct” way of attracting investments, talent and knowledge from Kenya’s East African neighbours. The private sector has welcomed the directive saying the gains that will accrue from open borders will be more than the negative effects of “a closed society”. Institute of Surveyors of Kenya Chairman, Stephen Ambani said it had ratified g a Mutual Recognition Agreement with their partner associations that was now awaiting the nod from the East Africa heads of State Summit before their members can practice their trade across borders. “Coming on the background of big regional projects, standard gauge railway, roads and the East Africa Electricity Pool, it is important that cross-border practice be allowed to promote inter-regional trade,” Mr Ambani said.

COMESA trade policy updates:

(i) Leaders, ministers of 24 nations gather in Sharm El-Sheikh for COMESA economic conference. Presidents and ministers from 24 nations will gather in Sharm El-Sheikh on Thursday for a three-day conference of the COMESA free-trade area, discussing investment and development issues affecting eastern and southern Africa. COMESA announced its “Africa 2017” conference on Monday, saying the event from 7-9 December will see 10 national leaders and 40 ministers in attendance. The event is being organized in cooperation with Egyptian Ministry of Investment and International Cooperation, and will see the participation of 1,500 high-profile executive managers and investors from 500 different African and international companies.

(ii) Arab Maghreb Union seek collaboration with COMESA. Secretary General of the Arab Maghreb Union, Dr Taieb Baccouche and senior official are on three day visit to the COMESA Secretariat to discuss possible areas of co-operation between the two regional economic groupings. Among the potential areas of cooperation to be discussed is in the agriculture sector, intra-regional economic communities and investments in the banking and manufacturing sectors. “It is good to note that one of your members, Tunisia, is soon to become a member of COMESA and Algeria has also expressed interest to join,” COMESA Secretary General Sindiso Ngwenya said.

(iii) COMESA Business Council chairperson, Amany Asfour noted that Tunisia is likely to join the convention in the coming period, without specifying a date for that to happen. “Tunisia will be the 20th country to become a member,” she said. “It [Tunisia] has submitted its accession papers, which are now being reviewed in preparation to formally enter.” Asfour said Cairo would also host two other conferences to support pharmaceutical industries and tourism among the countries covered by the agreement. The COMESA Business Council has set up seven teams recently to look into the strains facing trade development among the continent’s countries. The first group is working on mechanisms to finance projects implemented on the continent, especially for small and medium enterprises, while the second group aims to facilitate shipping between member states, and other groups are concerned with agriculture, tourism, and telecommunications. The ICT Working Group is interested in facilitating export procedures, such as issuing smart cards to exporters to follow up on shipping and travel procedures from origin country until they reach customers in other countries.

Indo-African bilateral trade will cross $100bn in next two years predicts Union Minister (Business Standard)

Bilateral trade between India and Africa, which reached about $60bn in 2015-16, will cross the $100bn mark in the next two years owing to improvement in business environment in the country together with better infrastructure and connectivity across the African continent, Union Minister Mukhtar Abbas Naqvi said at an ASSOCHAM event (pdf). Africa offers lucrative business opportunities for Indian micro, small and medium enterprises across diverse sectors such as FMCG (fast moving consumer goods), mining and minerals, telecommunications, construction and others, said Mr Naqvi. [CII Blog: India-Africa Trade and Investment Relations]


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