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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Bloomberg

07 Dec 2017

In Harare today: Finance and Economic Planning minister Patrick Chinamasa presented the first budget in the post-Robert Mugabe era. Previews from NewsDay, Bloomberg. Access the full budget statement.

Ambassador Albert Muchanga’s presentation on the CFTA, prepared for the Afreximbank’s Cairo seminar, is now available for download (courtesy of Afreximbank).

Featured trade policy commentaries: Shawn Donnan: Barack Obama saw the WTO as a strategic tool for dealing with China. Donald Trump instead sees the WTO as a strategic target; Robert McDougall: The search for solutions to save the WTO Appellate body

AfDB’s Regional Integration Strategy: update

“Integrate Africa”, the fourth of the AfDB’s five strategic development priorities, the High 5s, was the central theme of discussions with regional stakeholders in Abidjan. Welcoming over 50 participants at the meeting, AfDB President, Akinwumi Adesina set the tone of the deliberations, saying that integrating Africa would help achieve the High 5 objectives in a coherent way. “Today, we are here primarily to discuss Integrate Africa, to bring down the tariff and non-tariff barriers that have marginalized and impoverished so many economies and prevented us from capitalizing on our physical and human capital resource base,” he said noting that “The lack of integration amounts to Africa’s own Beggar-Thy-Neighbour policy,” adding: “It must stop.”

Presenting the 2018-2025 Regional Integration Strategy, Vice President for Regional Development, Integration and Business Delivery, Khaled Sherif, explained that the document proposes measures and mechanisms to address issues related to building larger and more attractive subregional markets, including linking landlocked countries to African regional trade points. Ultimately, the strategy aims to improve the business environment for private sector investment. Other expected effects include a substantial increase in income and a real impact on human development due to the free movement of people, ideas and cultures, skills building, knowledge exchange and information.

Africa takes a seat in the ‘Made in China’ workshop (Caixin)

The native of China’s Shandong province added that Twyford is also moving beyond Kenya, with another plant opening in Ghana earlier this year and a third under construction in Tanzania. Twyford is one of a new generation of Chinese companies setting up shop in Africa, laying the foundation for what experts believe will become a major economic engine for the continent. Unlike previous generations of Chinese investment in the continent that were at least partly politically motivated, this latest is coming largely from China’s young private sector looking for growth opportunities and to escape rising costs at home. What they are doing is similar in many ways to what Westerners did in China back in the 1980s and 1990s, when many came to the country to make basic products that could take advantage of the low Chinese labor costs. Unlike earlier investors that were mostly state-owned giants backed by Beijing money and political agendas, most of the latest investors are simply moving production offshore to escape rising costs at home and avoid Africa’s high import tariffs. Twyford exemplifies the group, estimating its products are 30% cheaper when produced locally than comparable ones shipped from China.

Djibouti’s quest for inclusive growth (IMF)

Djibouti’s progress toward middle-income economy status can be tracked against several comparator countries. Useful comparators are countries that have already achieved and sustained high growth rates in the past 20 years, have at least tripled their per capita GDP, or have succeeded in specific reform areas of direct interest to Djibouti. International experience applied to Djibouti suggests that a healthy business environment is one of the most critical factors for growth. In the case of Djibouti, other significant variables that explain growth—such as the investment ratio and real exports growth—are less critical. Given the areas where Djibouti underperforms relative to its average DB rank, reforms should target in particular the energy sector, getting credit, taxation, investor protection, and property rights.

Egypt pays $4 billion dollars of debt to African Export-Import Bank (Ahram)

Egypt’s state-run news agency MENA reported on Monday that the central bank recently paid back $2bn to the African Export-Import Bank out of a $3.2bn short-term loan. The central bank will repay the remaining $1.2bn by the end of December, the central bank’s Assistant Sub-Governor for the markets sector, Ramy Ahmed Adel Abol Naga, was quoted by MENA as saying. On Tuesday, Governor of the Egyptian Central Bank Tarek Amer told the Egyptian financial newspaper El-Borsa that the bank had also paid back $2bn under a repurchase agreement, reducing the total debt to to the bank to $5.2bn.

World Intellectual Property Indicators – 2017: China tops patent, trademark, design filings in 2016 (WIPO)

Worldwide filings for patents, trademarks and industrial designs reached record heights in 2016 amid soaring demand in China, which received more patent applications than the combined total for the United States of America, Japan, the Republic of Korea and the European Patent Office. Innovators around the world filed 3.1 million patent applications in 2016, up 8.3% in a seventh straight yearly increase, according to WIPO’s annual World Intellectual Property Indicators (WIPI) report. China received about 236,600 of the nearly 240,600 additional patent filings, accounting for 98% of total growth. Trademark applications jumped by 16.4% to about 7 million, and worldwide industrial design applications grew by 10.4% to almost 1 million – both also driven by growth in China.

Digital China: powering the economy to global competitiveness (McKinsey)

In this report, the McKinsey Global Institute assesses the strengths of China’s digital system, the degree of digitization of industries, and the scope for value shift and creation. Part 1 looks at China’s position in the global digital landscape. Part 2 introduces the MGI Industry Digitization Index for China, which reveals large variations among sectors in terms of their digitization. Part 3 takes a more detailed look at how three digital forces (disintermediation, disaggregation, and dematerialization) can restructure value chains and increase the magnitude of disruption in four sectors (consumer and retail; automotive and mobility; healthcare; and freight and logistics) and discusses how much scope there is for digitization to shift (and create) value. In Part 4, we look at what policy makers can do to encourage China’s digital economy, and, finally, in Part 5, we discuss what choices companies can make to prepare for the impending wave of change and why digital strategy matters more in China.

Trade and Development in Numbers: UNCTAD’s Handbook of Statistics

For example, this year’s handbook reveals that 2016 was a difficult year of African economies. This was particularly evident in merchandise exports, which fell by 10.5%. Decreasing volumes of goods loaded in seaports for international shipment (-1.3%) and falling foreign direct investment receipts (-3.5%) also illustrated the challenges. Nevertheless, for the region, GDP grew by a modest 1.7%. Several factors contributed to this picture: Africa’s exports remain characterized by low product diversification (see figure 1) and a high dependency on raw materials compared with other regions of the world.

The handbook also illustrates the importance of trans-continental and intra-region trade and how they vary across continents. In 2016, the exchange of goods between China, the United States of America and Germany amounted to almost US$1 trillion - 6% of world merchandise trade (see figure 3). In 2016, 69% of the European exports remained within Europe and 59% of the Asian exports, in Asia. By contrast, for Northern America, Latin America and the Caribbean and for Africa, most exports were delivered to economies in other continents than that of the exporter (see figure 4). Extracts (pdf):

How important is trade for economies? Over the last ten years, the importance of trade in goods relative to domestic economic output has declined significantly in developing and transition economies. In developing economies, trade openness, measured as the ratio between the average of exports and imports of goods to GDP, fell from 31% in 2006 to 22% in 2016. In transition economies the rate decreased from 27 to 22%. Trade openness of developed economies has been comparatively low. After a peak around the year 2011, in 2016 the rate amounted to 19%, the same level as in 2006.

Global trends in 2016: The stagnation of global trade in total services in 2016 (see section 2.1) masks notable changes at the level of individual service categories. Telecommunications, computer and information services showed a relatively strong increase (4.5%). Exports of intellectual property and other business services as well as of personal, cultural and recreational services recorded positive growth rates, ranging between 2 and 3%. Travel receipts increased by modest 1.8%. Meanwhile, trade in international transport (-4.3%) and in insurance, pension and financial services (-2.6%), two service groups strongly linked with merchandise trade, declined. 2016 was a particularly unfavorable year for trade in construction, recording a drop of 8.7%.

Today’s Quick Links:

Benin, Nigeria a step closer to implementing the WTO Trade Facilitation Agreement

Experts push for a single African air transport market

USTR: United States, Egypt agree to further trade cooperation

China’s Sinopec looking to sell Nigeria business - sources

Zimbabwe: China extends $213m loan facility for three projects

CMI survey: “Making money in Angola is about connections, not hard work”

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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