Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Featured tweets:

@AUC_MoussaFaki: #SDGsAfricaRoundtable: Leadership in Africa must speak, act local to galvanise intra-African trade, stronger political commitment to address the real needs of all Africans.The #AUReforms is part of acknowledgement that we must own, pay for our collective ambitions. Now. Not later.

@AlibabaGroup: Jack Ma: In the future, trade will not go through containers, it will go through packages. E-commerce will not be one of the solutions, it will be THE solution. Rules and laws should be simple and modernized – designed for e-commerce.

MC11 updates:

(i) WTO, WEF, eWTP launch the Enabling E-commerce Initiative. The initiative aims to bring together leading voices from governments, businesses and other stakeholders for public-private dialogue on e-commerce policies and practices that can benefit small businesses. It will start its work early in 2018, with a high-level meeting at Davos in January to be followed by other conversations, including a major event in Geneva later in 2018. [WEF: 5 ways to make global e-commerce easier for everyone]

(ii) More than 40 ministers issue joint statement affirming support for the WTO. Ministers from 44 WTO members issued a joint statement on 11 December underlining their support for the WTO and reaffirming the “centrality” of the rules-based multilateral trading system. “We, the Ministers from 44 developing and developed Members that are strongly supportive of the multilateral trading system, are concerned that the World Trade Organization is facing challenges,” they declared. “We reaffirm the principles and objectives set out in the Marrakesh Agreement Establishing the WTO and the centrality of the rules-based multilateral trading system.”

(iii) The unseen impact of non-tariff measures: insights from a new database. A new report by UNCTAD and the World Bank Group launched at the WTO’s 11th Ministerial Conference reveals that non-tariff measures make trade costlier for developing countries than tariffs. The report is based on the updated database TRAINS 2.0, which collects comprehensive and comparable NTM data for 109 countries, covering 90% of global trade. On usage of NTMs, the report found that (pdf): (i) NTMs affect 77% global trade; (ii) In general, developed countries regulate more products and a higher share of imports than least-developed and developing countries; (iii) Agricultural products are more often regulated than manufactured goods and natural resources; (iv) Technical barriers to tradeand Sanitary and phytosanitary measures are the most frequently used form of NTMs; (v) Developed countries drive the high global usage of TBTs and export measures, while the use of SPS measures is more uniformly distributed. The report also measures the impact of NTMs on trade by estimating their equivalents according to value, or ad valorem equivalents (AVEs), which makes them comparable to tariffs. Four findings stand out:

(iv) TRAINS 2.0: New report reveals that trade regulations are costlier for developing countries than tariffs. A new release of UNCTAD’s global non-tariff measures database, TRAINS 2.0, was presented yesterday. The update means that the database now offers systematic and comprehensive information on 109 countries and covers 90% of world trade. UNCTAD TRAINS 2.0 contains 14,561 different regulations that comprise 50,511 distinct regulatory measures. Each entry provides information on the substance of measures, and the products and trading partners subject to the measure.

(v) WTO, ITC launch Cotton Portal to enhance transparency and support development. The Cotton Portal is designed for exporters, importers, investors and trade support institutions to search business opportunities and market requirements for cotton products. It provides a single entry point for all cotton-specific information available in WTO and ITC databases on market access, trade statistics, country-specific business contacts and development assistance-related information as well as links to relevant documents, web pages and to other organizations active in the cotton sector. Four African cotton-producing countries – Benin, Burkina Faso, Chad and Mali – proposed a Sectoral Initiative on Cotton in 2003. Since then, cotton has been discussed as a specific topic in the WTO.

(vi) Commodities and Development Report 2017. To support its policy recommendations, the report reviews policies pursued by several countries and their respective socio-economic impacts. The case studies cover such commodities in producing countries as soybeans in Argentina and Brazil, rice in Bangladesh, diamonds in Botswana and Sierra Leone, cotton in Burkina Faso, coffee and bananas in Costa Rica, cocoa in Ghana, nickel in Indonesia, sorghum in Mali, oil in Nigeria, and copper in Zambia. According to the report, policies that can promote inclusive growth over the next 15 years include economic diversification, expanding the linkages between the commodity sector and the national economy, adopting countercyclical expenditure policies which build commodity revenue buffers during price upswings to use them during downswings, adding value to raw commodities, and investing in social protection, health and education. [Various downloads available]

(vii) MIKTA Ministerial Communique; Statements by Members and Observers at the plenary session; USTR Lighthizer’s opening plenary statement; UNCTAD Secretary-General at MC11: It’s time to re-energize the global trading system; @MalmstromEU: Despite all the hard work yesterday we still have no agreed outcomes says MC 11 chair @SusanaMalcorra. Now the real tough negotiations start.

Nigeria’s trade surplus hits N1.2trn on recovering oil price (Sundiata Post)

Nigeria’s trade surplus hit the N1.2 trillion mark in the third quarter of 2017 for the first time since 2014, buoyed by oil price recoveries since the beginning of the year, the National Bureau of Statistics said Monday. Nigeria’s oil exports rose by 99.13% year-on-year jump, as the economy gradually recovers from its worst economic slump in almost three decades, recorded a trade surplus of N1.2 trillion in the period under review, as the value of exports rose 54% from last year toN3.5 trillion while imports declined 4.5% to N2.3 trillion. On a quarterly basis, exports rose 15% while imports fell 9%. The trade surplus in Q3 is the third straight surplus this year, having been followed by N719 billion and N506 billion trade surpluses in the first and second quarters respectively, according to data compiled by BusinessDay.

Sudan and the IMF

After 20 years, long-standing US sanctions on trade and financial flows were revoked in October 2017, considering Sudan’s progress in cessation of hostilities in internal conflicts, improved cooperation on regional stability and counterterrorism, and improved humanitarian access. However, Sudan remains on the U.S. list of State Sponsors of Terrorism, blocking progress towards badly needed debt relief. Arrears to the Fund are large (SDR 966.3 million). Selected Issues report: Banking relationships between Sudanese banks and foreign correspondents are likely to be gradually re-established. CBOS officials and commercial banks interviewed by the mission reported that negotiations with correspondent banks started since early 2017; however, they did not report material change to CBRs yet. CBOS officials also indicated that foreign banks have expressed interest for dealing with Sudan again. European and Middle-East banks are reportedly waiting for U.S. banks to begin operating in Sudan before taking action, and expect delays in resuming transactions between 6 to 12 months, despite the lifting of US sanctions, due to the need for compliance reports from the requesting bank. 2017 Article IV Consultation: Extract – Supply side reforms (pdf). The authorities have intensified efforts to modernize the business environment, notably in the context of their application for WTO membership. A high-level committee and eight sub-committees have been formed to coordinate this effort, and they have already identified 151 laws to be amended or completely modernized; staff encouraged them to press on with this effort. The authorities also continue to develop measures to fight corruption, including the Auditor General Act of 2017 which permits the Auditor General to audit any entity with at least 1 percent government ownership, the establishment of a Special Prosecutor General to investigate cases of abuse of public funds, and the establishment of an Anti-Corruption Commission.

Niger: Systematic country diagnostic (World Bank)

The economy is undiversified with few indications of structural transformation. Agriculture is the dominant sector in the economy (40% of GDP) and sectors such as manufacturing (6% of GDP), construction and public works (3% of GDP), and production of electricity gas and water (1% of GDP) are relatively small and underdeveloped. More than 60% of GDP is generated in the informal sector. The share of the secondary sector in GDP did increase over the past 15 years, however, not because of growth in industrial production but due to the expansion of the extractives industry. The tertiary sector generates around 40% of GDP. The relatively high contribution of the tertiary sector is not so much the result of the development of a more modern section of the economy as the reflection of the importance of import and export trade and the cost of transportation. Commerce and transport and the public sector represent the most important activities in the tertiary sector with shares of 12% of GDP respectively. Box 4.1: Niger’s economic symbiosis with Nigeria and consequences of the naira devaluation (pdf):

Re-exports are another aspect of trade between Niger and Nigeria. Niger functions as a warehouse state for products that are heavily taxed or subject to import restrictions in Nigeria, including used cars, textiles, rice, and cigarettes. In 2014 and 2015, the value of re-exports to Nigeria represented 15% and 12% of the GDP, respectively. While these figures are not part of Niger’s trade balance, they however contributed the equivalent of approximately 1% of GDP to the national budget each year in terms of customs duties. The cumulated effect of lower demand from Nigeria because of the recession in Nigeria for livestock and other products exported by Niger and the lower transit trade is significant. The impact of transit trade alone could be about 0.15–0.2% of GDP reduction in growth. The negative impact is mitigated to some extent by lower prices of imports from Nigeria. Cereal imports from Nigeria, which account for 2% of GDP, play a major role in food security. Well-organized distribution channels supply Niger’s markets from regions of Nigeria where there is surplus production. The substantial naira devaluation affected prices of food products favorably, even without full pass-through of this devaluation.

The World Economic Situation and Prospects 2018 report (UN)

A 3% upturn in the global economy has paved the way to readjust policy towards longer-term issues, such as addressing climate change, tackling existing inequalities and removing institutional obstacles to development, according to a new UN report on global economic prospects. According to the report, 2017 global economic growth had reached 3% – its highest since 2011 – as crisis-related fragilities and the adverse effects of other recent shocks have subsided. The improvement is widespread. Roughly two-thirds of the world’s countries have experienced stronger growth in 2017 than in the previous year, and movement is expected to remain steady at three per cent in 2018 and 2019. Noting that the recent pickup in global growth stems predominantly from firmer growth in several developed economies, the report states that East and South Asia remain the world most dynamic regions. Extract (pdf): In 2017–2019, further setbacks or negligible growth in per capita GDP is anticipated in Central, Southern and West Africa, Western Asia, and Latin America and the Caribbean. These regions combined are home to 275 million people living in extreme poverty. This underscores the importance of addressing some of the longer-term structural issues that hold back more rapid progress towards sustainable development and to ensure that the targets of eradicating poverty and creating decent jobs for all are not pushed further from reach. Failure to address these issues may leave a quarter of the population of Africa in extreme poverty by 2030. Very few of the LDCs are expected to reach the Sustainable Development Goal target for GDP growth of “at least 7%” in the near term. Approaching this target will require higher levels of investment in many LDCs

PIDA Week updates:

Remarks by Dr Cheikh Bedda (AUC Director for Infrastructure and Energy): With regards to project development, as of December 2017, from the 433 PIDA PAP projects, we are pleased to announce the following status following our data collection efforts 46 are at Concept, 40 are at Pre-Feasibility, 30 are at Feasibility, 30 are at Detailing Structuring, 18 are at Financing, 19 are at Tendering, 83 are at Construction and 50 are in operation. The AfDB acknowledged that even though the cost of PIDA projects is very high, the cost of not implementing PIDA projects bears higher impacts to the sustainable development of the continent. It is imperative to analyse the “cost of inaction”, its impacts in the future economic growth of Africa. PIDA projects have so far created jobs and will continue to create employment in the region.

At the African Union Commission, we are already in the process of carrying out a mid-term review of the PIDA in order to assess the current projects on the ground and also to select projects for the next cycle of PIDA implementation, which is from 2020 – 2030. It is our strong expectation that the new phase of the programme will leverage partner support towards a comprehensive package of PIDA implementation strategy. In that regard, the AUC is proposing a strategy with renewed focus to infrastructure development in rural and remote areas through an integrated approach that will prioritise programmes that deliver roads, energy and ICT to help these regions leapfrog in their development trajectory. [Remarks by Dr Ibrahim Assane Mayaki (NEPAD Agency CEO); Improving project bankability key to bridging Africa’s infrastructure gap; Adeyemi unpacks PIDA Model Law for transboundary infrastructure projects in Africa]

Today’s Quick Links:

African Economic Conference: Fair trade with Europe should depend on quality African exports

ECOWAS Free Movement and Migration programme: African trade unions seek ways to improve migration

Africa’s slice of $6.2 trillion global air cargo up for grabs

European Investment Bank signs €250m financing for SMEs in Egypt

OECD: The middle income plateau: trap or springboard?


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