tralac’s Daily News Selection
Featured infographic, @justchad_cga: Over half of oranges traded globally are sourced from Africa – who would have thought!! Extract from latest USDA Foreign Agriculture Services reports: South Africa Citrus Annual, Egypt: Citrus Annual, Citrus: World Markets and Trade
TFTA update: The 13th COMESA-EAC-SADC Tripartite FTA session of Principal Secretaries took place yesterday in Addis. @Kiptoock, while chairing the session of the PSs, urged Partner States to fast track the negotiations of outstanding issues so as to pave way for the implementation of the TFTA agreement to allow countries to enjoy benefit of greater market access, wider investment area etc.
Africa’s signature policy reform of 2018, the Continental Free Trade Area (CFTA), is set to unleash the continent’s full potential with more African countries trading with each other in a wider integrated market, says Economic Commission for Africa’s (ECA) Executive Secretary, Vera Songwe. In opening remarks to the 5th Annual Ministerial Symposium at the 2018 Mining Indaba that kicked off Monday in Cape Town, Ms. Songwe said the mining sector on the continent was set to benefit the most from the CFTA and could help with the transformation of Africa’s economies.
African trade policy events starting today:
In Addis: CFTA negotiation meetings (until 17 February)
In Pretoria: Law Society of South Africa application on the 2014 SADC Protocol as it relates to the SADC Tribunal
In Harare: Establishing a trade facilitation roadmap in Zimbabwe (Module 3)
In Kampala: Sectoral meeting on TBR Implementation Harmonized EAC Standards to facilitate trade (textile and products)
In Geneva: Trade and Development Board executive session (Least Developed Countries). Advance documentation includes the Selected Sustainable Development Trends in the Least Developed Countries 2018. Extract (pdf): The above interpretation of the evidence is vindicated by the evolution of terms of trade and exports/imports volume indices across LDC groupings (Figure 9). Despite the impact of the 2009 global financial and economic crisis, LDC merchandise exports have increased significantly in volume terms, to the extent that the corresponding index for the whole LDC group rose from 100 in the year 2000 to 285 in 2011, and 376 in 2016 (Figure 9, panel A). Across African LDCs and Haiti (Figure 9, panel B), however, the expansion of merchandise imports, in volume terms, has largely outpaced that of merchandise exports. Hence, as long as high commodity prices (especially for fuels) sustained the terms of trade, the group actually posted a trade surplus; but as the positive terms of trade shock waned out, import compression became inevitable. This situation contrasts sharply with the prevailing developments among Asian LDCs (panel C), where merchandise exports and imports grew at a similar pace (at least in volume terms), as well as among island LDCs, where export volumes clearly outpaced import ones. Both Asian and island LDCs, however, have posted broadly stable or slightly declining terms of trade since the early 2000s, which explains why the sustained boost in export volumes translated only marginally into improved trade balances.
Angola and Morocco last month became the latest African nations to loosen long-held currency pegs, following the lead of Nigeria and Egypt as they sought to revive struggling economies. The question is whether they’ve done enough. The four nations – among Africa’s six biggest economies – have relieved some of the pressure that was causing dire dollar shortages or hindering businesses, but they may all have to make further moves and reforms to benefit from the currency shifts and fully satisfy investors. They changed stance for different reasons.
Uganda overtakes South Africa in Kenya exports (Daily Nation)
Uganda overtook South Africa for the first time in November as the largest source of goods ordered by Kenyans, underlining the impact of drought which saw electricity and food imports shoot up. Kenya’s monthly import bill from Uganda jumped more than two-fold to Sh7.59 billion compared with Sh2.93 billion in October, marking the highest ever recorded monthly imports value from the land-locked country. Goods from South Africa stood at Sh4.60 billion, a 5.66% drop compared with October’s value. Imports from Uganda in the January-November period doubled to Sh35.08 billion from Sh17.75 billion in the same period in 2016, leapfrogging Egypt to become the second importer of goods to Kenya in Africa. South Africa, however, remained the biggest seller of goods to Kenya in the continent in the period at Sh57.70 billion, a growth of 28.31% year-on-year.
A decade ago South Africa sent the bulk of its coal exports to Europe, a market now disappearing right before its eyes. But far from being worried, South Africa’s coal exporters are confident that they can increase shipments in coming years by becoming the supplier of choice to new markets in Asia, particularly Pakistan and India. The common theme among speakers at last week’s South African Coal Export Conference, hosted by IHS Markit, was that South Africa is in pole position to take advantage of growth in South Asia. While India is currently the world’s second-largest coal importer behind China, the outlook for imports is far from certain, with the government officially targeting a goal of zero foreign purchases, a position in conflict with the views of several utilities that rely on imports to fuel coastal power plants.
Rwanda: How tax evaders smuggle goods into the country (New Times)
Rwanda Revenue Authority recently announced that they were battling rising cases of smuggling among other malpractices with used clothes and alcoholic products being among the most smuggled goods. The move to increase levies on imported used clothes saw an increase in attempts to smuggle these clothes as a section of traders seek to retain their profit margins. This is because though the supply has reduced significantly as some business people are abandoning this line of business, the demand remains the same. For instance, RRA has intercepted about 230 tonnes of used clothes being smuggled into the country. People with knowledge on logistics and importation of products say that among the major ways smugglers use is import goods and send them to a neighbouring country (mostly DRC and Uganda) then find a way to smuggle back into the country, through porous borders.
Kenya: Safaricom-backed logistics firm eyes Africa expansion (Business Daily)
Sendy’s chief executive Meshack Alloys says the company now has sufficient financial muscle to foray into East African countries. “We shall expand into East Africa by this year,” he said in interview, but declined to disclose the specific countries the firm is eyeing. Sendy has about 50,000 customers and serves over 4,000 businesses in Thika, Mombasa, Kisumu and Nairobi. The company last year said it expected to move to new towns in Kenya “in the next few months.” The on-demand logistics firm allows customers to order courier services over their mobile phones.
The presentation (available for download) highlights the food crisis in East and southern Africa, but also stresses that the region has the ability to feed itself if food were allowed to move freely from surplus to deficit regions. It also provides information on The Hub and the Eastern Africa Grain Council trade facilitation forums that have been successful in promoting food security. In 2017, the USAID Hub and EAGC facilitated contracts for 1.2 million MT of staple grains for cross-border trade, supporting the food security of an estimated 14.4 million people. [Rwanda: Horticulture sector players tipped on how to reduce post-harvest losses]
The question has changed from “what Africa needs from the United States?” to “how can the United States create win-win opportunities with Africa?” The concern is: can the United States change its approach to Africa and compete for business opportunities there? If not, then China will end up as Africa’s partner of choice and will continue to be the “go to” commercial partner for the future unless we make some drastic changes in our approach. Strong partnerships between African countries and China have major geostrategic and national security implications for the United States and the Trump administration. We need to leverage and expand on our current assets, including our traditional foreign assistance as well innovations such as Power Africa, and leverage our trade and financial institutions like the Overseas Private Investment Corporation, Export-Import Bank, and the US Trade and Development Agency to help level the playing field for American businesses in Africa. (i) Recommendations for the White House and Congress: (ii) Recommendations for business leaders and US agencies: [The authors: Daniel Runde, Christopher Metzger, MacKenzie Hammond]
Georgetown Africa Business Conference: keynote address by Dr Bukola Saraki (Proshare)
Another interesting dimension to the Africa Rising narrative is that much of what is celebrated as economic growth on the continent was in fact serendipitous. Because much of Africa still relies on commodity exports, we are able to make a connection between its economic growth and the rise in global commodity exports, rather than any new thinking or deliberate planning. I tend to align with those who reject this notion of Africa as a piggy-backer on the global economy as rather simplistic – especially given the remarkable political and social transformation that the continent had undergone by the end of the last century. Democratization and the more accountable governance system that comes with it, promote a way of thinking and doing things, which in turn create more conducive environments for business and investments. It was hardly a coincidence, therefore, that the Africa Rising mantra emerged about the time that almost all the countries of Africa had embraced constitutional democracy as the only legitimate form of government. I believe, however, that this kind of skepticism is healthy. It forces us to continue to interrogate the markers of our growth, what it means, what policy options it places before us and what choices we must make if economic development is to yield real dividends for the people, and address the social and economic challenges that we face. [The author is President of Nigeria’s Senate]
Informal sector heterogeneity and income inequality: evidence from the DRC (World Bank)
This paper uses 1-2-3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector. The first group of entrepreneurs – top performers – is growth oriented and enjoys greater access to capital. The second group – constrained gazelles – includes entrepreneurs who share many characteristics, especially management skills, with the top performers, but operate with less capital. The third group – survivalists – comprises firms struggling to grow.
BRICS-plus: Alternative globalization in the making? (WEF)
Indeed, despite the creation of the New Development Bank and some of the initiatives to boost economic ties between BRICS members, there is a sense that the BRICS is starting to encounter limitations to further integration. One of the ways to overcome this may be to shift the focus from trade liberalization or large-scale integration towards building a wider framework of integration and cooperation in the developing world that opens new gateways for cooperation among BRICS and their partners across continents. This kind of framework may be realized through China’s initiative to create a BRICS+ circle that according to China’s foreign minister Wang Yi will represent a new platform for the South-South cooperation via holding dialogues with other major developing countries or groups of developing countries to establish a more extensive partnership. Thus, rather than expanding the core set of BRICS members, the BRICS+ initiative seeks to create a new platform for forging regional and bilateral alliances across continents and aims at bringing together the regional integration blocks, in which BRICS economies play a leading role. Accordingly, the main regional integration blocks that could form the BRICS+ platform include Mercosur, SACU, EEU, SAARC, as well as the China-ASEAN FTA. Altogether, in such a setting, 35 countries form the BRICS+ circle. [The author: Yaroslav Lisovolik]
The ICC International Court of Arbitration and the International Arbitration Institute of the University of Miami School of Law and have announced their collaboration on an unprecedented research project aiming to bring greater transparency to international arbitration. The state-of-the-art platform will allow those involved in international arbitration – scholars, arbitrators, counsel, and users – to organise data across different variables to test various hypotheses. They can assess if there is any correlation between, for instance, the governing law and the number of legal experts; the value of the dispute and the presence of dissent; the bifurcation of specific issues; and the length of the arbitration.
When the region’s regulators roll out the changes – known as the General Data Protection Regulation, or GDPR – on 25 May, it will represent the biggest overhaul of the world’s privacy rules in more than 20 years. The new regulations offer EU citizens sweeping new powers over how their data can be collected, used and stored, presenting global leaders outside the 28-country block with a stark choice: bring their domestic laws in line with the EU’s new rules, or risk being shut out of a market of 500 million well-heeled consumers.
Today’s Quick Links:
FAO Food Price Index: January 2018
2018 SADC Renewable Energy and Energy Efficiency Status Report: update
Roman Grynberg: Buying investment – lessons from America
Guinea-Bissau: (i) ECOWAS statement, (ii) AU, UN voice concern over protracted political crisis
Kuwait’s UNSC Presidency: briefings and/or adopt resolutions pertaining to Sudan sanctions (8 February), Guinea-Bissau (14 and 27 Feb), CAR (22 Feb), South Sudan (27 Feb), Burundi (26 Feb).