tralac’s Daily News Selection
Starting today, in New York: The Platform for Collaboration on Tax global conference
Diarise: The 6th edition of the Africa CEO Forum in Abidjan (26-27 March) on the theme African Champions: powering competitiveness
SACU has issued a tender for the development of an online harmonized customs and excise tariff database and reference tool: details (pdf)
Africa’s top 500 companies: time to tighten up (The Africa Report)
For the fourth year running, the turnover of Africa’s 500 largest companies fell in our exclusive rankings. And though the drop was less steep – 6.7% for the companies’ 2016 financial year results compared to 12.6% the previous year – it means turnover is back to where it was in 2008. Back then, Africa’s corporate titans made $566.9bn. After a neat parabola of African corporate rise and fall, the 2016 turnover was $569.2bn. [The author: Nicholas Norbrook]
FOCAC trade preview: Of China’s 15 fastest-growing export markets since 2009, 10 are in Africa (Standard Bank)
Perhaps more startling is that 10 of China’s 15 fastest-growing export markets since 2009 are in Africa. These are Djibouti, Kenya, Ethiopia and Tanzania in East Africa; Senegal, Ivory Coast, Guinea, Ghana and Cameroon in West Africa; and Mozambique in southern Africa. These now account for over one-fifth of China’s total sales to Africa, from one-tenth seven years ago, together consuming nearly $25bn of Chinese goods in 2017. This reinforces our view that Beijing and, more importantly, Chinese firms – both SOEs and private owned firms – are continuing their focused and nuanced approach to Africa. However, Africa needs to step up to the plate to ensure Beijing’s further commitment.
China’s exports to Africa reached $95bn for a second consecutive year in 2017. Overall, Africa has proved a resilient market for China, with exports rising by an average 14% y/y each year since 2010 — five percentage points faster than China’s sales elsewhere. Fast growth in Africa has managed to offset demand softness in Africa’s largest economies – Nigeria and South Africa – in recent years. Promisingly, there has also been an up-turn in demand in both Nigeria and South Africa, with sales to both countries increasing in 2017 for the first time since 2015, by 17% y/y and 13% y/y respectively.
Also, the recovery in commodity prices – especially metals and hydrocarbons – resulted in Chinese imports from Africa rising 32% y/y last year, to $75bn. Total China-Africa trade has now returned to growth, increasing by 11.4%, from $151bn in 2016, to $169bn in 2017— the fastest rate since 2012. This recovery in trade growth is good news, laying a positive foundation for the sixth Forum on China and Africa Cooperation (FOCAC) which will be held in Beijing in September this year.
Nevertheless, the trade balance of most African countries has continued to deteriorate materially. Only five African countries have a trade surplus with China. Kenya – East Africa’s most developed economy – is a case in point. [The author, Jeremy Stevens, is an international economist for the Standard Bank Group, based in Beijing], [Update: Angola, Mozambique’s 2017 exports to China]
Kenya: Budget options for 2018/19 and the medium term (PBO)
Medium term economic growth prospects: Baseline Scenario. Assuming no significant change in policy, Economic growth is projected at 5.0% in 2018, picking to 5.6 in 2019 and 5.9 in 2020. In fiscal years, this translates to 4.4% growth for financial year 2017/18, 5.5% in 2018/19 and 5.8% in 2019/20. External Sector Outlook component to Baseline Scenario: The trade deficit is likely to continue expanding on account of stagnating exports and increasing imports. Reported increases in Kenya’s exports are mostly due to increase of exports in value terms, not volume terms. Structural competitiveness or quality of exports is still wanting and Kenya’s export market share in sub-Saharan Africa has been declining. On the other hand, given continued huge government investment projects, imports are likely to continue increasing. [Anzetse Were: Key concerns with Kenya’s new Eurobond issue]
Nigeria: Senate wants importation of palm oil, kernel banned (Premium Times)
The Nigerian Senate on Tuesday resolved to urge the Federal Government to ban the importation of palm oil/kernel, and inject funds to aid its local production. The senators also urged the private sector to partner state governments to embark on the transformation of palm oil production, and on creation of allied industries through “backward integration.” The lawmakers also resolved to mandate the Committee on Agriculture and Rural Development to invite the Nigerian Institute for Oil Palm Research on why it has failed to deliver on its mandate. Francis Alimikhena (APC, Edo North) explained that since 2017, Nigeria has imported 450,000 tons of palm oil to the tune of N116.3billion, adding that “it is as grim a reality as it is worrisome.” “With an ever increasing population, a steady decline in palm oil production, and a proliferation of the uses of various products from palm oil, it is an economic fact that there is high demand for palm oil in Nigeria”, he said. [NEPC to sustain intervention in $60bn leather industry]
The apex bank noted that the rising exports in the country as well as increased confidence and inflow of foreign exchange through the Nigeria Autonomous Foreign Exchange window were also factors contributing to the accretion of the external reserves. The reserves this year rose by $2.18bn, or 5.6%, from $38.91bn it was as at 2 January 2018. The reserves, which had dropped to below $24bn at the height of the oil price crash in 2016, has been accruing crossing $41bn, a level it last achieved in December 2013. Analysts project that the reserves will continue to accrue this year, rising to almost $50bn. [Ecobank’s Nigeria downstream oil 2017 review, 2018 outlook (pdf)]
South Africa: National Planning Commission strategy session outcomes (GCIS)
We received a briefing on the outcomes of research and dialogues on the transformation of township and rural economies, with a particular focus on the promotion of small and medium-sized businesses and black-owned enterprises. We remain deeply concerned that the marginalisation of small, medium-sized and black-owned enterprises continues, due to various barriers and the persisting high levels of concentration in the economy. Government SMME policies are not achieving the desired transformative impact especially as a pathway out of unemployment and poverty. We agreed to undertake further engagements with relevant stakeholders on the specific recommendations emerging from the research and dialogues. In particular, we plan to engage with Development Finance Institutions about their role and mandate in stimulating development.
Ireland exports around €1.3bn a year to Africa as a whole, which is comparable with what the country exports to Poland or Mexico individually. Mr McAuley said around a third of Irish exports to Africa comes from the agri-food sector. “Dairy is particularly successful with over €200m going to Africa.” One such company who successfully exports to Africa is dairy group, LacPatrick. Gabriel D’Arcy, Chief Executive of LacPatrick, said their brand is a brand leader in 15 to 20 African countries stretching from Mauritania to Angola in West Africa. Africa has 54 countries with a population of 1.5 billion.
George Wachira: Critical success factors for SGR (Business Daily)
It is the ICD import/exports consignee model that presents the biggest potential for early SGR success. The test for SGR is to make ICDs work flawlessly by substantially improving cargo and truck turnaround times by eliminating documentation and operational delays. Cargo clearance and forwarding paperwork will need to be effectively transferred from Mombasa to Nairobi and Naivasha, by integrating the Kenya Ports Authority, the Kenya Revenue Authority and SGR systems into efficient real time systems that work 7x24 hours. Times from ship to loaded trucks at ICDs should reduce and approximate global benchmarks. To encourage the exporters from Western Kenya and Uganda to use the ICDs, especially at Naivasha, it is important to make available back-load cargo for return journeys to avoid empty return journeys.
RwandAir to start flights to Abuja, Cape Town (New Times)
RwandAir, the national carrier, is set to expand its wings to Abuja in Nigeria and Cape Town in South Africa. According to airline officials, RwandAir will operate four weekly flights from Kigali to Cape Town with a stopover in Harare, Zimbabwe. However, the officials did not give timeframe during which they intend to start flying to the new destinations, but hastened to add that this will not take long. The Abuja route will be tagged to the existing Accra destination, where the flight will stop in Abuja before heading to Accra in Ghana and is expected to be operated four times a week. [KZN could soon have direct flights between Durban and London]
Bharti Airtel International (Netherlands) BV said the discussion on feasibility of listing its shares on an “internationally recognized” exchange was still in preliminary stage. Bharti Airtel owns telecom assets in 14 African countries. For the quarter ended 31 December, Airtel’s African operations reported a 5.3% growth in revenue over last year on constant currency basis.
Food prices must drop in Africa: how can this be achieved? (SWAC/OECD)
Third, strengthening and facilitating regional trade will also help reduce transaction costs and achieve economies of scale. In West Africa, the high price differential – from -28% in Mauritania to +14% in Ghana relative to the regional average – reflects the inefficiencies of the regional food market. [The author, Thomas Allen, Sahel and West Africa Club Secretariat]
Unlocking India’s logistics potential: the value of disaggregated macroscopic freight flow analysis (World Bank)
India is one of the fastest growing major economies. However, at 14% of GDP, its logistics costs are high relative to the 8 to 10% that is typical of most advanced economies. High logistics costs and poor logistics performance impact the competitiveness of the economy on multiple levels: (i) firms deliver less competitive goods and services; (ii) consumers pay more than peers for goods; and (iii) the cost of achieving improvements in GDP is excessive. The development of a national transport and logistics network to facilitate competitiveness and sustainable development and uplift rural regions will play an increasingly important role in shaping spatial organization in emerging economies. An element that is absent, yet critically important for national logistics issues in emerging economies, is sufficiently detailed freight-flow analysis to facilitate targeted infrastructure investments and enable transformational change to improve national logistics performance. [Express delivery: use drones not trucks to cut carbon emissions, experts say]
WTO: anti-multilateral attacks and a mini-trade ministerial in Delhi (Livemint)
Against this backdrop, India’s decision to host an informal ministerial meeting of around 40 countries on 19 March in New Delhi seems like an audacious move. It is not the first time that India is hosting such a meeting. The previous United Progressive Alliance government led by the Congress party convened two meetings in 2005 and 2009.
Today’s Quick Links:
Access to justice in Africa: the fight for an effective SADC tribunal
WEF’s Kris Broekaert: How can policy keep pace with the Fourth Industrial Revolution?
South Africa: Quarterly Labour Force Survey, 4th Quarter 2017
Tanzania: Highlights for Third Quarter (July – September) GDP , 2017 (pdf)
UN Special Committee on Peacekeeping Operations: meeting summary