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 | Akintunde Akinleye

Diarise: East Africa Trade Development Forum (28 February - 1 March, Kampala)

African Trade Policy Centre (ATPC) Steering Committee: tracking AfCFTA implementation (UNECA)

The 3rd Steering Committee Meeting of the African Trade Policy Centre under its current 2016-2020 programme cycle took place in Marrakesh (14-15 February), hosted by the Arab Maghreb Union. ATPC Coordinator, Mr David Luke, gave an overview of the Centre’s activities during 2017 with additional details provided by the Centre’s team members. As part of the 2018 work programme, the Centre presented its new monitoring tool for tracking AfCFTA implementation throughout the continent and impact on enterprise and business expansion and development. The quality of the Centre’s research, policy advisory services, capacity building and training activities encompassing both intra-African and Africa’s external trade was commended. It was noted that the Centre’s new monitoring tool will be useful in generating data and evidence on the impact of the AfCFTA since implementation must now be driven by the private sector as it responds to the 2.5 trillion in market opportunities made possible by the agreement.

The economy of illicit trade in West Africa (OECD)

This report is a first step towards building a qualitative understanding of the way illicit or criminal activities interact with the economy, security and development of West African states. Going beyond a traditional analysis of illicit financial flows, which typically emphasises the scale of monetary flows, the report examines the nature of 13 overlapping, and oftentimes mutually reinforcing, criminal and illicit economies, with a view to identify their resulting financial flows and development linkages. In taking this approach, this report identifies the networks and drivers that allow these criminal economies to thrive, with a particular emphasis on the actors and incentives behind them. As a conclusion to this work, this report proposes a series of policy considerations to assist countries to prioritise and focus their responses to reduce the development impacts of IFFs.

Ken Ofori-Atta: Fiscal deficit remains major challenge for attaining ECOWAS single currency (Ghanaweb)

The Minister for Finance, Ken Ofori-Atta has observed that public debt and fiscal deficit remain major challenges hindering the Economic Community of West African States to meet the convergence criteria of a single currency. Addressing key stakeholders at the Second Meeting of the ECOWAS Ministerial Committee of the Presidential Taskforce on the ECOWAS Single Currency in Accra, on Monday, Mr Ofori-Atta, who is the Chairperson of the Ministerial Committee, said the implementation of the activities of the Roadmap required financial, human and material resources to execute the final roadmap. The Finance Minister said the journey to the successful establishment of ECOWAS single currency by 2020 required commitment and unwavering political support from all stakeholders and member countries.

Morocco’s accession to ECOWAS: Building bridges or rocking the boat? (ECDPM)

Though discussions are still ongoing, the issue raises numerous questions. Is geography no longer a determinant for African countries’ memberships of RECs? Does this put into question the AU’s architecture of the eight recognised RECs, especially with Tunisia requesting membership of COMESA? And in trade terms, how will a Continental Free Trade Area alter these interests and discussions? [The authors: Bruce Byiers, Tasnim Abderrahim] [ECOWAS Commission research process: Economic relations (trade and investment) between Morocco and selected ECOWAS member countries (Nigeria, Ghana, Cote d’Ivoire, Senegal, Mali, Togo)]

Nigeria: New platform for 48-hour cargo clearance coming (The Nation)

The Nigeria Customs Service, Tin Can Island Command, is set to introduce a new electronic information system, to ensure that cargoes are cleared from the port within 48 hours. According to the command, Time Release Studies will comprise data and electronic information that will enable stakeholders track the movement of their Single Goods Declaration forms from the date of submission to when the cargo exited the Customs system.

South Africa’s SONA debate: speech by Minister of Economic Development, Ebrahim Patel (EDD)

In the next 12 months, to get SA ready for the 4th Industrial revolution, we will: (i) Develop a skills framework for the new jobs of the future and a social plan to address the disruptions to labour markets and workplaces that flow from new technologies; (ii) Invest in R&D to create the intellectual property base for our economy to benefit from the potential of these new technologies and provide funding for venture-capital projects involving the new technologies; (iii) Bring down the cost of data through the competition market inquiry into data services, expand infrastructure through finalising release of new spectrum, complete digital migration and conclude key policies, including for entry of cross-border e-commerce in SA. To drive this process and promote the wider partnership we need in society, we will work through the Digital Industrial Revolution Commission and through the office of the Speaker, we are arranging a session to brief Parliament on work undertaken on the implications of the 4th Industrial revolution. [Speech by Ms Joan Fubbs, chairperson portfolio committee on Trade and Industry)

South Africa port and rail group, Transnet, is out to conquer the continent (Bloomberg)

Transnet has drawn up a list of 18 African nations where it wants to do business and is targeting at least five transactions this year, said Petrus Fusi, general manager for cross-border strategy. The state-owned company is also looking for opportunities in the Middle East, India and South Asia and wants to boost revenue by more than half to R100bn ($8.6bn), group executive for strategy Khaya Ngema said in the same interview. [NPC Economy Series: Energy paper, pdf]

Malancha Chakrabarty: India’s feeble stakes in Africa (DNA India)

Although the figure seems appreciable, it is important to note that India’s FDI flows to Africa are concentrated in Mauritius, a tax haven. From 2008 to 2016, Indian FDI outflows to Mauritius totalled $47.6bn. Only $5bn went to the rest of Africa, which represents only 2% of global Indian FDI outflows. A large share of Indian FDI to Mauritius is round-tripped back to India, which means that the actual volume of Indian investment in Africa is much less than reported in the media. Thus, for an accurate picture of Indian investments in Africa, Mauritius has been excluded from the analysis.

Secondly, Indian investments in Africa are highly concentrated geographically. With a share of 63% and 22%, East and North African regions attract most of the investments from India (see Figure 2). Table 1 shows that the top 10 recipients account for over 90% of Indian FDI flows to Africa. With a share of about 52.9%, Mozambique tops the list. But its top position is largely due to ONGC Videsh’s investment in the Rovuma gas field, which accounts for about 99% of Indian investments in Mozambique. Thirdly, Indian outward investment in Africa is concentrated within a few large firms. Although about 597 Indian companies invested in Africa over 2008-16, the top 11 companies account for about 80% of the total Indian investment flows. [The author is Associate Fellow, Observer Research Foundation]

India: Suresh Prabhu says 40% of GDP to come from exports by 2025 (Financial Express)

Addressing the Maharashtra global investor summit, Prabhu said “exports is the driving force of our growth strategy. We are coming out with a comprehensive strategy to increase the share of global trade to 40 per cent of GDP, which is likely to touch USD 5 trillion.” Of the $5 trillion GDP expected to be achieved by 2025, he expects $3 trillion to come from the services sector, while $1 trillion each to come from the manufacturing and agriculture sectors. The minister also urged the business community to come up with a proper business plan to increase exports. According to the Federation of Indian Export Organisation, the current share of exports in GDP is only 18-19%. Prabhu informed that government has called a meeting of all state ministers to discuss on the export strategy. Currently just four states-Maharashtra, Tamil Nadu, Gujarat and Karnataka contribute almost 70 per cent of exports.

Expanding productive capacity: lessons learned from graduating Least Developed Countries (CDP)

The note develops an analytical framework (pdf) for expanding productive capacities for sustainable development that highlights the need for integrated policies across five broad policy areas: (i) development governance; (ii) social policy; (iii) macroeconomic and financial policies; (iv) industrial and sectoral policies; and (v) international support. It also emphasizes the need for different national strategies and tailored international support due to the diversity of LDCs. In this regard, the note identifies three different pathways towards graduation and highlights for each pathway key policy lessons for effectively expanding productive capacity.

Mustafizur Rahman: Graduating out of LDC group with momentum (CPD)

Bangladesh is well-poised to be considered for graduation from the LDC group at the next review of the UN’s Committee for Development Policy in March 2018. As may be recalled, to be eligible for graduation the thresholds for at least two of the three graduation criteria (Human Asset Index, Economic Vulnerability Index and per capita Gross National Income) need to be attained. While a number of LDCs, including from South Asia (Nepal and Bhutan), are expected to be considered for graduation, Bangladesh is likely to have the unique distinction of attaining (and surpassing) the thresholds for all the three graduation criteria by the time the CDP convenes its meeting. This, no doubt, is indicative of the strength of the Bangladesh economy, and lays a good foundation for going forward towards the final graduation out of the LDCs in 2024 following the two successive triennial reviews by the CDP in 2021 and 2024.

Policies, institutions, development praxis and incentives will need to be geared towards Bangladesh’s graduation with momentum. Since there is a six-year period between the time Bangladesh will be considered for graduation (in 2018) and when she will finally graduate out of the LDC group (in 2024), Bangladesh will need to pursue a well-crafted graduation strategy during the time between these two key milestones. Review of experience of some of the graduating and graduated LDCs indicates that while some LDCs have been successful in graduating with momentum by taking appropriate preparations, in case of some of the other LDCs graduation had to be even deferred because of continuing susceptibility to challenges and vulnerabilities. [Fahmida Khatun: Bangladesh prepares for graduation]

Collective action is key to defending trade, Geneva Dialogue hears (UNCTAD)

Pascal Lamy of the Jacques Delors Institute and a former director general of the WTO said the threat of a “trade offensive” from the United States was more “bark than bite”. He said that it was is clear that US President Donald Trump viewed trade arrangements as unfair to the United States. As a consequence, he said, its new approach was to quit or change the rules in its favour. Mr Lamy saw this as leading to three outcomes: from a weakening of the WTO’s rule-upholding capacity, through “a return to GATT” (the forerunner of the WTO) with “shallow discipline” on trade rules, to a WTO “minus the United States”. Mr Lamy said the view of the multilateral trading system as a win-win scenario favoured by the United States in the past had been replaced with the view that it was a zero-sum game. He said that there was a possibility that there was indeed unfairness in the system that needed to be addressed but, in his view, quitting the system rather than reforming it was not the right way forward. [Reuters: WTO should prepare for life without US, ex-chief Lamy says]

Is the Indian government expecting a spike in trade disputes? (Livemint)

With rise in protectionism in developed countries, India has increased its allocation for international trade disputes four-fold in its budget presented by finance minister Arun Jaitley earlier this month. The Rs1.2 crore provision for expenditure in 2018-19 against Rs30 lakh a year ago is mostly for paying the lawyers who need to be engaged to represent India’s case at the WTO), a commerce ministry official said, speaking under the condition of anonymity. India has so far launched 23 trade disputes at the WTO against other countries, while it is a respondent in 24 such cases. While India and the US have been strategic partners, both countries are fighting out on several issues at the WTO dispute settlement mechanism. [India, 37 others seek WTO dispute body’s aid to fill up Appellate Body vacancies]

Australia may be engaging in ‘free trade’ but it’s becoming more protectionist too (The Conversation)

The federal government may be aggressively negotiating free trade agreements, but in other ways it is restricting trade. The government has been giving itself extensive new anti-dumping powers, targeting steel and aluminium markets in particular. There was a nearly two-fold increase in anti-dumping investigations in Australia in 2017. According to the Productivity Commission, these protectionist measures “raise costs to consumers and reduce competitive pressures, leading to less efficient resource use in the country levying the protection”. The Productivity Commission estimates that for every A$1 increase in tariff revenue, economic activity in Australia falls by A$0.64. The commission also says that for “every year that higher tariffs prevailed, GDP would be lower by over one per cent”. Thus, “a household that spends A$2,500 a fortnight on goods and services would be worse off by A$100 a fortnight”.

Today’s Quick Links:

Southern Africa: regional maize supply and market outlook update

Full SADC electoral calendar as five countries prepare for polls in 2018

WCO support for Ethiopia, Zimbabwe

Ghana’s John Azumah appointed Secretary General of ECOWAS Parliament

Association of Ghana Industries: Overhaul tax exemption regime to save domestic industries

Another front opens: crisis along the Nigeria/Cameroon border

Australia-Mauritius Research and Innovation Forum: update

UNCTAD Toolbox: delivering results


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