Featured interactive: NEPAD’s impact on the continent

The CSAE Conference 2018 (18-20 March, Oxford) includes four trade panels: the preliminary papers have been posted

Selected preview of today’s EAC Heads of State Summit in Kampala: All is set for Somalia to join EAC fraternity. The inclusion of Mogadishu will make the East African Community to now own ‘The Horn of Africa,’ and boast the longest coastline of the Indian Ocean on the continent. The joint population of Kenya, Rwanda, Uganda, Tanzania, Burundi, South-Sudan and (if admitted) Somalia, will be close to 190 million in total, which is essentially the same number of people as Nigeria.

Francis Mangeni: RECs experience provides vital lessons for faster implementation of the Continental FTA (EA Business Week)

The presidents of Africa will meet in Kigali on 21 March 2018, hosted by President Paul Kagame, in an extra-ordinary Summit, to sign the framework Agreement establishing the African Continental Free Trade Area. This follows protracted negotiations over a record period of about two years and two months, since the launching of the negotiations on 15 June 2015 which effectively started in February 2016. Attached to the CFTA Agreement will be the protocols on trade in goods, trade in services, and dispute settlement. The protocol on trade in goods will have a number of annexes, covering rules of origin, non-tariff barriers, technical standards, health standards, customs, trade facilitation, transit trade, and trade remedies. A few outstanding issues remain to be sorted out, and legal scrubbing has to be done: but there should be enough time up to 21 March to get all this done.

Practical application of regional integration programs reveals areas for creativity and innovation, which continuously results in new pathways at REC levels. Realism would therefore suggest that REC policy formulation and programs should continue full blast, for it is unlikely that continental frameworks would move as fast as those of smaller coherent RECs. The CFTA long transition periods of 10 to 15 years and lower thresholds for market opening of around 90% of total product lines, mean that the Tripartite and the RECs, which are more ambitious, have the responsibility of keeping the continental market integration agenda functional; for it will be long before the CFTA regime fully kicks in. Experimental learning has been the ethos of African Economic Integration. Beginning with unique entry points, the RECs got the African regional integration programs off the ground from different vantage points that reflected specific critical developmental challenges at the time in the region. Positioning the RECs as learning organisations remains an important strategic orientation.

Africa growth prospects for 2018 (Afreximbank)

But the resilience of African economies is also attributed to a number of other factors, most notably growing cross-border trade and investments which are reducing the exposure of the region to adverse global volatility and external shocks. A growing number of African industrialists are playing an increasingly important role in the process of economic growth and investment. In particular, they are injecting the patient capital which is required to drive the process of structural transformation and mitigate the risk of sudden stop and capital outflows triggered by the challenging global environment of rising uncertainty and volatility. Most recent estimates place annual intra-regional investment at $15bn, over 24% of total foreign direct investment to the region. Moreover, cross-border investment undertaken by African entrepreneurs and industrialists is directed primarily towards labour-intensive manufacturing industries which are both growth and welfare-enhancing. [The author: Dr Hippolyte Fofack, Chief Economist of the African ExportImport Bank]

Poverty, welfare and income distribution implications of reducing trade costs through deep integration in Eastern and Southern Africa (Journal of African Economies)

We examine regional and unilateral policies to reduce three kinds of trade costs in Eastern and Southern Africa. Our article is the first CGE-microsimulation model to assess the impacts of the reduction of trade costs on poverty and income of the poorest 40% of the population. We estimate significant reductions in the poverty headcount and increases in income for the poorest 40%. We find that trade facilitation would increase the ‘share’ of income of the poorest 40% of the population, however, services reform decreases the share. We find and explain why our three types of trade costs have very diverse impacts across the countries. [The authors: Edward J Balistreri, Maryla Maliszewska, Israel Osorio-Rodarte, David G Tarr, Hidemichi Yonezawa] [Note: This article is available to subscribers only]

Will Ghana lead Anglophone West Africa to a single currency? (Deutsche Welle)

What’s behind the new push to introduce a West African single currency, the Eco? A statement by Ghana’s finance minister indicates Accra may be making one last attempt to realise this elusive goal. “The single currency for 2020 vision is: let’s find two, three or four countries that are ready. Once they meet up, we follow through with the others cascading in,” said Ken Ofori-Atta, Ghana’s finance minister, at a meeting of West African ministers in Accra on Wednesday. Ofori-Atta’s statement appears to be clearly directed at Nigeria, the West African region’s economic powerhouse that has put up stiff resistance to the Eco. Nigeria, however, is not convinced about the benefit of a single currency to its mega economy, whose GDP quadruples the rest of the others combined, with the exception of Ghana.

Kenya embraces IGAD Regional Protocol on Free Movement of Persons (IGAD)

Kenya’s Cabinet Administrative Secretary in the Ministry of Interior, Hon. Patrick Ole Ntutu launched the National Consultative Workshop towards the development of the Regional Protocol on Free Movement of Persons in Naivasha yesterday. “Some of key benefits that we will enjoy by facilitating free movement of persons and opening up our borders to the world include among others higher tourism and trade volumes, competitive economy, skilled labour exchange and education opportunities as well as social and cultural integration,” the newly appointed government official stated, adding that there is need to put in place mechanisms for better migration management, mobility and free movement of persons in the region. Speaking on behalf of Amb Dr Monica Juma, who was recently promoted to Cabinet Secretary for Foreign Affairs of Kenya, Amb Anthony Andanja pointed out that the New York Declaration on Refugees and Migrants was an affirmation by global leaders at the highest level of their unequivocal political commitment. He however added that the issue of refugees and migrants is manifestly divisive – while some see it through the lens of moral obligations to assist fellow humans at risk, others views migration as a threat to security and national identity. “The difficulty as a whole is not the overall capacity to absorb refugees, but the politics of how to share the burden,” Amb Andanja concluded.

Rail cargo movement increases in East Africa (Daily Monitor)

Latest report from the Kenya Ports Authority published this month shows that containers delivered up-country by rail from the Port of Mombasa recorded 671 twenty-foot equivalent unit (TEUs) registering an increase of 233 TEUs compared to the previous week. Imports population breakdown indicated that there were 3,170 TEUs locally bound (Kenya) and 4,873 TEUs for transit destinations. Uganda bound containers recorded 3,825 TEUs, out of the 4,873 TEUs making it the biggest customer. This was followed by Tanzania bound containers that registered 444 TEUs, South Sudan with 233 TEUs, and Democratic Republic of Congo with 162 TEUs and Rwanda with 157 TEUs.

COMESA to introduce seed labels and certificates to boost regional trade (COMESA)

Dr Cheluget added that although COMESA is home to some of the major seed producing countries in Africa such as Egypt, Zambia, Zimbabwe, Kenya, Malawi and Uganda, the levels of supply remain stagnant with each country differing in the laws, procedures and systems applied to the seed value chain. He said: “Companies are left to focus only on the domestic markets and thus unable to supply other markets in the region that may have greater demand.” Once operational, the COMESA Regional Seed Certificate will be issued by national seed authorities upon verification that a seed lot registered on the COMESA Variety Catalogue was inspected, met COMESA field standards and underwent laboratory analysis. Speaking at the same forum, the Permanent Secretary in Zambia’s Ministry of Agriculture Mr Julius Shawa said the country is committed to introducing harmonized seed trade regulations.

South Africa: Trade Probe, February edition (NAMC)

This issue of Trade Probe (pdf) covers the following topics: (i) Trade profile of water, include natural water; (ii) Confronting climate change: understanding and addressing the hotspots; (iii) Trade profile of live goats; (iv) Trade analysis of grain sorghum; (v) Market profile of the South African macadamia nuts industry; (vi) Assessing trade performance of oranges destined for Asian markets.

US Commerce Secretary releases steel and aluminum report: potentially impacting on South African steel exports? (AGOA.info)

Secretary Ross has recommended to the President that he consider the following alternative remedies to address the problem of steel imports: (i) A global tariff of at least 24% on all steel imports from all countries, or (ii) A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or (iii) A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States. Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention. The President is required to make a decision on the steel recommendations by 11 April 2018.

China in Africa: Much ado about investment - Part 2 (China Africa Research Initiative)

Keeping in mind this difference, these two activities each illustrate, in their own way, China’s presence in Africa; they show clearly that China is a services provider rather than an investor, that Africa is rather a customer than a partner. This conclusion would be even more evident if the services were to be added to the Chinese goods bought by African countries or, more accurately, to the growing African merchandise trade deficit with China. In my final post, using examples from Algeria, I will explain how the many kinds of “Chinese” enterprises in Africa further complicate efforts to understand Chinese FDI. [The author, Dr Thierry Pairault, is research director at France’s CNRS]

A multidimensional approach to trade policy indicators (IMF)

We present and discuss a set of indicators to help assess countries’ trade policies. The indicators relate to three policy areas – trade in goods, trade in services, and FDI. Given concerns about the direction of global trade policy, we also consider a set of more granular measures that reflect the evolution of countries’ policies since the 2008 financial crisis. We propose a simple approach to present the multidimensional aspects of trade policy that, by shedding light on relative openness across areas, can facilitate policy discussions. [The authors: Diego A. Cerdeiro; Rachel J. Nam]

Today’s Quick Links: South Africa’s 2018 Budget: speech, downloads. Profiled budget votes: Department of Trade and Industry, Vote 34 (pdf), Economic Development, Vote 25 (pdf) Tony Carroll: Renewing US - South Africa relations under Ramaphosa Peter Fabricius: SA returns to the UN Security Council with a new leader Carlos Lopes on the AfCFTA: Acordo de livre comércio quer África a resistir às potências que a exploram President Lungu backs AU reforms: calls for ‘urgent’ implementation Kenya: Import cover hits four-month high Incubator for Integration and Development in East Africa: call for proposals ECOWAS to open business incubator centres for women entrepreneurs in rural areas of West Africa Australia’s trade: by state and territory 2016-17 (pdf) JETRO’s annual survey on business conditions for Japanese companies in the US World Bank: Wider economic benefits of investments in transport corridors and the role of complementary policies