Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Xinhua

Last week’s North Gauteng High Court judgement on the SADC Tribunal case is posted (pdf)

Nigeria: 2017 Nigerian Annual Trade Policy Report (NOTN)

In 2017, in ECOWAS, the NOTN engaged across a number of areas to underscore Nigeria’s commitment to deepen regional integration from the angles of Industry, Trade and Investment. Nigeria’s welfare and prosperity are interlinked with the prosperity of ECOWAS. To follow-up, in 2018, the NOTN will focus on engaging with other Member States to drive much-needed reforms needed to deliver on the economic integration agenda of ECOWAS based on the sovereign dynamics of ECOWAS Member States. Considerable devotion will also be paid to preparing the ECOWAS sub-region for the implications of the AfCFTA and for maximizing the benefits while safeguarding economies in the sub-region from unfair and injurious trade practices by partners from outside the region. One of the priorities that shall be pursued shall be be the establishment of an ECOWAS Trade Policy Committee, consisting of designated Chief Negotiators of ECOWAS Members, and which shall recommend mandates, priorities and positions to ECOWAS principals. These Chief Trade Negotiators shall have expertise and profound understanding of trade policy and the relationship for structural reforms for productivity and competitiveness.

In 2018, Nigeria will negotiate strategic relations with notable trading partners using agreed 21st century templates for Nigeria’s Trade Agreements. On the flanks of the MC11 in Buenos Aires, Argentina, in 2017, Dr Okechukwu Enelamah, signed, on behalf of Nigeria, the Joint Declaration on Cooperation with the European Free Trade Association. This was a concrete milestone. It signalled the types of agreements Nigeria intends to sign onto, going forward. These would be agreements offering mutual benefits and responsibilities, based on the establishment of global value chains.

The establishment of a rules-based trade remedy infrastructure shall be a priority in 2018. With the support of King and Spalding, signalled by the signing of an agreement with the NOTN, the pace of establishment of a trade remedy infrastructure shall be accelerated. Injurious and unfair trade practices targeted at the Nigerian market are posing ever greater risks, undermining industrialization of the Nigerian economy and posing a serious handicap to development. The current pre-occupation is with the drafting of legislation, staff requirement for an investigating authority and, training. [Note: Chapter Three examines Nigeria’s key trade statistics – deficits and surpluses, pp 45-72] [Download the full report (pdf)]

Swaziland: Budget Speech 2018

As I have alluded earlier, the public sector has grown at a much faster pace over the years creating significant dependency in the economy and compromising growth and employment creation. This has led to the large size of government, increased the wage bill significantly, and limited the space for social and infrastructure spending. The model where government is the employer of first choice has to be changed in order to create space for investment spending on critical infrastructure projects that would encourage private sector activity and job creation. The widening of the budget deficits without adequate financing is exerting pressures on the domestic economy. Government spending continues to outpace its ability to raise enough revenues resulting in cash flow challenges and accumulation of arrears. The cash flow challenges experienced in 2016/17 continued into 2017/18, and this has negatively affected local businesses. It is therefore, very important that Government restores fiscal sustainability to ensure macroeconomic stability and unlock the country’s potential to place growth on a higher growth trajectory.

The budget deficit for the financial year 2017/18 is contingent on the passage of newly identified revenue measures. If these proposed measures are passed the budget deficit is projected to stand at 6.7% of GDP with financing for 2.4% of GDP pending policy direction. This figure is in line with the SADC Macroeconomic Convergence targets of single-digit deficit levels and, in the medium term, Government intends to lower it further. Failure to pass these revenue measures would lead to a budget deficit of 8% of GDP and would imply a 3.8% of GDP as a financing gap, which would add E2.4bn to the ballooning arrears stock. [Presented by Martin G. Dlamini, Minister of Finance] [Download the full speech (pdf)]

Results of JETRO’s 2017 survey on business conditions of Japanese-affiliated firms in Africa (JETRO)

Between August and October 2017, JETRO conducted its latest survey on business operations of Japanese-affiliated firms in twenty four countries in Africa. The survey received a record-high 315 replies. Summary of results: (i) evaluation of Morocco growing due to its remarkable economy; (ii) while competition has intensified through China’s entry in the market, some Japanese companies see benefits; (iii) concern regarding the political situation and governance is extremely higher than in other regions. Extracts (pdf):

(i) Operating profit forecast and future business outlook: Morocco stands out. Results vary largely depending on the destination country. The ratio of the companies reporting a surplus ranges from over 60% in South Africa and Morocco to 25% in Kenya. Morocco has had the highest ratio in the past four surveys. When asked about their future business forecast, 90% of all respondent companies in Morocco answered that they will expand business. Among the reasons behind expanding business, the highest was “increased sales” (70.6%) and “the high growth potential of the local market” (70.6%). Morocco has been focusing efforts on cultivating exports mainly in the fields of automobiles and aircraft and proactively drawing foreign direct investment. Approximately 50 Japanese companies are active in Morocco as of 2017, and the largest foreign employer is a Japanese parts manufacturer. This is the fourth year in a row in which over half of respondents across Africa reported intentions to expand business, meaning that the trend toward expansion will continue. Over 40% of all respondent companies plan to increase the number of local employees.

(ii) Change in business environment: Market entry in pursuit of private-sector demand, reduction of ODA from Japan by half. Among the reasons for entry to Africa, there was an increase in answers of “growth potential” and “market scale” in what is believed to be pursuit of private-sector demand. In comparison with 10 years ago, the ratio for “natural resources” and “ODA from Japan” were down by half. The number of companies taking advantage of FTAs, such as the Southern African Development Community, has steadily increased. Progress has been seen in the Initiative of the African Economic Community, which aims at establishment in 2028.

(iii) Change in business environment: While competition has intensified through China’s entry, some Japanese companies consider it as benefits. Regarding China’s strengthening of economic ties with Africa, 44.4% of respondents reported that it has intensified competition and had an impact on their business. On the other hand, 15.7% of all respondents answered that the situation is bringing about business opportunities and benefits. Comments from them included “China’s speedy and aggressive entrance into Africa has led to the creation of new business by spotlighting overlooked needs in the local region, and there is a sense that new markets are taking shape.”

Looking at the greatest competitors by nationality, “European companies” (26.8%), “Japanese companies” (20.5%), “local companies” (17.8%) and “Chinese companies” (14.1%) were cited. Conversely, regarding potential partners by nationality, “France” (21.5%), “India” (20.2%) and “South Africa” (18.5%) were ranked in the top. Japanese companies have placed great expectations on collaboration with French companies in the markets of francophone countries in Africa, where Japanese companies have had a late start. [Related: JETRO Middle East report]

Govt to help Japanese firms expand into Africa (The Japan News)

The government plans to support partnerships between Japanese companies and firms from nations with economic influence in Africa, such as France and India, to encourage Japanese enterprises to branch out into the continent. Arrangements are being made to hold in South Africa in May a first-of-its-kind conference for governments and firms concerned to discuss ways to cooperate. From Japan, the meeting is expected to be attended by Economy, Trade and Industry Minister Hiroshige Seko and senior executives from nearly 100 firms, including trading companies and manufacturers. [Harry G. Broadman: Japan should refocus on Africa as a source of growth]

Kenya reaps big from TICAD conference (Mediamax)

Japan’s largest bank Mitsubishi UFJ Financial Group plans to open new offices in Kenya to support the investments of Japanese companies in Africa. Last month, the world third largest logistics company Nippon Express, opened a subsidiary office in Kenya that will offer a one-stop service from procurement logistics, optimising logistics required in product manufacturing processes, to distribution logistics. The company will use local agents to export roses and other cut flowers grown in Kenya. “The opening of a branch in Kenya by Nippon will help in exporting Kenya’s flowers directly to Japan, without necessarily going through Amsterdam.” KenInvest managing director Moses Ikiara said: “Since TICAD conference was held in August 2016, the number of companies investing in Kenya has increased by 53%, from 41 to 54 companies. More are showing interest by sending their think thank teams to do research on the country and prospect for investment opportunities.” [Ambassador Toshitsugu Uesawa: Ticad 6 key to Kenya’s industry plan; 28 SA companies to showcase at Foodex Trade Fair this week in Japan]

South Africa: Transnet launches new company to facilitate projects in Africa (Business Report)

Transnet has launched a new company, Transnet International Holdings (TIH) to facilitate multiple rail, port and pipeline projects in the rest of Africa. TIH, which has a capital injection of R100m, held its inaugural annual general meeting this week to, among others, appoint a board. According to Transnet chief executive Siyabonga Gama, the new entity would commence trading on 1 April. Gama said Khaya Ngema was the group executive responsible for overseeing TIH, while Petrus Fusi, Transnet’s general manager for cross-border strategy, is the new chief executive of TIH. Transnet Board of Directors, Department of Public Enterprises and National Treasury have already approved the establishment of the company. He said Transnet’s plans to diversify had long been on the cards. In terms of Transnet’s new strategic blueprint, called Transnet 4.0, the entity prioritised geographic diversification ”using the core competencies of port, railway, pipeline and gas. How do we assist other countries in terms of regional integration? That is the space that TIH is going to be in.” [Related: Transnet’s Market Demand Strategy, pdf; Transnet’s Siyabonga Gama: Build Africa and reignite the continent]

Kenya: Foreign supermarkets bring stiff competition to retailers (Business Daily)

The spirited entry into Kenya by multinational chain stores is set to stiffen competition, pitting listed new players against the local family-owned retailers whose footprints hardly go beyond East Africa. Last week, Shoprite - Africa’s largest retailer by sales - said it would open its first two stores in Nairobi’s Garden City and West Gate shopping malls in August, while Carrefour opened its fifth store at Sarit Centre. Kunal Ajmera, chief operating officer of professional services firm Grant Thornton: “Companies like Carrefour and Shoprite have substantial financial backing and proven track records. They can also borrow at cheaper rates from their home countries whereas the cost of borrowing in Kenya is very high.” [World Bank bets billions on Kenya’s private firms]

Tanzania: DRC, Uganda engaged on Central Corridor road user fee (Daily News)

The Central Corridor Transit Transport Facilitation Agency (CCTTFA) is engaging the DR Congo and Uganda to harmonise road user charges after Tanzania, Rwanda and Burundi agreed to lower the fee to $152. The CCTTFA Chief Executive Secretary, Capt. Dieudonne Dukundane told reporters in Dar es Salaam that they were engaging DR Congo and Uganda to harmonise the fees which have been complained to add costs of transport, a key component which affects intra-regional trade. He was speaking on the sidelines of a regional workshop organised by UNCTAD and CCTTFA to support the agency and Central Corridor member states to develop and implement a sustainable Freight Transport Strategy. [Tanzania omits Kenya from preferential transport deal]

New Commonwealth body proposed to tackle cross-border crime

Dedicated bodies that will help lawmakers tackle cross-border crime across the Commonwealth have been proposed at a meeting in London. The Heads of Central Authorities in the Commonwealth met at Marlborough House for a two-day conference earlier this month, and addressed the barriers to effective cooperation in criminal matters.

Today’s Quick Links:

Namibia, SA trade at N$64.1bn

Dr John Maré: Uncertainties of a post-Brexit world bring opportunities for SA and Africa

Index of Economic Freedom: Mauritius maintains its first position in Sub-Saharan Africa

Moody’s assigns first-time B1 issuer rating to Tanzania; outlook negative

Afreximbank ready to assist Egyptian businesswomen expand into rest of Africa

Kenya Ports Authority: Car imports register huge increase, wheat dominates food imports at Mombasa port

Kenya National Bureau of Statistics implementing the Integrated Survey of Services 2017/18

EALA corridor monitoring initiative update: lack of emergency services at OSBPs a major risk

EACSOF to popularise AU Charter in EA region


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010