Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Institute for Money, Technology and Financial Inclusion

Press coverage of the first day of the Trade Law Centre, Zimbabwe National Chamber of Commerce, Zimbabwe Network of Customs and Excise Experts AfCFTA awareness workshop

The African free trade dividend: editorial comment in today’s New Times, Kigali

Report of the 10th session of the Committee on Regional Cooperation and Integration (UNECA)

The tenth session of the Committee on Regional Cooperation and Integration was held in Addis Ababa (1-2 November 2017) on the theme Implementation of the continental free trade area and shared gains. The main objective of the session was to examine the efforts being made to fast track the implementation of the Action Plan for Boosting Intra-African Trade and an agreement to establish a continental free trade area. Extract from the Session VI A: Surveying developments in Africa’s regional integration with a view to influencing policy. In regard to investment issues, it was noted that data collection on intra-African investments remained a challenge for African countries. There was a need to collect and compile data on intra-African investments, including, in particular, on foreign direct investment originating from and heading to African countries. Also stressed was the need to identify key financial challenges faced by the continent and the importance of investments in infrastructure aimed at unlocking the regional trade potential.

Extract from the Session VI F: Sharing best practices - boosting intra-African investment. It was pointed out that the establishment of a continental free trade area would significantly boost intra-African trade. It was very important to ensure, however, that once the trade area was established, African countries would undertake not to participate in discriminatory practices. In addition, any international agreements and protocols, including trade facilitation and customs agreements, must be localized in order for the continent to reap the greatest benefits from such an area. Deeper regional integration in Africa was also called for, based on the view that it was a critical factor in supporting intraregional trade and investment. The importance of investment for Africa ‘s development, as a source of both finance and productive assets, was also stressed. It was noted that the establishment of a continental free trade area would serve as an effective tool in dealing with the numerous challenges and bottlenecks associated with efforts to boost intra-African investment. [Note: This report is one of the submissions to the Conference of African Ministers of Finance, Planning and Economic Development, 11-15 May, Addis Ababa]

South Africa’s investment drive: statement by President Ramaphosa (The Presidency)

Investment in our economy has declined in recent years. While total fixed investment in our economy stood at 24% of GDP in 2008, it has declined to around 19% last year. The National Development Plan says we need to increase this to at least 30% of GDP by 2030. Foreign direct investment declined from around R76bn in 2008 to just R17.6bn last year. This has been driven by low business confidence and regulatory uncertainty; and has resulted in slow growth, along with poor growth in employment. In line with our commitment in the State of the Nation Address, we are therefore launching an ambitious new investment drive. This drive will culminate in an Investment Conference to be held in August or September 2018. The Investment Conference, which will involve domestic and international investors in equal measure, is not intended merely as a forum to discuss the investment climate. Rather, we expect the Conference to report on actual investment deals that have been concluded and to provide a platform for would-be investors to seek out opportunities in the South African market. I am therefore pleased and grateful that the following South Africans have accepted our invitation to be the President’s Special Envoys on Investment:

Zimbabwe: Chinese delegation jets in after ED visit (The Herald)

China has sent an 11-member delegation to Zimbabwe as a follow-up to President Mnangagwa’s State visit to the Asian economic giant early this month where several business deals were signed, while relations between the two countries were elevated to the highest status. The latest Chinese delegation to arrive in the country on a week-long exploratory mission is led by China Trade Promotion Centre director Mr Tan Wenbao. The group yesterday met Zimbabwe Investment Authority chief executive officer Mr Richard Mbaiwa before meeting Zimbabwe Energy Regulatory Authority officials. [Zimbabwe wants global investments says RBZ’s Mangudya]

India focuses on Africa as US tightens trade policy (The Week)

India has considerably improved its trade relations with Africa. Subsequent to a number of India-Africa trade summits held in New Delhi, India will now seek out investors and markets in the entire African continent over the coming few months, trade and civil aviation minister Suresh Prabhu said on Tuesday. “We are going to South Africa and other nations in the vicinity by the end of this month,” Prabhu told reporters on the sidelines of the launch of Federation of Indian Export Organisation’s exporter’s business networking portal. An Indian Commerce ministry delegation, headed by Prabhu and commerce and industries secretary Rita Teotia, had visited East Africa last month. The visit is said to have received considerable success with a lot of interest for doing business with India. The minister will also lead similar trade delegations to north, west and central Africa to boost domestic trade with the African continent.

Financing for development: progress and prospects (UN)

While a moderate upturn in the world economy led to more development financing in 2017, a new United Nations report says the vast majority of investment is still short-term oriented, putting global commitments to create sustainable economies at risk. The report cites ‘short-termism’ - an excessive focus on projects that will yield quick profit at the expense of long-term interests like infrastructure improvement and job training – as among the major funding challenges to implementing the 2030 Agenda on Sustainable Development. The UN chief warned: “The choices we make now on financing will be pivotal.” Extract from the Overview (pdf): The remainder of the report (chapters III.A to III.G and IV) discusses progress in the seven action areas of the Addis Agenda: domestic resource mobilization, private finance, international development cooperation, trade, debt, systemic issues and science, technology and capacity-building, as well as data issues. Each chapter begins with a summary that highlights key messages and presents policy options. The necessarily concise assessments in the report are complemented by and should be read in conjunction with the comprehensive online annex of the Task Force report. The annex provides data and analysis for each of the more than 100 clusters of commitments and actions across nine areas covered in the Financing for Development outcomes.

Global Financial Development Report 2017/2018: bankers without borders (World Bank)

Blog, by Claudia Ruiz, Bob Cull: The Global Financial Development Report 2017/2018: Bankers without Borders contributes to the policy dialogue on international banks by summarizing what has been learned so far about: (i) the risks and opportunities posed by foreign banks when entering developing countries and (ii) under what circumstances host economies can reap most benefits from the entry of international banks. One key message from the report is that foreign banks, through their brick and mortar operations, can improve the performance of local banks, increase competition in the banking sector and raise overall credit access in the host economy. However, for these benefits to materialize, host and home countries need to have in place the proper regulatory and supervisory frameworks, and the entry of foreign banks must be accompanied by institutional and legal reforms that strengthen the information environment and contract enforcement of the host economy. Extract from the report (pdf): This report, the fourth in its series, comes at a critical time when the global reform agenda is shaping financial globalization - in particular, banking. The Global Financial Development Report 2017/2018 offers new research and data that help fill gaps in the knowledge of international banking and contributes key insights to the policy discussion. The report provides stylized facts and examines existing and new evidence of the causes and effects of bank globalization - in particular, for economic growth, shared prosperity, and poverty reduction.

South-South digital cooperation for industrialization: a regional integration agenda (UNCTAD)

Disruptions in the existing patterns of production, consumption and investments are invariably affecting international trade and FDI patterns and governments are under increasing pressure to act in order to sustain economic growth, preserve jobs and ensure their firms retain shares in global production, investments and trade. This paper discusses the various components of digital infrastructure to de-mystify digital economy and examines the reasons for growth of big-tech firms and the source of their rent-seeking powers. The extent of digitization of manufacturing is estimated for identified developed and developing countries using world input-output database. The estimated value-added by digital services to manufacturing exports show wide variation between developed and developing countries, indicating the growing digital divide in manufacturing exports. The paper proposes a ten-point South-South digital cooperation agenda (pdf) which can help the developing countries to build their digital capacities and digital skills.

Distributed ledger technology: opportunities for Africa’s trade (tralac)

This Trade Brief introduces the reader to the DLT concept, particularly its application in the blockchain, and provides an overview of how this technology works, a brief history of its adoption, prospects for future use, and its relevance in the trading economy of Africa. The paper then highlights the challenges, applications and opportunities for adopting this technology in the African economy as well as its potential in simplifying the value and supply chain in trade. Adopting regulations for blockchain and DLT technology should lend a certain degree of credibility and further encourage its uptake as a reliable and secure medium of exchange. [The author: Gavin van der Nest]

Digital technologies provide fertile ground for Africa, EU says (UNCTAD)

Mindful of its own experience in building a single digital market, the EU is dedicated to helping Africa do likewise and help unleash the transformative power of e-commerce on the continent, the EU’s digital economy and society commissioner, Mariya Gabriel, said on the opening day of UNCTAD’s E-Commerce Week in Geneva. “Creating a single digital market was the EU’s response to the challenges posed by the digital transformation in our society and in our economies. However, as you know, the digital revolution doesn’t stop at the borders of the EU. Our expertise and our experience can be put to the benefit of development cooperation between the EU and Africa,” Ms Gabriel said, adding that the digital economy was identified as a priority during the November 2017 European Union-African Union Summit in Abidjan.

Sharing the benefits of innovation-digitization: a summary of market processes and policy suggestions (World Bank)

Developing country governments, having lower institutional capacity and usually fewer resources, will likely find it even more difficult to manage these changes. Global production patterns are likely to continue shifting. These shifts will depend on a combination of factors: the direction of technological change, trade agreements, global demand patterns, policies, and endowment shifts. Developing countries may not follow the same structural route of the past, through manufacturing, to higher income, but with appropriate investments, they can develop high-productivity service sectors. The policies that are needed to harness the benefits of digitization span a wide range of sectors: finance, competition policy, public support to innovation, fiscal and regulatory incentives for innovation, macroeconomic frameworks supporting demand growth, public support to education and reskilling, infrastructure provision for the digitization age, and sustainable fiscal insurance and redistribution systems.

Electricity provision and tax mobilization in Africa (World Bank)

Using data from the most recent World Bank Enterprise Surveys and under conservative assumptions, the paper estimates that countries in the region could in total generate additional tax revenues of more than $9.5bn (4.3% of total tax revenue) per year solely by resolving issues related to electricity shortages. Put together, the paper concludes that the financial returns associated with public investments toward improving access to and reliability of electricity are substantial and could be harnessed to augment the financing gap in the sector.

Today’s Quick Links:

Africa’s new debt binge: what are the risks?

WTO launches new version of the Analytical Index

AfDB releases highlights of 2018 African Economic Outlook in Arabic, Hausa, Kiswahili

Middle East and North Africa Economic Monitor: economic transformation


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