tralac’s Daily News Selection
African CEOs: AfCFTA will boost business sentiment (New Telegraph)
Although the implementation of the CFTA agreement could be hindered by challenges and its benefits likely to take a long time to be felt, the deal will further boost business sentiment on the continent, African CEOs have said. The CEOs’ position is part of findings contained in the launch edition of the Business Barometer: Africa CEO Survey carried out by the Oxford Business Group.
Related AfCFTA commentaries: OBG’s Souhir Mzali: How effective will Africa’s Continental Free Trade Area be?; NANTS’ Ken Ukaoha: Eight lessons on imperatives of private sector-driven AfCFTA
The introduction of the United States dollar as a trading currency on the southern African regional payment system is expected to improve the settlement of transactions among banks within the region. According to the SADC Secretariat, the US dollar is expected to be added as a trading currency by October, while other currencies including SADC currencies will be considered as the payment system progresses. The current settlement currency for the SADC Integrated Regional Electronic Settlement System is the South African Rand. The system is housed at the South African Reserve Bank. According to the SARB, around 60% of cross-border transactions in SADC are denominated in US dollars, 35% in ZAR and the rest in other currencies. SADC Executive Secretariat, Dr Stergomena Lawrence Tax told the SADC Council of Ministers, held in late March in South Africa, that “to-date over a million transactions representing ZAR 4.09 trillion have been settled using the system.”
West African Economic and Monetary Union: common policies for member countries (IMF)
Policy recommendations: (i) Fiscal and monetary policy. Growth-friendly fiscal consolidation is essential to lower public debt, lift pressures on international reserves, and preserve external viability over the medium term. The regional central bank should stand ready to further tighten monetary policy in case pressures persist on the money market and on foreign exchange reserves. (ii) Financial sector. The short-term refinancing of sovereign bonds has constrained monetary policy in 2017 and it will be important to restore room for monetary policy to backstop financial stability. To this end, the authorities should use bank supervision and resolution tools to improve bank balance sheets and resolve fragile banks. (iii) Competitiveness and diversification. Structural policies aimed at improving competitiveness and fostering regional integration are critical to making the growth momentum sustainable and more inclusive. Selected Issues Paper, on the theme Growth acceleration in the West African Economic and Monetary Union (pdf):
Sector in focus: Cocoa
Fourth World Cocoa Conference: Berlin Declaration (ICCO)
On sustainable industry: Supply chain traceability should be recognised as a necessity for a sustainable value chain. A sector wide consensus on traceability should be developed. Efforts must be undertaken to ensure that this does not lead to additional costs and other burdens being transferred to the farmers without sufficient remuneration. Sector sustainability efforts should be transparent and publicly accountable in both efforts and impacts, including through appropriate monitoring and evaluation frameworks.
On sustainable consumption: Engage the sector in dynamic activities to stimulate processing in origin countries and healthy cocoa consumption in origin countries and emerging cocoa markets. Complying with SPS requirements is in the interest of consumers and producers alike. It is essential to ensure that the necessary assistance (technical, financial, or otherwise) is provided to enable producers to comply with these requirements.
On sustainable management: Producing country governments to coordinate national and regional cocoa policies, specifically being mindful of the impact this can have on cocoa prices. Producing country governments should strengthen National Cocoa Development Plans (NCDPs); including a strengthening of infrastructure, extension services, farm diversification, tenure security, etc, making efforts to ensure a transparent, inclusive and participatory approach in the development and implementation of the NCDPs. [Conference daily newsletters]
World Cocoa Conference: Low prices still hurt African farmers (DW)
There’s a tense mood at this year’s meeting. “The future of the cocoa sector as a whole is at stake,” explains Jean-Marc Anga, director of the International Cocoa Organization. The reason is the low prices. Cocoa currently stands at around €2,200 ($2,680) per ton. In 2016 prices were even lower. For African farmers and governments, that is simply too little. “We need prices from which the farmers can make a living,” complains Souleymane Diarrassouba, trade minister of Ivory Coast. The country is the world’s largest cocoa exporter. The farmers, however, make less than €0.50 euro cents per day on average. African delegates warn of the consequences – the use of child labor, for instance, because the farmers cannot employ paid laborers. Environmental destruction is another consequence as farmers burn forests to expand their plantations. The resentment over the attitude of the main cocoa importer in Europe and the US is palpable at the meeting. The global prices are totally non-transparent, African delegates say. Some governments would like to see the creation of a global alliance based on the model of the Organization of the Oil Exporting Countries. In this way they could exert more influence on the global market.
Traders said this week that they’re preparing to ship cocoa from the new West African crop to the U.S. as New York futures trade at the highest premium to London in at least three decades. The unprecedented arbitrage window has opened as some funds prefer to bet on U.S. futures and as the London bourse is plagued with supplies from Cameroon that traders don’t want to buy. The price gap -- now at more than $200 a metric ton -- allows traders to make a huge profit even after accounting for the cost of shipping, importing and storing in American warehouses. There are also big premiums for contract months further out, which may encourage demand for beans from top producers Ivory Coast and Ghana when the next crop starts in October. “This has never happened before, this is extraordinary,” said Jonathan Parkman, co-head of agriculture at London-based brokerage Marex Spectron Group and who has been in the market more than 30 years. “In my entire career, I have never seen anything like this. We have an arbitrage a year forward which is not just a record, but it’s a record by a wide margin.”
Gum Arabic: Growing demand means new opportunities for African producers (UNCTAD)
UNCTAD is now spotlighting the huge potential of revenue growth that lies in transforming the commodity into processed export goods in a special gum arabic-themed issue of its Commodities at a Glance series. “In a highly concentrated sector, UNCTAD proposes reforms from the micro to the national institution levels,” Mario Jales, an economist at UNCTAD’s Commodities Branch, said. “The objectives are to ensure that all stakeholders get a fair share of the total value generated along the gum-arabic global value chain.” Exports of unprocessed and semi-processed gum arabic have almost tripled in the last 25 years, from an annual average of 35,000 tonnes in 1992–1994 to an annual average of 102,000 tonnes in 2014–2016. In addition, exports of processed gum arabic more than tripled, from 17,000 tonnes to 53,000 tonnes in the same period. The three largest exporters of crude gum arabic are Sudan, which accounts for 66% of the total, Chad with 13%, and Nigeria with 8.5%, in 2014–2016. “But paradoxically, many African countries that export crude gum arabic at low prices re-import processed gum at substantially higher prices to meet local manufacturing demand,” Mr Jales said.
One of the impacts of 4IR is increased productivity. For African countries, this probably means increased productivity of the modern sector. Growth driven by automation may create jobs to support new business lines that may be enabled by the 4IR technologies. On the other hand, growth may stem from more production of the same things the firm has been producing through efficiencies enabled by 4IR, and may thus eliminate some jobs. For now, the evidence seems to point to elimination of jobs through automation. However, 4IR offers many opportunities to support transformation strategies that are job-creating growth pathways. This is especially true for agriculture and services, where applications are numerous. Nascent areas of local content provision can also create many opportunities, though much capacity will need to be built. Indeed, a major concern is the low level of preparedness of countries to take advantage of opportunities. Thus, while Africa will surely face the disruptions associated with 4IR, the region currently is ill-prepared to take advantage of the unique opportunities that will come with those challenges.
Yet there is no doubt that Africa has the potential to accelerate its development using 4IR platforms. In less than 15 years, the continent has grown to become the world’s second-largest mobile phone market, offering millions of families access to financial services, public health information, and the internet. Even more impressive is how young people have used this technology as a platform to unleash their entrepreneurial potential. This has led to the emergence of a growing pool of mostly young, successful entrepreneurs. With the right support, Africa’s success with mobile platforms can be replicated on increasingly powerful 4IR platforms and can drive transformation of African economies. This underscores the need to revisit job creation and growth strategies so that they can address the opportunities and challenges presented by 4IR. [Note: This extract from Chapter 2 in the new publication issued jointly by the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank] [Duncan Green: The World Bank’s flagship report this year is on the future of work – here’s what the draft says (Oxfam)]
Nigeria: Apapa gridlock delays N85m solid minerals export (Punch)
The persistent difficulty in accessing the nation’s major seaport, Apapa, is taking its toll on movement of non-oil exports and may affect the earnings for this year, investigation by our correspondent has revealed. It was gathered that on the average, 15-container load of solid minerals, valued at $18,500 each is expected to be exported every month. But since the beginning of April, half of the containers have been in the queue along the road to Apapa, unable to access the port. The situation, according to the Chairman of the Export Group, Lagos Chamber of Commerce and Industry, Mr Bamidele Ayemibo, has affected loading of fresh cargoes because the trucks that are supposed to pick the cargoes are in the queue waiting to enter the port and discharge the cargoes. Agricultural and other fragile exports are said to be faring very badly as the length of time spent in the queue to get into the ports does a lot of damage to the freshness and market value of the products.
Nigeria: Stakeholders harp on standards to harness trade relations (Guardian)
Stakeholders in the manufacturing and importation sectors have been advised to ensure that their products meet the regulatory standards set up by the Standard Organisation of Nigeria. With the production and importation of substandard goods into the country that has caused more havoc, the Republic of China is collaborating with SON to ensure that products imported reached safety measures. This was the thrust of discussions a seminar organised by the Consulate-General of the People’s Republic of China and SON, in Lagos, yesterday.
Today’s Quick Links:
UNIDO unveils $50m programme to drive industrial devt in Nigeria
SA team’s absence deals Zimbabwe International Trade Fair a blow
Namibia Transport Infrastructure Improvement Project: GPN update (pdf)
Lobito Corridor Trade Facilitation Project: update
African Women Leadership Fund: update
Washington Post: A new ‘resource curse’ is fueling riots around the world
Responsible Mining Index: an interview with Dutch diplomat Prince Jaime de Bourbon de Parme
WBG, IMF to hold 2021 annual meetings in Marrakech
Judicial perspectives on competition law: executive summary of discussion at Session II, 16th Global Forum on Competition (7-8 December 2017)