Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Axel Lauer

Underway, in Sandton: The Japan-Africa Public-Private Economic Forum. The keynote address was delivered by President Cyril Ramaphosa.

AfCFTA updates, analysis:

(i) The AfCFTA Ratification Barometer now stands at 3 states after Kenya’s National Assembly yesterday endorsed the report of the Defence and Foreign Relations committee recommending ratification of the African Continental Free Trade Area. The MPs also approved the ratification of the Comesa, EAC and SADC Tripartite Free Trade Area agreement.

(ii) The Nigerian Office of Trade Negotiations continues to convene domestic consultations over the AfCFTA. At yesterday’s North-West Stakeholders Forum in Kano, participants recommended Nigeria sign the AFCFTA agreement.

(iii) Nigerian Institute of Advance Legal Studies sensitisation workshop. The DG of the Nigerian Office for Trade Negotiations, Ambassador Osakwe, delivered a lecture on the topic “Trade negotiations and update on the continental free trade area”. Osakwe said the AfCFTA will help to expand market access for Nigerian exporters, increase Nigerian industrial and competitive policies through negotiations and agreements, ease of doing business, increase productivity. The representative of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Mr Sanusi, called on Nigerians to embrace AfCFTA negotiations, saying that Nigerian trade policy is outdated and needs improvement and it is on this that fears of the unknown comes in, based on the manners businesses are being carried out.

“Business men are not protected, but with this new innovation, AfCFTA is here to put things in right places to see that it is well implemented and that both manufacturers and traders are protected. Nigeria has no other continent than the African continent and therefore it cannot stand aside in the face of the transformations that are sweeping across the continent. It must not only cash in and ensure most things if not everything are in her favour. Nigeria’s endorsement of the agreement must however take on all the concerns of the stakeholders’ seriously and attend to them, swiftly. NACCIMA is in support of AfCFTA and recommends that adequate fund be provided by the Govt for the negotiations to enable negotiators make adequate preparations. Capacity training be carried out by NOTN members to succeed in their process, subcommittee be set up to conduct or oversee Baseline and Sectoral Studies to enable them utilize the outcome.”

(iv) A dedicated session of the AfCFTA Negotiating Forum began on 30 April in Addis Ababa. It is scheduled to continue until 14 May.

(v) Will the African Free Trade agreement succeed? (pdf, OCP Policy Centre, Rabat). Another way of assessing the effect of trade agreements on African countries is to compare their trade-weighted WTO Most-Favored-Nation applied tariffs with their trade-weighted effectively applied tariffs. The latter take into account the preferences countries accord to each other under bilateral or regional trade agreements. The MFN and effectively applied measures of tariffs are high and essentially the same in most African countries, a reflection of limited preferences and the small amount of trade that occurs under regional partnerships. By contrast, Morocco’s trade-weighted effectively tariff, 3.8%, is far lower than its MFN applied tariff, 10.8%, reflecting its trade agreements with the EU, other Arab countries, and the United States, which together account for over 70% of its trade. Another notable exception are countries that trade heavily with South Africa under the South African Customs Union, such as Botswana and Namibia, and whose effectively applied tariffs are under 1% while their MFN applied tariffs are 5.8% and 7.5% respectively.

A more detailed examination of African trade and tariff policies is best carried out at the country level. We have selected a sample of four of the largest African countries that are signatories of the ACFTA, namely Morocco in North-Africa, Ethiopia and Kenya in East Africa, and Cote d’Ivoire in West Africa. We believe this sample is sufficiently large and diverse to give a good sense of trade policies and relations in the region. All four countries have high average MFN applied tariffs in the 11% to 17% range, and, while Morocco has bound 100% of its tariffs in the WTO, it has only done so at very high levels (40% plus). Cote d’Ivoire, Ethiopia and Kenya have bound less than 1/3 of their tariff lines. Moreover, in all four countries tariff peaks (tariffs in excess of 15%, which are often in practice prohibitive) are applied to over half of agricultural imports and between one quarter and one half of non-agricultural imports. [The authors: Rim Berahab, Uri Dadush]

Industrialisation and African diaspora investment are key to boosting Africa’s capital stock, says Afreximbank President

President Oramah told the Africa Leaders Speak Forum at Harvard University’s Kennedy School, that Africa’s low levels of capital accumulation was largely result of African economies not capturing a good share of the value chain of agricultural commodities and natural resources. He noted, for instance, that in the global cocoa sector, which generated $120bn annually, African farmers, who delivered 77% of the cocoa supply, retained only 3% to 8% of the value while a few foreign traders and chocolate manufacturers earned between 32% and 50% of the global cocoa value chain. Similarly, in the oil sector, Africa received only 3% of the $3 trillion from the petroleum products market although it accounted for 10% of crude oil reserves, and in other sectors like the gold, Africa accounted for 50% of the world’s deposits but received only 4% of the over $300bnglobal gold earnings, Dr. Oramah added. He announced that Afreximbank had the Afreximbank Market Asymmetry index to measure the distribution of revenues to various actors in the commodity value chain.

Infrastructure development in Sub-Saharan Africa: a scorecard (World Bank)

This paper provides a scorecard on infrastructure development in Sub-Saharan Africa over the past decades along four sectors (telecommunications, electric power, transportation, and water and sanitation) and three dimensions (quantity, quality, and access). First, it documents the existence of a large gap in infrastructure in the region - although the magnitude of the gap depends on the sector, dimension, and country/group. Second, the potential growth benefits from closing the infrastructure gap are large. Third, the infrastructure financing needs are very large, and the public sector so far is unable to meet these needs. Other options that involve the private sector may be available for the region. Finally, there is room for improving the efficiency of public infrastructure spending (that is, the quality of public investment management systems and procurement methods), which, in turn, may increase the output multiplier of investment spending.

Benchmarking the performance of infrastructure sectors in Sub-Saharan African countries involves the assessment of economic infrastructure across three dimensions: quantity, quality, and access. To place the infrastructure trends in Sub-Saharan Africa in context, the report uses a comparative perspective. First, the analysis uses different comparator regions, namely, South Asia, the Middle East and North Africa, Latin America and the Caribbean, and East Asia and the Pacific. Second, it examines infrastructure trends across income groups in the region - including low-income countries (LICs), lower- middle-income countries (LMCs), and upper-middle-income countries (UMCs). The full list of countries is presented in Annex 1. [The authors: César Calderón, Catalina Cantú, Punam Chuhan-Pole]

Cairo to Cape Town road boosts cross-border economies, links Tanzania to rest of Africa (AfDB)

Until its completion, the Dodoma-Babati road was a critical missing link in the 10,228-kilometre Trans-Africa Highway, linking Cairo to Cape Town, connecting nine African countries from South Africa to Egypt, through Zimbabwe, Mozambique, Zambia, Tanzania, Kenya, Ethiopia and Sudan. With the completion of the road, traders and travelers now conduct immigration procedures on only one side of the border, reducing time and costs. Thanks to these efforts, the volume of trade between Tanzania and the rest of Eastern and Southern Africa has risen to US $1.1 billion in 2016, a level both Adesina and Magufuli described as historic. The Dodoma-Babati road project was commissioned last Friday.

Angola: Laúca Hydropower Plant update (IPPMedia)

The company executing the Laúca Hydropower Plant project on the Kwanza River said in a statement last week that the third power generation group, which brings the total installed capacity at the mega facility to over 1,000 MW, was completed last month. Apart from overseeing execution of the project, Odebrecht of Brazil is also responsible for the engineering, procurement and construction services of the plant, including the supply, assembly and commissioning of all electromechanical equipment. “With the commissioning of the third power generation group in April this year, the total current installed power will be over 1,000 MW. With these three generation groups in full operation, out of a total of six, Laúca will have already consolidated its position as the largest hydropower plant in Angola, surpassing the installed capacity of Capanda (520 MW) and of Cambambe (960 MW) Hydropower plants,” it said in the statement. According to Odebrecht, the sixth generator is being assembled, and once it comes into operation Laúca will reach an installed capacity of 2,070 MW, becoming one of the largest hydropower plants in Southern Africa, alongside the Cahora Bassa Hydropower plant, in Mozambique.

Nigeria: Economic challenges, anti-competition shrinking number of telcos (ThisDay)

To address the situation, the Nigeria Communication Commission, at a stakeholder’s forum on the study of the level of competition in the telecoms industry, said it has commissioned a study that will address the situation. President of the Association of Licensed Telecoms Operators of Nigeria, Gbenga Adebayo: “We were 35 active members, but as I am speaking with you, we are only left with 16 members. We have supposedly lost the rest to economic challenges, anti-competition, multiple taxation, vandalism and theft, among others.” NCC Director of Commission and Economic Analysis, Josephine Amuwa: “NCC has engaged the services of Messer’s CT Worx. Limited to conduct a study on the ‘Level of Competition in the Nigerian Telecommunications Industry,’ using the 2013 as baseline year.”

South Africa: Yunus Carrim calls for co-ordinated effort to stub out illicit cigarette market (Business Day)

Finance committee chairman Yunus Carrim has called on Finance Minister Nhlanhla Nene to co-ordinate a team that would help the committee on illicit financial flows to do its work. On Wednesday, Carrim highlighted the need for effective co-ordination to combat the illicit tobacco trade because money was being lost to the fiscus. He said a structure with a clear strategy was needed. Carrim made the comments at a meeting about the issue held by the finance committee and attended by industry and various state agencies. Tobacco Institute chairman Francois van der Merwe told MPs that at least a quarter of the cigarette market in SA was illicit, resulting in significant losses to the fiscus. [Legal tobacco industry could disappear in two years, Parliament hears]

Kenya: Uhuru pushes Big Four agenda in key House speech (Business Daily)

President Uhuru Kenyatta on Wednesday pleaded with Parliament to help anchor his second term’s economic agenda with speedy passage of the legislation that is needed to roll out its pillars commonly known as the ‘Big Four’. Mr Kenyatta said the dream of transforming Kenya riding on the Big Four agenda that includes Universal Healthcare, Manufacturing, Affordable Housing and Food Security, would only come true with concerted action aimed at eliminating the numerous barriers on the path of execution. Full text of speech: extract on AfCFTA. For years, all sorts of barriers, legal and customary, have delayed Africa’s progress and prosperity. In the African Continental Free Trade Agreement, we have, at last, a real chance of opening up the continent’s trade, once and for all. If we succeed, then trade, goods and services will flow across Africa, not outside it, bringing jobs, skills, and unity. That we are so close to a final agreement shows the vision of our generation of African leaders, among whom we must count you, Hon. Members of this House, for ratifying the agreement without delay. I can only hope that every African nation will show the same foresight that you, our Hon. Members, displayed. [Bitange Ndemo: How to finance Uhuru’s Big Four agenda without raising taxes]

Today’s Quick Links:

Understanding the characteristics of regionally extensive droughts over Southern Africa

AFD provides €8m to support ecological transition in five ECOWAS nations

Malaria Free Africa: WHO calls for more resources, cross-border collaboration

Nigeria, EU trade volume rises to €25.3 billion in 2017

Kenya: Sugar imports fall 54% in Q1 after duty free window shut

Kenya: Revenue from sin taxes down by Sh4bn in only nine months

IATA: Air freight growth slows to 22-month low as restocking cycle ends

India notifies food subsidies to WTO, says it’s within the 10% limit

Vietnam’s manufacturing miracle: lessons for developing countries


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