tralac’s Daily News Selection
The consultant will, inter alia, perform the following key tasks: Assist in the finalization of the annexes to the AfCFTA Agreement, jointly with AUC: attend meetings relating to the AfCFTA (including Continental Task Force) to prepare the annexes and accompanying documents, as well as other documents that may be requested by the AfCFTA negotiating institutions, and make substantive interventions; Assist Member States in the preparation of schedules of tariff concessions and schedules of specific commitments on trade in services in line with the agreed modalities for the AfCFTA agreement; Assist Member States in the ratification process of the AfCFTA agreement; Assist ATPC in its preparation to provide technical assistance to phase two of the AfCFTA negotiations on competition policy, investment and intellectual property rights, and possibly electronic commerce.
The Consortium to stem Illicit Financial Flows in Africa meets in Pretoria, Monday, 7 May, to review progress on implementation of the Thabo Mbeki study and recommendations.
Diarise: The Southern African Structured Trade Seminar takes place at the Avani Victoria Falls Resort, Zambia (26-29 June). Discussions will tackle commodity challenges and outline a viable roadmap for inter-regional trade in Africa.
The report looks at the SDGs from economic, social and environmental perspectives and outlines how trade is contributing to making progress in each of these areas, including through reducing poverty, improving health and tackling environmental degradation. It outlines a number of steps (pdf) to help accelerate progress in achieving the SDGs. This includes governments embedding trade policies into their national development plans to spread the benefits of trade more widely and strengthening the multilateral trading system. It also includes action to further lower the costs of world trade, notably by implementing the WTO’s Trade Facilitation Agreement, which establishes procedures for streamlining the flow of goods among WTO members.
East Africa updates
The region has clearly performed well over the last decade, but is beginning to confront a new set of challenges. To sustain the impressive development, this report recommends member states to focus more attention on (i) actively implementing reforms to create a more conducive business environment, especially with regard to providing adequate financing of the private sector; (ii) better leveraging inflows of FDI into the manufacturing sector to facilitate a more rapid technological upgrading and faster job creation; (iii) continuing to invest in infrastructure but in financially sustainable ways; (iv) strengthening domestic resource mobilization and managing external borrowing prudently; and (v) strategically reviewing existing trade agreements. Extracts:
Fourthly, in the context of structural current account deficits, regional economies have to better manage exchange rate fluctuation. Most countries in the region have now adopted either floating exchange rate or ‘managed’ float. Many currencies recorded notable depreciations against the US dollar between 2014 and 2016, although there was some stabilisation in 2017. Currency depreciations together with the spike in food prices due to severe drought conditions exerted upward pressure on inflation. Following a subsequent fall in the value of US dollar and an easing effect of a prolonged dry season, both exchange rate and inflation pressures subsided in mid-2017.
Fifthly, the region is still underperforming in terms of exports, as evidenced by the large trade deficits sustained by most countries. The structure of trade also remains little changed compared to the situation a decade ago. Specifically, exports are still excessively concentrated on primary commodities, leaving the region in the lower rungs of global value chains and highly vulnerable to commodity price shocks. The report highlights the role not only of goods exports, but also of services – and in particular tourism, which is a major foreign exchange earner in a number of countries across the region (e.g. Comoros, Ethiopia, Rwanda and Seychelles).
Profiled contents, Boxes 1-7: Did economic growth meet national targets?, Lessons on implementing industrialization policy from Ethiopia, Contribution of tourism to Eastern African economy, Opportunity from China’s Belt and Road Initiative, Overview of the exchange rate regimes in Eastern Africa, Potential impacts of the EAC-EU Economic Partnership Agreement, An opportunity missed? – The African Growth and Opportunity Act.
EAC adopts Bills to pave the way for monetary union (The East African)
The East African Community has moved a step closer to attaining a monetary union after the Council of Ministers adopted two key Bills that if passed, will enable the partner states to establish a single currency. The Council adopted the Draft East African Monetary Institute Bill, 2016 and the Bill establishing the East African Statistics Bureau. The two draft laws are a precondition for having a single currency by 2024, and will enable the partner states to establish the East African Central Bank. [EAC talks on single tax rate hit deadlock, options on table]
East Africa mulls over fee for mergers and buyouts (The East African)
The East African Community Competition Authority is considering approval fees for companies seeking to expand into the region through mergers and acquisitions. This would raise the cost of cross-border investment and put the region at par with other blocs such as the Common Market for Eastern and Southern Africa, which levy filing fees on such transactions. Already, the competition watchdog is carrying out a study to determine how much firms would be required to pay, insisting that while filing fees are essential to facilitate merger and acquisition investigations, they do not want to discourage investments into the region.
East and Southern Africa (WCO ESA) Governing Council: Customs authorities need more capacity (New Times)
Nigeria’s cargo airports: a tale of broken dreams (BusinessDay)
Adewale’s experience is a generous reflection of the frustration of many exporters who wish to export their products through non-functional Nigerian cargo airports. To them, it has been tales of stagnation, disappointment and frustration. In a bid to investigate these complaints and frustrations by prospective farmers who, largely, do not have the means to first transport their goods to Lagos to make use of the Murtala Mohammed International Airport, I embarked on a visit to five designated airports – Lagos, Uyo, Akure, Port Harcourt and Owerri – to see the infrastructure put in place by the Federal Government to aid cargo services at these airports. Among these five airports, my findings show that only Lagos and Port Harcourt currently import and export cargoes to various countries, while others barely function as passenger airports.
Nigeria Economic Update (World Bank)
Extract from the report’s Special Topic: Connecting to Compete – regional connections and coordination to enhance Nigeria’s competitiveness. With a large population and a growing middle class (from 13% to 19% of population between 2003 and 2013), Nigeria has a big home market. However, the majority of firms identify local markets – same locality, same town/city, same state – as the main sales channels. Under the dominance of local trading, regional economic specialization is less likely to emerge, as local trading leads to a replication of same economic sectors across different locations rather than specialization. Spatial fragmentation of the domestic market is exacerbated by limited connective infrastructure, reducing producers and firms’ ability to reach wider markets. This dampens the potential for scale economies as well as economic collaboration and cooperation among regions. Spatial fragmentation and limited connections also hurts welfare and prospects for poverty reduction. Recent research shows that a 10% reduction in transport costs in rural areas would increase welfare by 13%.
In choosing where to prioritize spatially connective interventions, policymakers may need to manage trade-offs between goals of spatial equity and aggregate economic efficiency. Reduction in transport cost between remote and connected rural areas has a bigger welfare impact than a similar reduction in transport cost between cities and connected rural areas – local welfare gains are higher for investments supporting rural connectivity. But, for aggregate economic efficiency, there are higher gains from focusing on the development of inter-regional corridors, linking the major urban centers. For example, improvements along the LAKAJ corridor would result in estimated annual benefits of over $1.34bn. Furthermore, a recent study showed that the elasticity of local GDP increase to transport investments is higher for the Southern zones.
IGAD has contracted IPE Global Limited, in association with Africon Universal Consulting, to undertake this comprehensive study. The output of this regional study is the formulation of an infrastructure strategic framework, and its concomitant financing strategy. The 18-month study will cost $3.6m. In his remarks during the signature ceremony, Amb Maalim, highlighted that the Master Plan is to cover transport, energy and Information and Communications Technologies. He underlined the commencement of the development of the IRIMP was timely as many African countries have ratified the Continental Free Trade Area and are also working on the open skies for air traffic.
Dr Muchina Munyua, Director of the IGAD Centre for Pastoral Areas and Livestock Development, indicated that “80% of conservation areas in the IGAD region are in pastoral areas. If maps were overlaid with conflict and resource maps, it will be clear that no land has been left for pastoralists. That is why it is important to secure their tenure rights in light of the newly discovered natural resources especially minerals, oil and gas as well as the infrastructure developments”. He further called upon Member States to adopt inclusive consultative processes in developing policy frameworks on pastoralism in order to ensure that pastoral communities are involved in decision making on matters that affect their livelihoods.
Taxi, ride-sourcing and ride-sharing services: note by South Africa (OECD)
In line with the OECD’s request, the Competition Commission of South Africa firstly discusses the current regulatory framework in South Africa’s public passenger transport and secondly provides an overview of the taxi industry. Thirdly, a discussion of the traditional metered taxis follows with special focus on their competitive response to the introduction of app-based services. We lastly discuss the engagements that the CCSA has had with various key stakeholders in the public transport market to understand and deal with factors that potentially prevent, distort or restrict competition. [Documentation: Taxi, ride-sourcing and ride-sharing services]
Today’s Quick Links:
Japan says economic integration will boost Africa’s investment prospects
CBN’s $2.5 bn swap deal with China seen boosting trade, easing FX volatility
World Bank grants Kenya $1bn loan for infrastructure projects
Kenya reviews ties with African states
Sudan and Ethiopia commit to resolve the Nile row with Egypt
Economic impacts of child marriage: Ethiopia synthesis report
Tinker, tailor, robot maker: In China, trade war threat casts long shadow