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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Dominic Chavez | World Bank

14 May 2018

AfCFTA Ratification Barometer: Niger has completed domestic ratification processes and is expected to deposit the ratification instruments shortly with the AU; Rwanda inches closer to formal AfCFTA ratification

Makhtar Diop, the World Bank’s Vice President for Africa, has been appointed as the World Bank’s new Vice President for Infrastructure

ECA Conference of Ministers calls for bold action to drive AfCFTA

Vera Songwe, Executive Secretary of the ECA, stated that realising the promise of the AfCFTA and its development goals required the continent to take ‘bold actions’ on many fronts. She told the 51st session of the Conference of Ministers: ‘Now we must seize the momentum at hand, to focus on how to operationalize the agreement in a manner that realises its potential to the benefit of the average African.’ Her address also acknowledged concerns that the AfCTA may cause tariff revenues losses leading to ‘holes’ in national budgets. The AFCFTA’s impact upon taxes applied to imported and exported goods, however, would be ‘small and gradual’ according to the Executive Secretary who explained: ‘These tariff revenue losses may be outweighed by the additional revenues from growth to be generated by AfCFTA.’

Africa’s governments were also urged to take a broader review of macroeconomic policies, especially fiscal measures, in order to ensure they are ‘fit for purpose’ to make the most of the AfCFTA. Vera Songwe remarked: ‘We need to improve our levels of fiscal space. This includes boosting tax revenues, improving the efficiency of public expenditure management, tackling illicit financial flows and making use of private finance for public projects.’

Aia-Eza Nacilia Gomes Da Silva (Secretary of State for Budget, Angola) at today’s High-level Ministerial Dialogue on the AfCFTA: “Free trade is not just a matter of being together, it’s a matter of changing internal structures, having uniform policies, and preparing agendas that are not conflicting with international commitments”

COM 2018 updates: Presentations, News items. Profiled COM 2018 news item: Managing Africa’s resources – Time to stop the ‘dig and export’ model, improve governance, create linkages

AfCFTA, intra-African trade commentaries, updates

Francis Mangeni: Making African trade work (Project Syndicate; registration required)

Still, the need for a pan-African trade area is clear. Consider a startling statistic: hidden charges such as corruption, road blocks, and time-related costs arising from delays at border crossings account for 90% of total transportation costs on the continent, whereas freight and insurance account for just 1%. Moreover, Africa is divided among many national economies, most of which are host to smaller, fewer, and less sophisticated companies than in other parts of the world. Its level of technological development lags behind that of many other regions, and it suffers from market information and credit shortages. And a significant amount of intraregional trade that does occur goes unrecorded, owing to the continent’s large informal sector.

All of this helps to explain why intra-African trade as a share of the continent’s total trade in 2016 was just 21.2%. The corresponding share in the European Union is 61.7%. Among the members of the North American Free Trade Agreement, the share is 50.3%, and it is 24.3% within the Association of Southeast Asian Nations. True, intra-African trade as a share of total trade is now higher than in other developing regions such as Mercosur (13.6%) in Latin America and CARICOM (9.7%) in the Caribbean. But this is largely owing to the COMESA-EAC-SADC Tripartite free-trade area, which accounts for 72% of intraregional trade, and encompasses most of the eastern half of the continent, from Egypt in the north to South Africa in the south. As it happens, Africa itself is the Tripartite region’s top export market.

Olu Fasan: Still on AfCFTA – the imperative of good faith fulfilment (BusinessDay)

By contrast, AfCFTA’s dispute settlement provisions are the same as those set out in the WTO’s Dispute Settlement Understanding, a system described by one scholar as “more far-reaching than any multilateral arrangement for resolution of disputes among states in history”. It would involve the establishment of dispute panels and an appellate body, as well as the authorisation of trade sanctions where a party fails to comply with the ruling of the dispute settlement body. While the Abuja Treaty establishing the African Economic Community provides that disputes would be settled by a putative African Court of Justice, the AfCFTA creates a WTO-style multi-layered dispute settlement system. Yet, it’s instructive to note that, in the nearly 25 years of the WTO, no African country has been a complainant in a WTO dispute.

It would be ironic if African countries that are not challenging China, the EU and the US at the WTO, despite their anti-Africa trade policies, are dragging each other before the AfCFTA dispute panels and imposing trade sanctions against each other in a free trade zone that is expected to morph into one African market. But, let’s face it, enforcement and sanctions will play no significant role in inducing compliance with the AfCFTA agreement. Rather, three factors would be central to the success or otherwise of AfCFTA. The first is national will, the second is state capacity and the third is regime type. Let’s briefly consider each in turn. [Economists advise Nigeria to sign AfCFTA]

No big shock for Zimbabwe in AfCFTA (NewsDay)

Stephen Karingi, director of Regional Integration, Infrastructure and Trade Division at the UNECA, told journalists there was existing autonomous liberalisation within the regional economic communities resulting in 56% of intra-African imports being duty free. “There is not going to be any bigger shock to the trade between South Africa and Zimbabwe even though one would expect. In the regional value chain, Zimbabwe and South Africa operating in the SADC FTA will be deepened, as countries from SADC starts exporting to other parts of the continent,” Karingi said.

EAC chief justices pledge faster trade dispute resolution (New Times)

The judicial bosses from Kenya, Uganda, Tanzania, Rwanda, South Sudan and Zanzibar met in Nairobi last week to draft a framework where judiciaries in the region will cooperate, share experiences and expertise, harmonise jurisprudence and jointly confront challenges to the administration of justice in the region. “The process of regional integration, by its very nature, generates disputes between states, states and citizens and the judiciaries have stepped in to solve these peacefully and amicably,” said Uganda Chief Justice, Bert Katureebe. Whereas trade disputes take long to settle, the EAC summit of the Heads of State has recognised the problem and signed a protocol on extended jurisdiction. This allows the EACJ to receive and decide cases involving trade and investment matters emanating from the implementation of the Customs Union Protocol and the Common Market Protocol. The protocol is at various levels of ratifications in the partner states.

Botswana: International merchandise trade statistics, February 2018 (pdf, Statistics Botswana)

February 2018 total imports were valued at P4,535 million while total exports were valued at P3,480.6 million, resulting in a trade deficit of P1,054.3 million. Diamonds contributed the most to total imports at 35.1% followed by machinery and electrical equipment; food, beverages and tobacco and fuel at 12%, 11.8% and 11.3%. Diamonds constituted 86% (P2,992.6 million) of total exports during the period under review. SACU was the main source of imports into Botswana during February 2018, with South Africa alone contributing 60.6% of total imports during the month. Asia, as a block, was the major destination for Botswana exports with a share of 52.2%, mainly constituted by diamonds. Singapore and India received most of exports destined to Asia, respectively receiving 18.7 and 12.7% of total exports during the month.

New panel to reboot SA’s African Renaissance status (Mail and Guardian)

Two senior government officials confirmed to the Mail & Guardian this week that the international relations minister, Lindiwe Sisulu, has appointed the panel, comprising experts in foreign policy and economics. It has been set up to move South Africa’s foreign affairs approach from a focus on continental peace and security towards economic diplomacy. The panel members include ANC head of economic transformation Enoch Godongwana, former deputy foreign affairs minister Aziz Pahad, former South African ambassador to Germany Lindiwe Mabuza, former international relations director general Ayanda Ntsaluba and economist Xhanti Payi.

Inside the World Bank’s gamble on ‘digital economies’ in Africa (Devex)

As the proliferation of technologies risks leaving Africa further behind, the World Bank is betting on “digital economies” as a way for the continent to leapfrog over old development pathways. But as the world grapples with the potential consequences of rapid technological change, even insiders say the strategy is a gamble. Launched by the World Bank and International Finance Corporation last month, the new strategy seeks to help African governments follow in the footsteps of countries such as India and China, by capitalizing on the billions of online interactions that take place every day. While investment in the area has historically been weak, a Devex analysis found that as of March 2018, approximately $2bn worth of projects awaiting approval in the World Bank’s pipeline could fall into the category of Africa’s digital economy, including projects focused on public policy, service delivery, and skills development. Discussions are already underway with a number of African governments — and pilot projects are set to be announced at the World Bank meetings in October. [The author: Sophie Edwards]

Atlas of Economic Complexity: East African pointers (Harvard)

Countries that have diversified their economies into more complex sectors, like India and Vietnam, are those that will grow the fastest in the coming decade. That is the conclusion of new growth projections presented by researchers at the Center for International Development at Harvard University. India and Uganda top the list of the fastest growing economies to 2026, predicted at 7.9 and 7.5 percent annually, respectively. The growth projections are based on Economic Complexity, a single measure of each country’s economy which captures the diversity and sophistication of the productive capabilities embedded in a country’s exports. After a decade of growth driven by record oil and commodity prices, the researchers find a landscape that has shifted in favor of more diversified economies.

In sub-Saharan Africa, growth is shifting eastward from commodity-driven West Africa to East Africa, with Uganda, Tanzania (4th), and Kenya (10th) in the top 10 predicted fastest growing countries globally for the coming decade. These East African countries have seen labor shift out of farming into limited manufacturing sectors, as expressed in a more diversified export basket. Far from an industrial revolution, structural change has been partial and piecemeal across these economies. Notably, a significant share of expected growth is driven by rapid population growth. This contrasts with Southeast Asia where growth has been realized in countries that have engaged in full structural transformation by diversifying production into more complex sectors. [Note: The Growth Lab at CID also released new country rankings of the 2016 Economic Complexity Index (ECI), the measure that forms the basis for much of the growth projections. The ECI ranking finds the most complex countries in the world are, in order:]

Today’s Quick Links:

Underway, in Johannesburg: SADC Regional Task Team for Teacher Standards

Underway, in Dar es Salaam: National Implementation Committee on the EAC Common Market Protocol; training of the East African Monitoring Systems Common Market Module

Tomorrow, in Accra: Morocco’s accession to ECOWAS – towards a strengthening of the West African community

Mauritius: Promoting green industry workshop

Nigeria: 5 things we know about the Petroleum Industry Bill

Kenya: 400 tonnes of illegal sugar destroyed and dumped at sea in Mombasa Port

Kenya: Uhuru appoints ex-Rift Valley regional coordinator to lead fight against fakes

Tanzania: Former Prime Minister, Dr Salim Ahmed Salim counsels on effective exploitation of Sino-Africa

DR Congo: UN prepared for ‘all scenarios’ despite low risk of Ebola spreading

Ebola in the DRC: How a global and local response has been mobilised

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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