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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Georgina Goodwin | World Bank

15 May 2018

tralac Intra-African trade analysis, in the news: Namibia’s exports to Africa at N$24,5b

The Conference of African Ministers of Finance, Planning and Economic Development ended today in Addis Ababa. Profiled perspectives on AfCFTA implementation from Monday’s sessions:

Stephen Karingi: E-commerce is also being mooted as a possible additional topic; Pan-African Investment Code provides basis for investment chapter of AfCFTA.

Donald Kaberuka: “For the AfCFTA we need to get it out of the high level conference halls to the people at all levels. This is critical to the success of this historic enterprise. Part of the problem is that we do not mobilize the African citizenry enough. We can’t afford to slide back. It is sincerely my hope that every country in this room should make it a solemn pledge that the AU, the only continental political instrument we have and need, should be a top priority.”

ACBF: Insufficient capacities among AfCFTA implementers could pose a real threat to African trade ambitions as only 25 out of some 42 treaties and agreements signed by the OAU and the AU between 1963 and 2014 have been ratified so far, possibly due to the lack of national capacities to facilitate their ratification and implementation.

Emmanuel Nnadozie: “Ratification of the AfCFTA is only the beginning. To make sure countries benefit from the maximum outcomes, it means that implementation will have to be accelerated through a strong strategy”

Sindiso Ngwenya: “When decisions are made, they need to be implemented. If we want transformation on the continent, we need first to have leadership that will make things happen”

pdf African Statistical Yearbook 2018 (5.14 MB)

The African Statistical Yearbook (ASYB) 2018 is the tenth edition jointly produced by the AfDB, the AUC and the UNECA. As our collective efforts to build the capacity of national statistical systems bear fruit, we are able to use more national data for the country tables, in some cases even to source data directly from online dissemination facilities of national statistical offices - as the custodians of countries’ official statistics and coordinators of the National Statistical Systems. Invariably, there are some data sets that have to be sourced from international organizations that have been designated to compile comparable statistics on specific themes for the whole world, including Africa. Still it is important that such series are confirmed by the countries so that any variations resulting, for instance from methodological differences, are reconciled before compiling the final figures in the ASYB. We have therefore continued to emphasize the importance of involving our member states in the validation process. [Related: AfDB Statistics Pocketbook 2018, Compendium of Statistics on AfDB Group Operations – 2018]

Mauritius hosts WTO Regional Trade Policy Course for African delegates (GoM)

Thirty-one delegates of English-speaking African members and observers of the WTO are participating (14 May to 6 July), in the first ever RTPC organised in Mauritius. Participating countries are: Botswana, Egypt, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Namibia, Nigeria, Seychelles, South Africa, Tanzania, Uganda, Zambia and Zimbabwe.

Kenya trade policy updates:

  1. Kenya rejects China-EAC trade pact. Kenya will not sign a free trade agreement that China has been negotiating with EAC partner States since 2016, Trade principal secretary Chris Kiptoo has said. Mr Kiptoo, Monday, said the decision, which could trigger diplomatic unease between Nairobi and Beijing, is intended to protect Kenya’s nascent manufacturing sector from being over-run by China’s cheaper and more efficient producers. “China already accounts for 25% of Kenya’s import bill under the current common external tariff structure of zero per cent, 10% and 25% for raw materials, intermediate goods and final goods respectively. This means that China is likely to get even a larger share of Kenya’s market once we enter into a free trade arrangement. China accounts for less than two per cent of our exports currently. An FTA with China might improve our export share but not significantly. A preferential trade agreement with China is what we prefer…an AGOA type of trade.”

  2. Kenya mulls incentives to boost exports. Peter Biwott, CEO of the Export Promotion Council, told a media briefing that the growth of exports has been declining in the past five years. “In order to reverse the trend of slowing growth of export earnings, we shall soon roll out incentives to enable local producers to penetrate international markets,” Biwott said during a trade forum organized by EPC. Biwott said that the incentives include the formation of export fund, Export Import Bank as well as export guarantee schemes. Current incentives for manufacturers include the Export Processing Zones as well as manufacturing under bond. According to the export agency, the incentives in place are not sufficient to enable exports to grow at the desired pace. Biwott said the incentives will enable small and medium enterprises to play a role in the export trade.

  3. Kenya warns Tanzania in sweets tax row. Tanzanian authorities have been given up to the end of the month to visit the Kenyan firms to find out if imported industrial sugar is being used in the products at the centre of the trade spat which remains unresolved since March. Dar slapped a 25% import duty on Kenyan firms in confectionery business, citing use of imported zero-rated industrial sugar in the goods. “Tanzania Verification Mission to visit Kenya on use of duty free sugar imports on confectioneries to be completed in two weeks (May 31, 2018). Failure to adhere will result in implementation of retaliatory measures,” said the report of a presidential roundtable. All manufacturers (have been) requested to comply and co-operate with the Tanzania Verification Mission.”

Uganda Economic Update: options for raising more domestic revenues (World Bank)

In the special section of the Update (pdf), the report analyses how Uganda could raise more domestic revenues to support its development. Uganda’s tax system is one of the most modern in the region, but revenue collections, at 14 percent of GDP, are low, and way below its tax potential. Tax avoidance and evasion, partly resulting from generous tax exemptions to investors, weak tax administration, and a large informal sector (now at 80%), pose challenges to increasing revenues. Up to 5% of GDP is lost annually in tax leakages. Personal income tax contributes roughly 18% of GDP compared to up to 40% in developed countries. VAT collections amount to 4% of GDP, but would rise to 6% if there were no exemptions.

South Africa: Industrial policy action plan 2018/19 – 2020/21 (dti)

African integration and industrial development (extracts, p. 85 onwards): At over R300bn, the rest of Africa (RoA) now represents 26.2% of South Africa’s total goods exports; marginally behind exports to Asia. The significant difference, however, is that exports to Africa comprise a high percentage (over 50%) of finished and intermediate products. If one includes trade in services (which will be proportionally higher for Africa than other regional trading blocs) the African region is arguably South Africa’s most important regional market. The regional trading relationship is, however, highly skewed in South Africa’s favour (at an approximate ratio of 3:1) with South African imports (of just over R100 billion) being mostly composed of raw materials, particularly oil. This has led to increasing concern in many countries that South African imports have had a detrimental impact on small and micro players, who are being squeezed out of their domestic market positions while big South African firms do little to invest in skills and local capacity-building.

Pointers: As indicated in Figure 2, the most important RoA export markets for South Africa are Botswana and Namibia, which are part of SACU – followed by Mozambique, Zambia and Zimbabwe. In total these countries absorb nearly 65% of total exports to the RoA. All these markets (except perhaps Namibia) are still heavily dependent on agricultural or mineral commodities and are therefore exposed to risk when markets turn. Figure 3 shows the dramatic rise in the importance of SADC as a regional bloc relative to the other blocs in West, North, Central, East and the Indian Ocean islands. The strategic question moving ahead is whether this trend will continue or whether opportunities are now saturated, and better growth prospects could be found in the other blocs. The challenge is that while exports are still rising to SADC countries, market share in several areas such as capital goods is now in decline, with increasing competition from Asian exporters in particular. Figures 6 and 7 indicate where the majority of the SA outward investment projects have been taking place [in Africa], and in which major sectors. [Rob Davies instructs Standards Bureau board to fast-track turnaround strategy]

2018 International Arbitration Survey: the evolution of international arbitration

International arbitration remains the preferred form of global dispute resolution for cross-border commercial disputes. London and Paris are still the most preferred seats, and the leading Asian hubs cement their positions in the top tiers of arbitral centres. The 2018 International Arbitration Survey (pdf) conducted by the School of International Arbitration, Queen Mary University of London, is the fourth survey carried out in partnership with White & Case. A pointer: Respondents believe that the use of international arbitration is likely to increase in the Energy, Construction/Infrastructure, Technology, and Banking and Finance sectors.

Seeking the best forum for regional trade agreement disputes (ICTSD)

Many proposals have been put forward to address the problematic nature of dispute settlement mechanisms found in regional trade agreements. This piece discusses two of them: using dispute settlement mechanisms under mega-regional agreements and resorting to existing arbitration and investment tribunals. The author argues that these proposals will amplify rather than solve existing problems, and concludes by suggesting that the World Trade Organization’s dispute settlement mechanism is the best forum for regional disputes. [The author: Henry Gao]

The ILO’s World Employment and Social Outlook 2018: greening with jobs

Its forecast that 24 million new posts “will be created globally by 2030”, contains the caveat that “the right policies to promote a greener economy” must also be in place for this to happen, along with better social safety nets for workers. The ILO report predicts that the transition to a green economy will also lead to the loss of six million jobs in industries that are heavily reliant on carbon-based production. ILO Deputy Director-General, Deborah Greenfield, insisted in a statement that the green economy “can enable millions more people to overcome poverty and deliver improved livelihoods for this and future generations”. But she warned that jobs also “rely heavily on a healthy environment”, something that is at risk from rising global temperatures which ILO believes will lead to a two per cent global loss in hours worked by 2030. “Most sectors” of the economy will benefit - out of 163 analysed in total, according to ILO - but 14 will face losses of more than 10,000 jobs worldwide. Two sectors, namely petroleum extraction and refining, are set to see job losses of one million or more.

The IMF’s new Global Debt Database: a note on methodology and sources

This paper describes the compilation of the Global Debt Database, a cutting-edge dataset covering private and public debt for virtually the entire world (190 countries) dating back to the 1950s. The GDD is the result of a multiyear investigative process that started with the October 2016 Fiscal Monitor, which pioneered the expansion of private debt series to a global sample. It differs from existing datasets in three major ways:

Today’s Quick Links

African integration bodes well for China-Africa trade and investment cooperation: Chinese envoy

World Bank identifies relevance of Nigeria’s Economic Growth, Recovery Plan to regional integration

Kenya, Rwanda, Tanzania, Uganda: briefing notes on country, regional analysis of youth demographics

East African countries seek to promote effective electronic waste management

IGAD Drought Disaster Resilience and Sustainability Initiative communiqué

Liberia’s delegation reports to ECOWAS Parliament

Nigerian seaports are the least efficient in West Africa

OECD roundtable (6 June): Implications of e-commerce for competition policy

UNCTAD: Rapid technological change threatens to outpace public policy

World Bank: Using satellite imagery to revolutionize creation of tax maps and local revenue collection

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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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