Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Reuters | Akintunde Akinleye

AUC holding workshop series to develop next phase of PIDA

The Arab and the Maghreb Union and IGAD were the first of the eight RECs to kick-start a continental consultative process (8-10 May, Tunis) to work together on a 60-question face-to-face consultation in a bid to assess the progress achieved so far in PIDA and highlight the strengths and success stories as well as the weaknesses of the processes and instruments put in place for achieving the 2020 targets set in the PIDA-PAP. The consultation in Tunis is expected to be followed by consultations in Nairobi, South Africa, Tanzania and Ghana, ahead of a continental presentation on the results in October 2018.

Related postings on forthcoming African infrastructure policy discussions: Joint EU-Africa Strategy Reference Group on Infrastructure (17-18 May, Addis): draft agenda (pdf); Ministerial Working Group on the operationalisation of the Single African Air Transport Market (25-28 May, Lomé): the concept note (pdf)

Global Trade Review interview: Afreximbank president unveils new initiatives and thoughts on Africa’s trade finance gap

AUC Deputy Chairperson, Ambassador Kwesi Quartey: For Africa to trade, it has to produce first (AU)

Perhaps the most illustrative of examples of this underperformance lies in the trade liberalization, the lack of implementation of policies, the poor infrastructure, the restrictive movement of persons, insecurity and governance challenges and the literacy and skills crisis in the continent. We must scale up infrastructure investment to improve connections between and within African countries. Though over the years we have seen great progress in infrastructure development of trans-border roads, rails, ports modernization and power sharing pools, more must be done to complete these projects and reap the full benefits. Railway lines must not only be from the gold mine to the harbour.

At the same time, there is a need to make trade more conducive through the elimination of trade non-tariff barriers such as the restrictive travel policies and visa regimes. Just try getting a visa to Ethiopia, our diplomatic capital! The latest visa openness index report shows slight improvement by states to open up their borders but more commitment must go into it to a point where you do not need a visa to travel to 45% of our countries. We must encourage managed migration and mobility. We must also seek to harmonize our trade policies. We must address the issues of the prohibitive transaction fees and seek to harmonize the rules of origin which greatly informs the imposed duties, and in accordance to the source of imports. This will greatly encourage competitiveness in trade. I am glad to note in this regard that the dialogue has been enhanced in the harmonization of the rules of origin as our states implement the decision on financing of the Union by imposing the 0.2% levy on eligible imported goods. That therefore, is a good start.

Conference of Ministers praised for tackling ‘real’ African issues: summary of ministerial statement (UNECA)

A ministerial statement from the 51st session of the Council of Ministers recognised the potential of the AfCTA to advance industrialisation, economic diversification and development to foster prosperity for all on the continent. It also, however, recognised the challenges including concerns over the impact upon the tax base arising from a single continental market for goods and services, reporting: ‘The short-term impact is likely to be minimal and will be outweighed in the medium and long term by the positive impacts of revenue from other sources of taxes.’ The summary also acknowledged the need for the bloc to advance trade facilitation measures. These include simplified trade regimes for informal cross-border traders and upgrading trans-boundary infrastructure to assist firms keen to penetrate the new markets opened up by the agreement.

Country updates

South Africa Systematic Country Diagnostic: An incomplete transition – overcoming the legacy of exclusion (World Bank)

This SCD identifies five key constraints. These are (i) insufficient skills; (ii) the skewed distribution of land and productive assets, and weak property rights; (iii) low competition and low integration in global and regional value chains; (iv) limited or expensive spatial connectivity and under-serviced historically disadvantaged settlements; and (v) climate shocks: the transition to a low-carbon economy and water insecurity. Extracts (pdf):

The shift in strategic emphasis of South Africa’s trade policy from developed markets to African markets can also be understood in the context of levels of competitiveness, which are low by global standards but sufficiently high by regional standards. This is further supported by relatively low barriers to entry in African markets, given relatively short distances and membership of regional trade agreements, such as SADC and SACU. Regional integration holds significant potential, as South African investment in Africa has been supporting development across the continent, especially in services (including finance, retail, and communications). A challenge will be to ensure that South African firms do not simply crowd out domestic firms, but help build value chains, and that South Africa remains an outlet for products produced across African value chains into the rest of the world. This will support growth in the region and benefit both South Africans and other Africans, such as the large number of migrants sending home remittances or those finding jobs in other African countries, through higher growth from regional integration. Further to this point and the previously discussed dynamism of South African services as inputs into other sectors’ exports, South African services firms have much to gain from greater services liberalization in the region through the implementation of the 2012 SADC Services Protocol. Industries in other southern African countries would benefit from greater access to these highly competitive inputs.

The manufacturing sector’s lack of competitiveness also helps explain the weak export response to real depreciations, further supporting persistent current account deficits. South African exports have barely been responding to real depreciations of the rand because the divergence in productivity – and the associated loss in competitiveness – is the reason for the depreciation in the first place. Except for commodity booms, South African exports tend to lag behind global trade growth. South Africa is thus losing global market share. Real depreciations tend to improve the trade balance and the current account, by compressing imports without necessarily a matching export response. In this sense, South Africa’s limited diversification is a consequence of low productivity, constituting an external vulnerability, as it limits the adjustment of external balance. Chapter 3 explains that bottlenecks in reliably and cost-effectively delivering critical network and infrastructure services, such as logistics, internet, and electricity, further erodes this competitiveness.

South Africa: dti Budget Vote address by Minister Rob Davies (dti)

South Africa is inextricably linked with the continent and in light of this the country’s engagement in promoting developmental regional integration continues unabated. In the short time available, I will mention just two issues. First, we have agreed with a number of our partners in the EAC to target the completion of the tariff schedule negotiations between SACU and the EAC by July. This will be an important, commercially meaningful step, towards the implementation of the Tripartite SADC-Comesa-EAC Free Trade Area and a significant step towards our eventual goal of a Continental FTA. Second, SADC has developed its road map towards its regional Industrial Development Action Plan. In August this year, South Africa will assume the chair of the SADC and I want to indicate that we will spare no effort to ensure that our REC is actually implementing its regional industrial programme before we hand over the chair next year.

Mozambique: National AGOA Utilization Strategy, 2018-2025 (SPEED+)

In spite of the low volume of export to the US and low utilization of AGOA, Mozambique does have a viable export sector with at least 20 product lines that would be eligible for AGOA if exported to the US. Of these goods, several are highly demanded in the US suggesting ample opportunity for Mozambique to export to the US. Through a rigorous 4-level analysis of Mozambique’s exports, measured against US demand and AGOA eligibility, 5 sectors and at least 13 goods were identified for high AGOA potential and for focus in this strategy. This strategy includes 21 recommendations (pdf) on improving awareness of AGOA, competitiveness of specific sectors, and exploiting the benefits granted to goods made in Mozambi­que for the US market.

Ethiopia Economic Update: The inescapable manufacturing-services nexus – exploring the potential of distribution services (World Bank)

Part one of this Economic Update, on recent economic developments and outlook, discusses Ethiopia’s growth strategy, emphasizing the sustainability of the country’s investment-focused and export-led growth model. Part two looks at the interlinkages between manufacturing and services, with a special focus on the role of distribution services in promoting Ethiopia’s export competitiveness and eventually its structural transformation. Extracts (pdf): The case studies on the role of distribution services in the dairy, teff, sesame, and textiles value chains show that although distribution services are critical in the performance of each value chain, they are only one part of the story. Eliminating the obstacles to distribution services could help link rural producers to markets for inputs, facilitate the sale of raw milk, or reduce post-harvest and storage losses. But other binding constraints, such as limited access to finance or lack of skills, would need to be addressed in parallel for distribution services reforms to benefit consumers and facilitate value chains climbing into higher value-added activities (such as cheese or sesame oil) and increase exports.

Pointers: Figures 2.1 – 2.7: Sectoral contributions to Ethiopia’s economy; Employment by sector and labor productivity; Services value added and employment shares in Ethiopia; Shares of services in total exports, 2005 and 2015; Ethiopia’s services exports and imports, 2013-15; Traditional and modern services exports and imports versus GDP per capita, 2013-15; Services’ export share (gross value, direct value added, and total value added considering forward linkages) versus level of development, 2011.

“Notes from a small island”: reflections on Mauritius and Seychelles (World Bank)

For the past few years, I have been fortunate enough to be the World Bank’s resident economist for Mauritius and Seychelles. With this now coming to an end, here are some especially striking impressions of these countries’ successes and challenges that I hope can provide food for thought more widely.

UNCTAD Technology and Innovation Report 2018: harnessing frontier technologies for sustainable development

The report calls for a concerted international effort to build technological capabilities and to support all forms of innovation in developing countries. Least developed countries, in particular, should receive international support to build their domestic capabilities and create the enabling environment necessary for frontier technologies to deliver on their promise. The report also notes (pdf) that the spread of new technologies threatens to outpace the ability of societies and policymakers to adapt to the sweeping changes that they generate and calls for an international dialogue to develop policy responses to the serious ethical, environmental, economic and social questions raised by frontier technologies. Similarly, massive open online courses (MOOCs) may enable better-off, more educated and more digitally-connected students and professionals to supplement their education with world-class content, leaving further behind those without digital access, economic opportunities or accessible education – especially in the world’s poorest countries.

Tracking SDG7: The Energy Progress Report (IRENA)

Prepared by the Custodian Agencies for Sustainable Development Goal (SDG7), the report gives the international community a global dashboard to register progress on three key targets: ensuring universal energy access; doubling progress on energy efficiency; substantially increasing the share of renewable energy by 2030. It assesses the progress made by each country on these targets and provides a snapshot of how far we are from achieving SDG7. Extract (pdf): The regions of sub-Saharan Africa and South Asia continue to have the largest access-deficit. The number of people without access in sub-Saharan Africa has recently begun to fall in absolute terms for the first time, driven by strong performers in East Africa. Electrification also outpaced population growth in South Asia. About 80% of those without electricity live in top 20 largest access deficit countries whose progress has a major influence on global outcomes. While this group made progress overall, access gains were uneven. Some of the strongest gains were Bangladesh, Ethiopia, Kenya and Tanzania, which expanded access by at least 3% of their population annually between 2010 and 2016. [Vienna Energy Forum 2018: update]

Today’s Quick Links:

Rwanda’s flower exports double as more investment comes in

Zimbabwe proposes new gold policy

Zimra net revenue collections improve

Raila Odinga’s Cambridge lecture: Africa in a changing world

South Africa’s foreign policy: speech by Minister Lindiwe Sisulu during International Relations and Cooperation Dept Budget Vote 2018/19

Nigeria’s 2018 budget: Senate inflates 2018 budget by 6% to N9.1 trillion; National Assembly to pass N9.120trn budget Wednesday; 2018 budget is the most delayed in 19 years

Going to Africa? The full guide on how easy or difficult it is to visit all African countries from Nigeria!


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