tralac’s Daily News Selection
Diarise: NILDS workshop on ECOWAS common currency (23 June, Abuja)
Former South African president, Thabo Mbeki, has been elected as the new Chairperson of the Board of the South Centre (pdf)
The workshop, held on the margins of a meeting of the SADC Committee of Central Bank Governors, provided a forum for the public and private sectors to discuss trends in and drivers of CBR withdrawal, and, in the light of their experiences, to identify workable solutions for the future. Participants welcomed the opportunity to have a frank dialogue on challenges facing SSA and recognized the need for coordinated efforts to address them. While stressing the need to prioritize among many measures that could mitigate problems, they consider that building trust is critical and called for: strengthening communication channels with global banks, communicating expectations including by providing policy statements; and respondent banks providing requested information in a timely manner. The IMF and SADC will continue to follow up on the implementation of these measures and plan to reconvene in order to assess progress in around a year’s time. [FinMark Trust blog: When the bus driver is the only option...]
State of bank recovery and resolution laws in Africa (Norton Rose Fulbright)
Global law firm Norton Rose Fulbright has launched a comparative guide on the state of recovery and resolution laws for banks in Africa. Banks require specific resolution arrangements as a result of their interconnectedness with each other, the rest of the financial system, and the real economy. A credible recovery and resolution regime not only impacts depositors, it can also have potential impacts on international debt markets, rating agencies and correspondent banking. The firm’s interactive guide provides an overview of the requirements applicable to over 20 jurisdictions across Africa. Working with colleagues and correspondent law firms from across Africa, Norton Rose Fulbright’s global banks team undertook a review, examining:
During its sixth ordinary session held in Midrand PAP adopted a report on the AFCFTA, which is the result of an agreement among all 55 members of the African Union. The report was presented by Hon. Alex Chersia Grant from Liberia who serves as vice chairperson of the Permanent Committee on Trade, Customs, and Immigration matters.
The PAP legislators are now required by the continental legislature to ensure that their respective national governments ratify the AFCFTA. The MPs agreed to ensure timely ratification of AFCFTA legal instruments once the executive branches had availed them to national parliaments. As elected representatives in their constituencies, the legislators agreed to encourage African private sector in their countries to invest and trade in the AFCFTA in order to generate jobs and decent standards of living. As members of the oversight institutions over the executive branch of their respective governments, the MPs agreed to demand (from their national governments) regular updates on their respective countries’ actions and progress concerning the AFCFTA.
African Union seeks aid for states affected by free trade zone (Financial Times)
“We’re trying to get some funds, an adjustment mechanism, to alleviate the impact [of cutting tariffs] and then move towards expanding the production base,” Mr Muchanga, from Zambia, said on the sidelines of a meeting of African finance ministers in Addis Ababa. He added that development partners such as the EU and World Bank had agreed “in principle” to provide the funds, which he estimated at billions of dollars.
This paper analyses the structural transformation and export structures of five Southern African economies: Mauritius, Mozambique, South Africa, Tanzania and Zambia. The economic transformation is assessed in terms of both domestic output and international export composition. The focus on export structures is motivated by three factors. First, recent literature on structural transformation has shown export structure to be a good predictor of economic growth and therefore one of the possible explanations of cross-country income disparities. Second, countries generally export those goods where they have a comparative advantage, hence examining the export structure can help to understand the underlying knowledge or institutional advantages that make a country competitive. Finally, in the absence of disaggregated, cross-country production data, export data provide a useful approximation of the productive structures in an economy. An experiment of regional integration (Section 5, pdf): As a final exercise, this section attempts the following thought experiment: what would the export diversification opportunities look like if the five countries were to act as a single economy?
World Economic Situation and Prospects: update as of mid-2018 (UN)
Growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than three per cent this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions, a new UN report finds. But rising trade tensions, heightened uncertainty over monetary policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress, according to the United Nations World Economic Situation and Prospects (WESP) as of mid-2018, launched today in New York. In Africa (pdf):
The region is forecast to grow by 3.6% in 2018 and 3.9% in 2019, marking an upward revision since December. The improvement largely reflects stronger prospects in some of the region’s largest economies, such as Nigeria and Egypt. Per capita income growth, however, remains very weak, estimated at 1.1-1.3 per cent in 2018-2019, and insufficient to significantly alleviate poverty in the absence of dramatic declines in income inequality. Growth in Nigeria remains subdued, but recent improvement reflects terms of-trade gains, recovering oil production, greater foreign exchange availability and more solid non-oil growth, driving the upward revision to the forecast for West Africa. North Africa is benefitting from lower inflation in countries such as Egypt and Libya. However, ongoing political instability and security issues continue to hinder prospects for the Libyan economy. Growth prospects have improved for 2018 in East Africa, as continued recovery from droughts and new manufacturing infrastructure spur growth in Ethiopia. In Central Africa, fiscal consolidation and lower oil production are projected to constrain growth in 2018. The outlook for Southern Africa remains challenging. However, growth in South Africa is expected to accelerate modestly this year, as a result of stronger household consumption and improving investor confidence.
The ‘B+’ rating reflects Nigeria’s position as Africa’s largest economy and most populous country, its net external creditor position, and its well-developed domestic debt markets, balanced against a high level of hydrocarbon dependence, low levels of domestic revenue mobilisation and GDP per capita, and low rankings on governance and business environment indicators. The Negative Outlook reflects uncertainty about the sustainability of the economic growth momentum as the impact of earlier shocks eases and progress on addressing high interest service ratios. [Nigeria and remittances: a smoothening agent]
What manufacturers need to drive Kenya’s Big Four growth agenda (Business Daily)
Kenya Association of Manufacturers vice-chairperson, Sachen Gudka, spoke to Business Daily on the industry’s view of its role in Kenya’s economic advancement and what must be done to meet the ambitious targets. Excerpts: [Uhuru deal set to raise cost of imported goods]
Egypt is on track to achieve a primary budget surplus excluding interest payments in 2017/18, with general government debt as a share of GDP expected to decline for the first time in a decade. The budget for 2018/19 targets a primary surplus of two percent of GDP, which would keep public debt on a firmly downward path. The government also remains committed to continuing energy subsidy reforms to achieve cost-recovery prices for most fuel products by 2019. Together with raising revenues through tax policy reforms, this will help create fiscal space for important infrastructure projects, targeted social protection measures and essential spending on health and education.
Harmonisation of regulatory framework for the electricity market in Africa: pdf First progress report of the Chairperson of the Commission (119 KB) (AU)
The third phase of the implementation of the Programme Energy Regulatory Frameworks is scheduled to commence in May 2018. The activities will focus on piloting the application of the transmission tariff methodology, as well as the guidelines and monitoring plan developed in phase 2. A meeting of all power pools and relevant institutions is planned for the second week of May 2018. It is planned to select two power pools and one transmission line for the pilot project. The pilot phase will be undertaken simultaneously with intensive training of relevant national and regional institutions involved in regional power trade, namely power pools, power utilities, transmission system operators, power market system operators, national regulators and Ministry of Energy Departments in Member States. The expected outcomes of the pilot phase are as follows:
Today’s Quick Links:
Tanzanite One Mining Company bows to government pressure on taxes
USTR Lighthizer: NAFTA nations ‘nowhere near’ a deal
Russian diplomat explains why free trade zone not yet BRICS priority
Choking on our harvest: threats loom over global food trade