Launching tomorrow, in Accra: the inaugural edition of the African Sovereign Wealth Funds Index (conducted by Konfidants, in partnership with the AfroChampions Initiative and PG and Partners)

Economic Development in Africa Report 2018: Migration for structural transformation

African migration could boost growth and positively transform the structure of the continent’s economy, UNCTAD’s 2018 Economic Development in Africa Report (pdf) reveals. In 2017, the top five intra-African migration destinations were South Africa, Cote d’Ivoire, Uganda, Nigeria, and Ethiopia (all exceeding 1 million migrants). The contribution of migrants to GDP was measured at 19% in Côte d’Ivoire (2008), 13% in Rwanda (2012), 9% in South Africa (2011) and 1% in Ghana (2010).

Meanwhile, remittance inflows from outside and within Africa rose on average from $38.4 billion (2005-2007), to $64.9 billion (2014-2016). These accounted for 51% of private capital flows in Africa in 2016, up from 42% in 2010. This is why both intra and extra-continental migration are needed for supporting Africa’s structural transformation.

The report also provides evidence on the “intimate correlation between two sides of the same coin: migration and trade” according to UNCTAD’s Junior Roy Davis, a lead author on the report. Africa is on the cusp of tremendous change, following the recent signing of the agreement establishing the AfCFTA, Protocol on Free Movement of Persons, and the launch of the Single African Air Transport Market in January 2018. “In this context the report contributes to a better understanding of the implications of intra-African migration for the continent’s socio-economic transformation,” he said.

US trade and investment with Sub-Saharan Africa: recent developments (USITC)

Rising per capita incomes, growing urbanization, the need for improved infrastructure, and expanding healthcare contributed to growth in US exports in some sectors to sub-Saharan Africa between 2010 and 2016, reports the United States International Trade Commission in its publication pdf US Trade and Investment with Sub-Saharan Africa: recent developments (5.61 MB) . The USITC conducted the investigation at the request of the USTR. Highlights of the report include:

The fastest growing US imports of goods from SSA between 2010 and 2016 were cocoa, chocolate, and confectionery; apparel; refined copper; catalytic converters; and edible nuts. Growth in these sectors was due to the long-term renewal of AGOA to 2025, the increased presence of FDI in these sectors, SSA production cost advantages relative to other global suppliers, and expanding manufacturing capacity in SSA. Apparel, edible nuts, footwear, and raw cane sugar show potential for growth in US imports from SSA under AGOA.

In 2015, the latest year for which data are available, merchandise exports to SSA by U.S. SMEs were approximately $5.8bn, a decrease from 2010. Over 40% of the 2015 exports were concentrated in South Africa and Nigeria. Some challenges faced by SMEs are high tariffs and poor protection of intellectual property rights.

The stock of US FDI in SSA declined from 2010 to 2016, with mining, including crude petroleum, being the largest destination sector. Sectors with the greatest potential for US FDI in SSA are professional and business services, financial services, textiles and apparel, renewable energy, and mining. The three largest destinations for US FDI in SSA in 2016 were Mauritius ($7.0bn), South Africa ($5.1bn), and Nigeria ($3.8bn).

Kenya: US trade secretary, Wilbur Ross, set for Kenya visit (The Standard)

US Commerce Secretary Wilbur Ross is scheduled to visit Kenya at the end of next month for a bi-lateral trade summit. This will be Mr Ross’ first official visit to Africa and will see the top US trade envoy accompanied by more than 70 delegates from the US private sector, looking to broaden trade and investment ties with Kenya. Outgoing US Ambassador Robert Godec announced the end-June trade summit yesterday, stating that US investors were keen on exploring opportunities around the Government’s ‘Big Four’ agenda. “Kenya and the US share a long and strong trade relationship and with a move to strengthen these ties the US Commerce Secretary will lead a 70-person delegation to Kenya at the end of June,” explained Godec.

South Africa: Trade statistics for April 2018 (pdf, SARS)

The South African Revenue Service today released trade statistics for April 2018 recording a trade balance surplus of R1.14bn. The year-to-date (01 January to 30 April 2018) trade balance deficit of R17.65bn is a deterioration on the surplus for the comparable period in 2017 of R8.52bn. Exports year-to-date decreased by 0.3% whilst imports for the same period showed an increase of 7.2%. South Africa’s trade statistics with BLNS countries only recorded a trade balance surplus of R7.34bn.

Ghana: Only a single textile container was officially declared in 2016 – trade minister (GhanaWeb)

Trade and Industry Minister, Alan Kyerematen has revealed that in 2016, the country recorded only a single textile container declared as coming through the ports of entry. He made this revelation at the joint press conference on the happenings in the textiles industry on last Wednesday. Currently, the combined production of the four local textile companies operating in the country does not exceed 40 million yards of print annually, out of the 120 million yards demand. This reflects the high level of smuggling of textiles into the country and loss of revenue to government. Hence, this has led to government implementing certain measures to mitigate the current challenges bedevilling the industry. These include the impending implementation of import restrictions on textile prints into the country expected to begin on September 1, 2018. The minister explained that the reason for the transition period of three months is to ensure that all smuggled goods in the country are cleared out of the market.

Ghana lost GHC1.9bn to illegal fuel trade in 2017 (GhanaWeb)

The Chamber of Bulk Oil Distributors is blaming the persistent issues of illegal fuel trade on what it says is the weak commitment of security agencies in addressing the issue. A latest industry report by the Chamber said the illegal fuel trade cost the country some 1.9 billion cedis in 2017. The report cited three main factors as accounting for the losses to the country. For instance, transfer pricing cost the country some 148 million cedis. Also, unreported ESLA receipts amounted to 915 million cedis between 2016 and 2017. In addition, smuggling and dumping of fuel products in the country led to losses of about 1.4 billion cedis. CEO of the Ghana Chamber of Bulk Oil Distributors, Senyo Hosi describes the situation as worrying.

South Africa: Carrim calls on FIC, Hawks, SARS and NPA to stem tax losses for SA (Fin24)

AfCFTA updates

Nigeria and the AfCFTA: LCCI urges caution as debate on African trade treaty rages (Business Day)

The Lagos Chamber of Commerce and Industry says some of the issues raised by Nigeria for not signing the AfCFTA are genuine. The chamber, just like the Manufacturers Association of Nigeria, urges caution to ensure the country makes no mistakes in this regard. Speaking at a stakeholders’ forum in Lagos, Babatunde Ruwase, president of the chamber, said the high point of argument for Nigeria not signing the AfCFTA was its fear of numerous bilateral trade agreements of some AU countries with the rest of the world and Nigeria’s underdeveloped industrial and infrastructural sector. “It has been argued that this will potentially make Nigeria a dumping ground due to our uncompetitive manufacturing profile, market size and population. To us at LCCI, these are legitimate concerns. It is therefore imperative to deepen consultation across all sectors, in order to address these genuine concerns from stakeholders.” [African Business: Continental Free Trade Area – game-changer or pipe dream?; FT Nigeria Summit: Signing AfCFTA will hurt Nigeria’s private sector, VP Osinbajo says]

AfroChampions Initiative, African Union AfCFTA sensitisation tour updates:

In Dakar: “Senegal is the second largest economy in Francophone West-Africa, and therefore represents a strategic market. We must convince local economic actors that the AfCFTA is a true opportunity for their activity” said Mr Albert Muchanga, AU Commissioner in charge of Trade and Industry. “Senegal will play a pivotal role, particularly because of its relationship with North Africa and its efforts to deploy strategic infrastructures, and we need to help it become a driving force in the future AfCFTA.”

African leaders committed to building a digital economy (World Bank)

During the Spring Meetings in April, the World Bank Group launched the Digital Economy for Africa Initiative (DE4A), which brought together African finance and ICT ministers, central bank governors, global tech and telecom giants, as well as local and regional internet platforms, think tanks and thought leaders, digital entrepreneurs and development partners. The event underlined the role of the digital economy as a new driver of growth, discussed how to build its foundations, and looked at the risks of being left behind. DE4A is now working with a group of countries on a Digital Economy Country Assessment, which will form the basis for digital economy country strategies. [Martin Mühleisen: The long and short of the digital revolution]

Christine Lagarde: Creating a better global trade system (IMF)

Think about it: between 1986-2008, global trade in goods and services grew at more than twice the rate of the global economy. In recent years, however, growth in this more traditional type of trade has barely exceeded global GDP growth. At the same time, digital flows have been booming. According to Cisco, the amount of cross-border bandwidth used grew 90-fold between 2005 and 2016, and is expected to grow an additional 13-fold by 2023. This is not just about video streaming, Skype calls, and social media posts. It is about the role of data in boosting other flows, especially by making services more tradable - from engineering, to communications, to transportation. So in many ways, the future of trade is the future of data. This is a huge opportunity for policymakers to build new economic bridges between countries, and to create a better global trade system. Let me highlight 4 building blocks of better trade:

OECD sees stronger world economy: but risks loom large (OECD)

The global economy is experiencing stronger growth, driven by a rebound in trade, higher investment and buoyant job creation, and supported by very accommodative monetary policy and fiscal easing, according to the OECD’s latest Economic Outlook. The pace of global expansion over the 2018-19 period is expected to hover near 4%, which is close to the long-term average. However, the Outlook also underlines that significant risks posed by trade tensions, financial market vulnerabilities and rising oil prices loom large, and more needs to be done to secure a strong and resilient medium-term improvement in living standards. Extract: Policy challenges from closer international trade and financial integration (pdf)

While gross trade flows give a strong indication of physical trading activity, trade in value added (Figure 2.4) gives a better picture of the income flows associated with trade. The two metrics can differ. For instance, total merchandise trade flows between China and the Dynamic Asian Economies are smaller when measured in value-added terms than in gross terms due to strong GVC linkages and sizeable trade in intermediates (Figures 2.3 and 2.4). In contrast, trade flows for Japan and Korea are relatively larger in value-added terms, as are flows between the United States and China.

There is still substantial room to reduce barriers to trade (Box 2.1) and stimulate trade integration, but there is also a possibility that technological advances could reduce trade intensities, at least for goods, and change trade patterns in the future. International trade is now starting to be affected by developing digital technologies, including the internet of things, big data, the cloud, autonomous robotics and 3D printing, all of which may act as a brake on GVC expansion (Baldwin, 2016). [Profiled highlights: Projections by country; General assessment of the macroeconomic situation; Policy challenges from closer international trade and financial integration; Statistical annex; Compare your country – data visualisation. South Africa: Economic forecast summary]

Unrealized potential: the high cost of gender inequality in earnings (World Bank)

Globally, countries are losing $160 trillion in wealth because of differences in lifetime earnings between women and men. This amounts to an average of $23,620 for each person in the 141 countries studied by the World Bank Group in a new report released Wednesday. The study examines the economic cost of gender inequality in lost human capital. The losses in wealth from inequality in earnings between men and women vary by region. The largest losses—each between $40 trillion and $50 trillion—are observed in East Asia and the Pacific, North America, and Europe and Central Asia. This is because these regions account for most of the world’s human capital wealth. Losses in other regions are also substantial. In South Asia, losses from gender inequality are estimated at $9.1 trillion, while they are estimated at $6.7 trillion in Latin America and the Caribbean and $3.1 trillion in the Middle East and North Africa. In Sub-Saharan Africa, the losses are estimated at $2.5 trillion.