UNCTAD: World Investment Report 2018

Developed economies saw the biggest drop in FDI flows in 2017 – at 37%, to $712bn – but this was to some extent expected, after a spike in 2016. More concerning is the “lack of (FDI) recovery” among developing economies last year, since FDI is the “largest external source” of finance for developing countries, at around 40%, UNCTAD says. In developing African states, external investment levels “continued to slide” to $42bn; marking a 21% fall since 2016. By way of contrast, investor interest in Asia’s developing economies “remained stable” – at $476bn – maintaining the region’s position as the largest FDI recipient in the world.

Investment treaty making has reached a turning point. The number of new international investment agreements concluded in 2017 (18) was the lowest since 1983. Moreover, for the first time, the number of effective treaty terminations outpaced the number of new IIAs. In contrast, negotiations for megaregional agreements maintained momentum, especially in Africa and Asia. The number of new investor-State dispute settlement claims remains high. In 2017, at least 65 new treaty-based ISDS cases were initiated, bringing the total number of known cases to 855. By the end of 2017, investors had won about 60 per cent of all cases that were decided on the merits. [Africa fact sheet (pdf); Regional FDI at a glance 2018: Africa (pdf)]

Achieving the SDGs in the least developed countries: UN deputy launches powerful tool for LDCs (UNCTAD)

Amina J. Mohammed, Deputy Secretary-General of the United Nations, launched a unique policy compendium in Geneva on 6 June 2018 that aims to assist governments of the world’s most disadvantaged countries in boosting prosperity and meeting the Sustainable Development Goals. While LDCs have many challenges in common, UNCTAD underlines that there is no single recipe for success, with government needing to take a pragmatic approach that involves a combination of policy measures tailored to national conditions.

The compendium offers a wide range of ways for policymakers and international development partners to fashion targeted solutions for the social, economic and environmental challenges facing LDCs. It identifies possible types of instruments in various policy areas that may foster development progress, enhance growth, and support poverty eradication and economic structural transformation. It also suggests several elements to strengthen international support measures for LDCs within the global economic system.

Beneficiation is not the easy solution for Africa, says UCT economist David Kaplan (Business Day)

Much has been said about beneficiation in SA, but apparently being a producer of raw materials does not necessarily equate to having an advantage in moving up the value chain, according to University of Cape Town economics professor David Kaplan. “In Africa it’s always said that we produce the iron and steel — why don’t we produce the pots and pans? We produce the gold, why do we not produce the jewellery?” Kaplan said on Thursday.” The fact that you produce raw materials very often doesn’t give you any real advantage to any further activity downstream. “I think this area has been exaggerated as an area for Africa’s production.” The possibilities for forward integration were hardly low-hanging fruit, he said. However, where a country produces scarce resources with high levels of demand, there is room for bargaining — as Botswana did with De Beers in the sale, sorting, and cutting and polishing of diamonds.

South Africa: Diversification and protection would help pull sugar industry out of crisis (Business Day)

Updates from Nigeria

AfCFTA: Riposte to Osinbajo on Africa free trade agreement (BusinessDay)

There are several benefits that Nigeria can look to under AfCFTA. Given our market size, which confers unrivalled advantages of scale, heft and influence, we can work to expand opportunities for Nigerian sectors such as services. The latter has grown stronger and more sophisticated as our recently rebased GDP figures reveal. Nigeria needs to raise its trade facilitation game to support emergent sectorial champions, from banking through cement manufacturers to e-commerce platforms like Jumia and Yudala. With Nollywood and ‘Yaba Valley’ and others, ‘Nigeria Incorporated’ is going out and becoming more adroit at competing in regional markets from Ghana to Zimbabwe.

Freer movement of capital, goods and personnel under AfCFTA will be a boon to Nigeria, helping to assuage a lot of the difficulties that Nigerians face when doing business continentally. Aliko Dangote recently alluded to this mobility challenge when lamenting the multiplicity of visas he has to secure to traverse his Africa-wide operations. The key lesson for Nigeria here is to recognise and weigh correctly broader benefits offered by undertakings like AfCFTA. We must also keep consolidating existing pockets of competitive advantage.

Few African observers understand how Nigeria went from its erstwhile position of leading AfCFTA from the front to being a conscientious abstainer. As chairman of the AU ministers of trade, Nigeria’s Enelama was instrumental in helping to shepherd the intra-state negotiation process, a process also led on a technical level by a seasoned Nigerian trade expert, Dr Chiedu Osakwe. Many African peers continue to commend this Nigerian contribution to date although they are peeved at how Nigeria abdicated leadership literally to rain on the AfCFTA signing ceremony in Kigali. [The author,Dr Ola Bello, is executive director, Good Governance Africa]

Nigeria’s seaports still struggle with clearing bottlenecks amid Executive Order (BusinessDay)

One year into the implementation of the Presidential Order on Ease of Doing Business, the nation’s seaports still struggle with cargo clearing bottlenecks, which hinder timely delivery of consignments to importers’ warehouses. The development has been attributed to the failure of some government agencies involved in cargo clearance at the ports, to realign their operations into complying with the stipulations and tenets of the Presidential Order on Ease of Doing Business, issued by the office of the vice President Yemi Osinbajo in 2017. On its part, the Nigerian Ports Authority has threatened to seek the intervention of the Vice President Yemi Osinbajo to handle the high level of non-compliance to the Presidential Order on the Ease of Doing Business at the nation’s seaports by some government agencies.

Nigeria needs $12bn to avoid missing LNG boat (Bloomberg)

Operator Nigeria LNG Ltd. says it will decide later this year whether to invest more than $10bn to boost capacity by 40%. That would allow the Bonny Island terminal -- an hour’s ferry ride from the oil hub of Port Harcourt -- to export as much as 66 million cubic meters (30 million tons) a year to markets in Europe and Asia. NLNG’s shareholders - Royal Dutch Shell Plc, Total SA, Eni SpA and state-controlled Nigerian National Petroleum Corp. - must weigh the benefits of expanding their profitable LNG venture against the threat of higher taxes, pipeline vandalism in the Niger River delta and volatile gas prices. Those concerns have already delayed the project first mooted in 2012. Any further interruptions will increase the risk that Africa’s biggest oil producer misses the global transition to cleaner fuels and a chance to reduce its stuttering economy’s reliance on crude.

Nigeria: Power sector loses N201.3bn in six months (Punch)

Revenue of world’s top mining firms rose by 23% in 2017 – PwC (Ghanaweb)

The world’s 40 largest mining companies have delivered an impressive financial performance in 2017, increasing revenue by 23% to $600bn. This is according to PwC’s Mine 2018 (pdf) report, which was released on the sidelines of the Junior Mining Indaba conference in Johannesburg. The report analysis confirms an upswing in the mining cycle, which comes on the back of rising global economic growth and a recovery in commodity prices. Helped by astute cost-saving strategies over the past few years, margins and cash-generating ability has improved significantly, leading to a 126 per cent jump in net profits.

Kenya: 20 companies registered to import consolidated cargo (Business Daily)

The Kenya Bureau of Standards has cleared 20 firms to bring in goods as consolidated cargo in a move expected to streamline importation of goods by small traders. Clearing agents pool goods for small importers into one container but while some agents have in the past taken advantage and resorted to tax evasion by mis-declaring the value of goods, others have used the channel to import substandard goods. The Kebs head of inspection Eric Ochieng said of the 53 firms that had applied to be considered as consolidated cargo importers, less than half of them were cleared.

Kenya: Kephis needs Sh1.4bn to ensure food safety (The Star)

Kenya Plant Health Inspectorate Services needs Sh1.4 billion to ensure safety of food, managing director Esther Kimani said yesterday. The money will be used to enhance production and grow the export market, she said. Kimani spoke during the opening of the second phytosanitary conference (pdf) at Kephis in Nairobi. The MD said EU requirements for the export market keep changing and farmers have to be dynamic to maintain the high standards. Local farmers, Kimani said, are losing lucrative opportunities in the local and global market as their export commodities fail to meet standards.