Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Kevin Sutherland | Bloomberg

The second African Transformation Forum takes place next week in Accra. Access the conference agenda here.

UNCTAD convenes an expert meeting on statistical methodologies for measuring illicit financial flows next week in Geneva. Download the concept note (pdf).

Africa in the New Trade Environment: insights into the World Bank’s research agenda

The AfDB has posted an EOI for a study on unlocking the potential for the Fourth Industrial Revolution in Africa. The recruited firm will be expected to deliver a report on case studies and situational analysis on a set of emerging technologies of the fourth Industrial revolution and their adoption and/or supply in African countries.

Vera Songwe: Africa’s railway renaissance needs public private partnerships (UNECA)

Experts from Africa’s rail sector gathered this week in Johannesburg to discuss rail transport and how it can be developed to support the grand design for growth on the continent. Addressing the gathering, Vera Songwe, Executive Secretary of the UNECA, said that economic development in Africa needs an efficient, expanded, rail network and described the current condition of existing railway infrastructure and rolling stock in many countries as “sub-optimal.” Elaborating on the numerous opportunities for rail transport development in Africa, she said that with the operationalization of the AfCFTA, large volumes of goods and bulk commodities will be generated to create huge markets for rail transport. Additionally, Africa’s large land mass, which is marked by 16 landlocked countries will encourage the development of high speed, high capacity and efficient transport corridors. “This presents opportunities for rail transport development in Africa”, said Songwe adding, “the large-scale urbanization comes with transportation challenges that can only be handled by railways.”

But the railway renaissance comes with a large price-tag for governments and, as noted by Ms. Songwe, states’ financial resources are being stretched to the limit and this becomes even more precarious when commodity prices fall. Innovative business models and an urgent recognition that the renaissance of the African rail sector requires a major injection of capital to bring the infrastructure up to an acceptable level are required, according to Songwe. Furthermore, private sector and public-private partnerships, she said, would give the private sector access to secure, long-term investment opportunities. Private sector partners can profit from PPPs by achieving efficiencies, based on their managerial, technical, financial and innovation capabilities.

Related updates: African rail operators should jump to digital networks, says DB venture architect; Medium-speed rail systems sufficient for Africa, most continents

Zambia, Zim and SA transport experts meet (The Mast)

Speaking during the three-day trilateral joint route management group meeting for Zambia, Zimbabwe and South Africa, transport and communications director in-charge of transport Nicholas Chikwenya called on road transport agencies in the region to develop systems and procedures that would lead to attainment of an efficient transport system. He said the three countries and other SADC members should make joint efforts towards harmonising border regulations as this was essential in reducing the cost of doing business. Chikwenya said there was need for Zambia, Zimbabwe and South Africa to review transport systems and identify factors that hamper the transportation of goods and people along the North-South corridor. He urged the three countries to embrace international best practices and fast-track the process of implementation of the bilateral or multilateral cross-border road transport agreements. And Soko said the meeting in Livingstone was aimed at ensuring the implementation of the establishment of the multilateral forum for member countries and other stakeholders

Channing Arndt, Simon Roberts: Key issues in regional growth and integration in Southern Africa (Development Southern Africa)

The decade to 2015 saw rapid growth in trade between SADC countries. Much of this growth reflected South African exports to its neighbours of diversified manufactured goods to meet growing urban consumption and to supply inputs to mining and infrastructure. While most SADC countries, aside from South Africa, grew quite rapidly over this period, their exports remained oriented to a narrow range of minerals and agricultural commodities destined to go outside the region. Drawing from a series of sectoral studies, we assess key regional issues including the investment and production decisions of firms whose operations stretch across borders, and consider the implications for a bottom-up integration agenda that could build productive capabilities across countries. Our evaluation highlights the importance of the spread of supermarkets, the need to address transport and logistics, and value chains whose competitive advantages are inherently regional, as in the cases of poultry and mining. [Sandy Lowitt: Cross-cutting logistics issues undermining regional integration across SADC]

The African Continental Free Trade Area: The day after the Kigali summit (UNCTAD)

The single market in goods would be created over a transition period of 5 years by the 21 non-least developed countries, and 10 years by the 33 least developed countries. Some 90% of all tariff lines would be subject to progressive tariff cuts. The remaining 10% of tariff lines would comprise (a) sensitive products that can be liberalized over 10 years by the non-least developed countries and 13 years by the least developed countries; and (b) products excluded from liberalization (the list of such products could be reviewed after 5 years through negotiations). The sensitive and exempted product lists should be carefully identified, negotiated and agreed upon, as the exemptions of products actually traded among African countries may undermine the benefits of trade growth.

These connectivity improvements with the larger market can attract investment to stimulate the development of regional and continental value chains, diversification and industrialization across Africa. Moreover, trade within Africa has better quality than its trade with the rest of the world. The former has higher manufacturing (46.3%), and medium- and high-technology content (27.1%) (figures 1 and 2), as well as more product diversity than the latter. Therefore, the Free Trade Area can help African countries expand domestic productive capacity, climb up the value chain and diversify local production and export baskets by facilitating the transformation of commodity-dependent economies into exporters of more sophisticated, processed goods.

Ethiopia pockets $2.35bn from exports over past 10 months (Xinhua)

The amount marked a $64.5m increase compared with the corresponding period in the previous fiscal year, state affiliate Fana Broadcasting Corporate reported, quoting the Ethiopian Ministry of Trade. Boosting the country’s export trade was the Ethiopian government’s major economic goal as it recently devalued the Ethiopian Birr by 15% - a move the Ethiopian National Bank (NBE) said would boost the current fiscal year’s export performance. While agricultural products remain the largest contributor of export earnings, with $1.79bn during the past 10-months, the Ethiopian government has recently revealed the addition of natural gas as one of Ethiopia’s major export commodities in the near future.

South Africa: Staff concluding statement for the 2018 Article IV mission (IMF)

Externally, tighter global financial conditions and capital flow volatility recently experienced by EMs bring to the fore a risk of sudden reversals in investor sentiment. Structurally weak growth in key advanced markets, or a disruption in trade due to growing protectionism could widen the fiscal and current account deficits, and dampen growth. Weakening growth in South Africa could have negative and lasting spillover effects on neighbouring countries. The time is now to put the South African economy on a trajectory toward strong and inclusive growth. Removing policy and regulatory uncertainty, combined with forceful implementation of an ambitious reform agenda would further strengthen confidence, attract private investment durably, support job creation, and distinguish South Africa further from other EMs at a time sentiment towards EMs is weakening.

Kenya, Singapore ink deal to cut taxes, boost investments (Business Daily)

Treasury secretary Henry Rotich and Singapore’s Trade and Industry minister Koh Poh Koon signed an agreement on avoidance of double taxation committing to give up levies already collected in each other’s jurisdiction. “We have had a long negotiation on these documents which we have finally signed today,” said Mr Rotich. “We hope to see more Singaporean investments set up here in Nairobi and vice versa.” Trade between the two states has nosedived in the last five years with Kenya’s annual imports falling from Sh19.4bn in 2013 to Sh5.8bn last year and exports dropping from Sh1.8bn to Sh375m. [Enterprise Singapore opens overseas centre in Kenya]

Indian, Rwandan companies to do business under the Rwanda Innovation Growth Programme (New Times)

Over 10 Indian and Rwandan companies have finally signed Business Engagement Agreements for the first year of India-Rwanda Innovation Growth program focusing on four sectors that include agriculture, IT, health and energy. This was revealed on Monday this week during a Business Acceleration and Capacity Building Workshop in Kigali. The National Industrial Research and Development Agency and the Federation of Indian Chambers of Commerce & Industry are implementing the India-Rwanda innovation growth program programme. A database of over 230 Indian technologies in over 26 value chains have been identified and ready for acquisition by Rwandan existing entrepreneurs, public institutions and business startups. [India, South Africa bilateral ties: New opportunities in trade and investment]

Private Equity Africa Investor Summit: address by UK’s Africa minister, Harriett Baldwin (DFID)

We know that private equity is a vital source of financing for growing businesses, yet the total fundraising into the African private equity market in 2016 was just $1.6bn. This is less than 1% of the total UK financial flows into Africa. I think you will agree that there is clearly room for growth for the private sector and for private equity. The good news is that we can see healthy signs of investor interest and an appetite for investment opportunities that make a difference to people’s lives: 12% of impact investing is in Sub-Saharan Africa and it is growing. We are working across Government to mobilise private investment into Africa in three key ways:

UN to partner with Africa to lower cost of remittances (Xinhua)

Bishar Hussein, Director General of the International Bureau of the Universal Postal Union, told Xinhua in Nairobi that the Regional Project on Electronic Postal Payment Services in Africa will make the national postal sector play a key role in facilitating financial remittance for international migrants. “We are going partner with the International Organization for Migration to leverage on the expansive network of government owned postal sector to bring down the cost of remittances in Africa to about 5% in order to promote financial inclusion,” Hussein said during the 25th East African Communications Organization meeting of assemblies. Hussein said some commercial firms charge above 10 %for African migrants to remit money back home. He said state owned postal firms are ideal partners because they are mostly nonprofit making entities and have branches in even the remotes villages of Africa. The first beneficiary of the Regional Project on Electronic Postal Payment Services in Africa will be Burundi.

Craig Atkinson: From Facilitation 2.0 to trade policy 3.0 – opportunities to expand and extend the rules of global trade (ICTSD)

This discussion provides a response to the piece by Meléndez-Ortiz and explains that the promise of Facilitation 2.0 is well-aligned with my classification of the functional, version history of trade policy. Both are relevant to policymakers and negotiators in conceptualising trade rules in the digital era. [Roberto Azevêdo: World trade has fought its way back to health. These tensions risk it all]

Today’s Quick Links:

African Trade Insurance sees annual portfolio doubling to $7bn by 2022

Quality key to international trade: Minister Rob Davies

First Stears Summit: The future of money, markets and marketplaces (24 July, Lagos)

Global Illicit Trade Environment Index: downloads

Trade impact of the Belt and Road Initiative

UN chief welcomes formation of unity government in Madagascar

David Donaldson – Sherlock of Trade: a profile and a podcast by Bruce Edwards


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