Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Donata Kiiza

A reminder: The Southern African Structured Trade Seminar is underway in Livingstone. For Twitter updates: #SAST2018

WTO’s Trade Facilitation Agreement: update

“Almost 85% of WTO members have now completed their domestic ratification processes. This is great progress, but of course there is more to do,” DG Azevêdo said at the launch of a new report Trade facilitation and the global economy published by the OECD. “We all know the potential that the TFA has to cut trade costs. This report takes a closer look at why this matters. For example, it highlights the difference that this will make for MSMEs, which often face a prohibitively high cost of trading. It also highlights the fact that inefficient border procedures multiply the costs when goods and components cross borders many times during their production,” DG Azevedo said. As of 26 June, the current rate of implementation commitments of the Agreement stands at 60.4%. Broken down by level of development, this equates to a 100% rate of implementation commitments by developed members, 59.1% among developing members and 21.6% among LDCs according to the TFA Database.

Carlos Lopes: A continental trade bloc could transform Africa’s economies (Chatham House)

This breadth of coverage reflects growing recognition of the limitations of economic development predicated on low-end exports. The shifts occurring in the Chinese industrial model are illustrative, heralding the end of export-oriented manufacturing as a driver of structural economic transformation. With cheap labour and other comparative advantages, Africa can still profit to some extent from the delocalization of low-value manufacturing. However, with the continent a latecomer to industrialization, the prospects of such a model on its own providing a durable boost to employment or GDP growth are minimal. Rather, the real opportunities lie in manufacturing for the African consumer market. With a combined GDP in 2017 of around $6.4 trillion on a purchasing power parity (PPP) basis, a population of 1.2 billion, favourable demographics – given its youth bulge and rapid urbanization – and a burgeoning middle class, the continent is potentially attractive to global brands anxious to expand from mature markets. From an African perspective, the concern is that opening domestic markets could render local companies less competitive. However, AfCFTA’s common external tariffs will offer some breathing space. Exempt from such tariffs, African suppliers may be in a stronger position to develop regional value chains in closer proximity to their target markets – this may help emerging local firms to develop until they can compete with established international players. [Note: This article is a contribution to the new Chatham House volume: Risks and Opportunities in International Affairs (pdf); Juliet Anammah, CEO of Jumia Nigeria: AfCFTA will foster partnerships among e-commerce firms]

14th NCIP Summit: updates

EAC leaders commit to hasten implementation of regional projects. Leaders of EAC states implementing joint infrastructure projects on Tuesday agreed to speed up their implementation during a review of the progress at the 14th Summit of the Northern Corridor Integration Projects, which was held in Nairobi on Tuesday after a two-year break. President Paul Kagame said the resumption of the review meetings held by all EAC members except Tanzania and Burundi will bring in new momentum to enable the region to complete the joint road, railway and power projects.

Outcomes: To ease the circulation of petroleum products in the region as a key source of industrial and domestic energy, the leaders agreed to come up with ‘the Lake Victoria intermodal transport system’ pending consultations on re-scoping of refined petroleum products pipeline. On the setting up of a commodities exchange, the Summit received an update on the harmonisation of standards for commonly traded commodities and directed partner states to fast track the process.

East African leaders push for quick deal on SGR. Ministers in charge of implementing the NCIP in Kenya, Uganda, Rwanda and South Sudan have until September to conclude financing agreements for construction of Standard Gauge Railway in the region. The financial agreement is for the construction of Naivasha-Kisumu, Kisumu-Malaba, Malaba-Kampala sections that fall within the NCIP. The Heads of States Summit further directed that the application for financing of the Kampala - Bihanga - Mirama - Kigali, Tororo - Gulu - Nimule / Gulu-Pakwach section be expedited. [NCIP leaders agree on common satellite project]

Downloads from recent regional conferences:

(i) The NEPAD Dialogue on Advancing Infrastructure Development in Africa:

Opening remarks by Symerre Grey-Johnson: For the previous 10 years, NEPAD Agency, the AfDB and other relevant partners have dedicated time and energy to assess Africa’s need in terms of infrastructure development, identify and prioritize and classify transformative and development impactful regional projects, evaluate the challenges and continuously design responsive instruments to those challenges. This journey led to the endorsement of PIDA as the continental flagship program and policy framework, development of PIDA Capacity building project, establishment of the Project Preparation Facility Network, the Continental Business Network and the PIDA Service Delivery Mechanism, etc. Most recently, the NEPAD Agency launched the 5 % Agenda Campaign and the AfDB inaugurated the Africa Investment Forum. It is time that we consolidate these efforts. We need a systemic and integrating strategy of Project Preparation and Project Financing, an approach capable to help us moving infrastructure projects from concept to financial close through an efficient use of all these instruments and initiative.

Brief on PIDA Job Creation Toolkit: To serve as a practical tool catalyzing a new African jobs focus in the development and operation of Africa’s infrastructure projects, maximising the number and quality of African jobs. Key value-added features: Uses National Input-Output Tables, leveraging decades of job estimation approaches used worldwide by multilateral organizations (e.g., World Bank, OECD, etc.) and governments of both developing and developed countries; Includes Full Spectrum of Job Creation; Provides Labor Market Information – Breaks out project job estimates by economic sectors for planning of skills development & education programs; and Serves as Advisory Tool for Job Creation Interventions: Provides Policymakers, Project Owners, partners and other stakeholders with range of job maximization policies, programs, processes, etc. with case study examples and resource links.

NEPAD CBN - 5% Agenda Campaign: Developing Innovative project financing mechanism. (i) NEPAD Agency will play its role of coordination and lead facilitator institution in to gather all the Development Finance Institutions (DFIs) and the Multilateral Development Banks (MDBs) with the sole aim of having a frank and open discussion on the establishment of a and aggregated scheme. (ii) Pool all the partial guarantee instruments into a “big facility” that will provide for 100% financial guarantee for institutional investors such as Pension and Sovereign Wealth Funds and Insurance Companies to invest comfortably in PIDA and trans-boundary infrastructure projects. (iii) The “big facility” will serve as the guarantee mechanism that will payout in the case of payment defaults by project owners/operators through African Ministries of Finance. [Plus: NEPAD-AU 5% Agenda: Attracting institutional investors in African infrastructure development; African Infrastructure Guarantee Scheme; African Infrastructure Guarantee Facility]

(ii) The UNECA Southern African Office workshop on Corruption and the challenge of economic transformation in Southern Africa: explore the seven presentations made available to tralac for posting on its website

(iii) AfDB, World Bank Second Global Roundtable on Infrastructure Governance. Exploring the strategies for building the right infrastructure and winning the war against corruption, panelists noted that a stable political, economic legal regime and environment was desirable. They argued that private investors generally look at returns on investment in infrastructure business as a priority rather than ensuring long-term public interest. The discussions focused on the importance of a strategic planning involving the government, the project beneficiaries as well as the private investor, while undertaking the economic evaluation prior to launching a viable infrastructure project. They also stressed the need for the private investors, not only to deliver under a high level of good governance, but invest in sustainable infrastructure and also plan for long term technological update. [Background to the Abidjan Roundtable on Infrastructure Governance; World Bank Blog]

Algeria’s parliament backs higher customs duties in place of ineffective import ban (Reuters)

Algeria’s lower house of parliament approved on Monday a government plan to lift a largely ineffective ban on imports of many goods and replace it with customs duties of between 30 and 200%. A committee made of the ministries of trade, finance and industry will be set up to determine the list of goods to which the duties will be applied, the government said. At the start of this year Algeria banned the import of 851 products, including mobile phones, home appliances and some foodstuffs, but the measure had little impact on imports, which have mostly continued in defiance of the ban.

Rwanda: Trade deficit reduces by 1.4% (New Times)

Rwanda’s trade deficit reduced by 1.4% in the first five months of 2018, compared to 2017, latest statistics from the central bank show. This was attributed to an increase in formal exports revenues by about 29% which outweighed an increase in formal imports, at 9%. The trade deficit as of January this year had gone down to Rwf1271.8B from Rwf 1624.5B in 2016. The reduction of the trade deficit has seen the Rwandan Franc remain stable against the dollar with the central bank projecting that annual depreciation will be at around 4.5%. [Rwanda: Why loans to private sector went down in 2017]

Tanzania to boost earnings from cotton exports (China.org)

Mary Mwanjelwa, the Deputy Minister for Agriculture, told the National Assembly that the plan is to increase cotton exports from the current $30m to $150m by 2020. “We have a number of strategies that have been implemented since 2017 to ensure cotton production surpass the 600,000 tonnes mark,” said Mwanjelwa, adding that the improved quality of the seeds also added value to the commodity. She noted that the plan is a new blueprint adopted by the government and other stakeholders to improve the production of cotton in the country, and the government is working to re-establish some internal systems starting with the production of seeds. [This is why cashew nuts have gripped Tanzania’s parliament]

MARKUP initiative to boost market access to Europe for East African SMEs (ITC)

Agribusinesses in EAC countries are to benefit from greater business opportunities in both East African and European markets thanks to a new initiative funded by the European Union. Central to MARKUP will be improving the compliance of SMEs with international quality and standards requirements. Improving awareness and transparency related to sanitary and phytosanitary measures, as well as on technical barriers to trade, will enable participating SMEs to gain product certification that will ease their efforts to enter foreign markets. A regional steering committee chaired by the EAC Secretariat, which will include representation from relevant national ministries, will provide overall direction for the programme. [East Africa’s exports to EU edge up 8%]

Afreximbank, ECIC announce $1bn programme to promote South Africa-Africa trade

The African Export-Import Bank and the Export Credit Insurance Corporation of South Africa yesterday launched the South African-Africa Trade and Investment Promotion Programme. Afreximbank and ECIC will work together to identify, prepare and appraise trade transactions and projects; explore co-financing and risk-sharing opportunities; and share knowledge, with particular emphasis on intra-African trade matters, through technical cooperation, staff exchange, research and joint events. It would also provide advisory services and guarantees to South African investors seeking trade and investment opportunities in Afreximbank African member countries.

Catherine Grant Makokera, Brian Mureverwi: MDC Alliance targets closer links with regional bodies (Business Day)

If it came off, a proposal by Zimbabwe’s official opposition to join SACU, the oldest customs union in the world, one that is anchored in SA’s membership, would be far-reaching. Even more profound would be the move to join the region’s monetary union. To appreciate the implications of the MDC Alliance proposal it is important to understand a few key points:

Impasse in transforming SADC-PF into a parliament – Angolan MP (EIN)

The impasse in the transformation of the SADC Parliamentary Forum into a regional parliament is due to the fear of losing sovereignty by some of the countries that make up the regional organization, said the Angolan MP and spokesperson for the 43rd Plenary Assembly of the SADC Forum Parliamentary, Josefina Pitra Diakité. Among the parliaments of the countries that favour the elevation of the Forum into a Parliament, of the 14 that make up the platform, Diakité highlighted Angola, South Africa, Namibia, Eswatini (former Swaziland), Botswana and Mozambique.

Wednesday’s Quick Links:

Linda Calabrese: Rwanda’s used clothes sellers are struggling

Rwanda steps up crackdown on used clothes

Nigeria’s fertilizer consumption rose by 63% in 2017; Ghana’s by 82%

The growth dynamics of new export entrants in Kenya: a survival analysis

AfDB EOI: Development of a new five-year governance strategy to guide lending and non-lending operations on governance in regional member countries

Ghana’s Value for Money Conference: Cost of government projects to be standardized

Water Institute of Southern Africa Biennial Conference: Breaking Boundaries, Connecting Ideas

SADC Ministerial: South Africa to align energy plans with SADC gas master plan

AIIB updates: India’s Modi urges AIIB to boost lending 10-fold to $40 bn: text of speech; No ‘debt trap’ with AIIB, president vows; Civil society sounds alarm on AIIB’s latest ‘hands-off’ lending deal; AIIB chief bats for China’s one-belt plan


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