tralac’s Daily News Selection
A reminder that the SACU Heads of State Summit took place today in Gaborone. SA’s President Ramaphosa will be accompanied by the Minister of Trade and Industry, Dr Rob Davies, and the Minister of Finance, Mr Nhlanhla Nene.
Final Inquiry report: pdf Australia’s trade and investment relationships with the countries of Africa (1.54 MB) (Parliament of Australia)
In its submission to the inquiry, the Department of Foreign Affairs and Trade provided information on trade between Australia and individual African economies. This data indicates that the goods trade with South Africa is, by a wide margin, Australia’s most valuable trade relationship with an African country. In 2016, Australia’s trade with South Africa was valued at over $2bn. As shown in Figure 1 below, Australia’s major merchandise exports to Africa, in 2016, were largely concentrated in the primary industries, with aluminium ores, wheat, coal, vegetables, meat and wool all featuring in the top 10 exports. Civil engineering equipment and parts, and specialised machinery, together formed 12% of merchandise exports to Africa.
The top five export destinations for Australian goods to Africa in 2016 were: South Africa (aluminium ores, coal, machinery and parts); Egypt (vegetables, wheat, wool); Mozambique (aluminium ores, wheat); Nigeria (wheat, edible products); Ghana (civil engineering equipment and parts, machinery and parts). As shown in Figure 2, Australia’s major merchandise imports from Africa, in 2016, were concentrated in crude petrol and passenger motor vehicles which accounted for 84% of imports. The top five goods import sources from Africa in 2016 were: South Africa (passenger motor vehicles, ores and concentrates); Gabon (crude petroleum); Algeria (crude petroleum); Rep of Congo (crude petroleum); Equatorial Guinea (Liquefied propane & butane).
Australian mining in Africa: Australia’s current commercial activity in Africa is strongly focused on the extractives sector. While reported figures vary, submissions to the inquiry have indicated that at least 170 Australian Stock Exchange-listed mining and other resource companies are operating in some 35 African countries, with the scale of exploration, extraction and processing involving current and potential investment estimated to be worth more than $40bn. Australian mining companies in Africa are active across a broad geographical area, in both the operation of mines and the exploration of future projects (see Figure 3 below).
Profiled recommendations: Recommendation 1: That the Australian Government continue to actively monitor the emerging Continental Free Trade Area with a view to best position Australia to take advantage of it when it comes into force and ensure that businesses and the public are kept informed of the benefits of this agreement. Recommendation 2: That Austrade actively monitor and promote non-extractive trade and investment opportunities in Africa to Australian businesses. Recommendation 5: That the Australian Government explore opportunities to increase the number of Australian ministerial and parliamentary visits to Africa. Recommendation 7: That the Australian Government give further consideration to supporting initiatives that strengthen the regulatory and governance landscape in Africa. Recommendation 8: That the Australian Government review its visa assessment process for African travellers with a view to minimising processing times, increasing transparency and to ensure there are no unintended barriers. Recommendation 10: That the Australian Government consult stakeholders such as the Australia-Africa Minerals and Energy Group on ways to improve data collection regarding Australian mining activity in Africa. Recommendation 13: That the Australian Government consider an Africa round for Business Partnerships Platform funding for African development projects delivered through public-private partnerships.
Ronak Gopaldas: The race to become Africa’s preferred gateway is heating up (ORF)
An intriguing contest is underway to emerge as the “gateway” to doing business in Africa. South Africa, the continent’s largest economy by GDP, is currently in pole position by virtue of the size, sophistication and connectivity of its economy to the rest of Africa and the globe. But in the past decade, a series of policy missteps, periodic bouts of xenophobia, a clumsy foreign policy as well as a marked deterioration in its business environment has seen the country lose significant ground to other nations. By contrast, Mauritius, Morocco, Kenya and even Dubai have intensified their efforts to be the preferred launch pads for businesses with a pan-African focus. As the race now hots up, who will emerge as the favourite for this prestigious title? We examine the strengths and weaknesses of each contender.
Aubrey Hruby: African nations are carrying the torch of free trade (The Hill)
The past decade has seen rapid economic growth across many African markets. The next decade will be defined by efforts to institutionalize the growth and ensure sustainability. A single African market of 1.2 billion people with a combined gross domestic product of more than $2 trillion will be a game changer for global trade and investment trends. As the US and China continue to toss tariffs at each other, African countries are deepening collaboration. They are now carrying the torch of free trade.
UNECA’s Dr Vera Songwe: As we work towards the AfCFTA, we must ensure that there is less transboundary corruption within Africa
Ethiopia-US: There are promising signs of economic change in Ethiopia. On 5 June, Ethiopia announced plans to partially privatize leading state-owned enterprises, including Ethiopian Airlines. EAL is the fastest growing and most profitable airline in Africa, registering an average growth of 25% in the past seven years. Following a meeting with Under Secretary Kaplan and the delegation, Ethiopian Airlines Group – parent company of EAL – Chief Executive Officer Tewolde Gebre Marian announced a deal with General Electric to procure 12 General Electric engines valued at $444m, as well as a separate $473.5m 10-year maintenance contract. Aviation is the top market in Ethiopia for US companies, and as of 2016 the export of aircraft and aircraft parts represents 54 of the principal U.S. merchandise exports to Ethiopia. [US delegation visits Ethiopian Airlines; US companies set to speed Ethiopia’s WTO accession]
Kenya-US: Kenya yesterday signed multi-billion shilling partnership agreements with the US government and companies – the majority of them targeting President Uhuru Kenyatta’s growth pillars commonly known as the ‘Big Four’. About 12 deals worth more than $100m (Sh10bn) were signed on the second day of the three-day official visit by 60 US business executives from the US Presidential Advisory Council on Doing Business in Africa. Most of the deals were negotiated during an economic summit that the American Chamber of Commerce held in Nairobi. Mr Kenyatta said Kenya was working to improve trade ties with her peers in the EAC to ensure that investors in the Big Four sectors have access to neighbouring countries such Tanzania, Uganda and Rwanda. The head of the US delegation, Under-Secretary for Commerce Gilbert Kaplan, said US investors were keen on East Africa’s roads, energy and financial services sectors with Nairobi as the hub. “Kenya is first on the list of our priority countries in Africa,” Mr Kaplan said.
African Standards Authorities: updates
(i) South Africa: Rob Davies dissolves SABS board. Trade and Industry Minister Rob Davies has decided to dissolve the board of the South African Bureau of Standards (SABS) with immediate effect and to place the entity under the control of administrators. His decision follows a deluge of complaints over the underperformance of SABS in conducting tests and issuing certificates for products. Davies said the board’s collective response to his concerns was unsatisfactory and indicated it did not understand its legislative mandate. The representations did not change his view of the board.
(ii) Kenya: KenInvest boss appointed acting Kebs MD to replace Charles Ongwae. Industry, Trade and Cooperatives Cabinet Secretary Adan Mohamed has appointed Kenya Investment Authority chief executive Moses Ikiara as acting managing director of the Kenya Bureau of Standards. In a letter dated June 26 addressed to Kebs chairman Mugambi Imanyara, Mr Ikiara has been appointed for a three-month period with immediate effect. The new appointment at the standards agency comes barely a few days after the arrest of Mr Ongwae and nine others senior officials over the importation of substandard fertiliser suspected to be laced with mercury and circulation of fake Kebs stamps. [Phyllis Wakiaga: War on counterfeits should not imperil legitimate business]
(iii) Tanzania meets deadline in sweets row with Kenya. Tanzania has met Nairobi’s deadline to visit Kenya confectionery, juice, ice cream and chewing gum factories to verify their source of sugar in the products after it restricted the entry of the goods to its market. Dar and Kampala slapped a 25% import duty on Kenyan confectionery, juice, ice cream and chewing gum earlier in the year, claiming use of zero-rated industrial sugar imports. Kenya threatened to retaliate against Tanzania made goods if Dar es Salam revenue and standards bodies failed to visit local factories by Sunday to verify their sugar sourcing. Tanzanian team arrived Monday and held talks with Kenya officials besides making the factory visits in a fresh attempt to resolve the trade spat.
BRICS Summit to push value-added trade (Financial Express)
According to media reports, South Africa is planning to reach out to other African nations for industrialisation and infrastructure development in the continent. Rwanda (chair of the AU), Namibia (incoming chair of SADC) and Togo (chair of ECOWAS) will take part. The head of NEPAD, the president of AfDB and chiefs of six regional executive committees have also been invited. Countries such as Argentina, Indonesia, Egypt and Turkey have also received invitation for the BRICS-plus Outreach. [BRICS Summit theme: BRICS in Africa – collaboration for inclusive growth and shared prosperity in the 4th Industrial Revolution]
Ghana: Statistical Service postpones rebasing of economy (GhanaWeb)
The Ghana Statistical Service has announced that it has rescheduled the rebasing of the economy to September this year. The service had earlier announced that it would complete the process of rebasing the economy by May 2018 after earlier postponements. Explaining the reasons behind the postponement, Acting Government Statistician Mr Baah Wadieh stated that the new date is to enable the service engage all stake holders before the exercise. “It is important that the figures are quality assured, so certain quality measures are being put in place.” [Ghana: About GH¢13bn accrues from mobile money monthly]
Rwanda has launched the fourth Agriculture Transformation Strategy (PST4) that is designed to significantly increase farm productivity and promote value addition to food. The five-year plan, which runs from 2018 until 2023, will cost Rw2.7 trillion, according to the Ministry of Agriculture and Animal Resources. The strategy has four priority areas; innovation and extension, productivity and resilience, inclusive markets and value addition as well as enabling environment and responsive institutions. The Prime Minister said that agriculture GDP grew at 6% on average in the concluded PSTA3, pointing out that in the PSTA4, the target is to achieve an average of 10% of the sector’s growth.
Ethiopia will begin extracting crude oil on a test basis from reserves in the country’s southeast this week, state-affiliated media and the prime minister’s office said on Wednesday. Prime Minister Dr. Abiy Ahmed yesterday met with the representatives of Poly-GCL Petroleum Investment Limited to officially kick start crude oil production test in Ogaden Region. The company has discovered that there is a prospect of commercial quantities of crude oil in the region. The firm is a joint venture of state-owned China POLY Group Corporation and Hong Kong-based Golden Concord Group. The state-affiliated Fana media quoted Abiy as saying 450 barrels would be produced on Thursday on a trial basis.