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tralac’s Daily News Selection

tralac’s Daily News Selection

11 Jul 2018

Launched today in Addis Ababa: The inaugural Africa’s Development Dynamics 2018 report

Africa needs development strategies that are more coherent and that prioritise improved public action to stand up to the challenges of growth, jobs and inequalities prompted by the continent’s remarkable emergence, according to the first issue of a new joint report by the African Union Commission (AUC) produced in collaboration with the OECD.

Tunisia initiates WTO dispute complaint against Moroccan book duties: this is the WTO’s first intra-African dispute and the first dispute initiated by Tunisia at the WTO.

Posted by the WCO: Framework of standards on cross-border e-commerce

The WCO has published the pdf Framework of Standards on Cross-Border E-Commerce (129 KB) , as adopted at the end of June 2018 by the Council, the Organization’s highest decision-making body, together with a Resolution aimed at ensuring its harmonized and effective implementation. Building upon the key principles laid down in the Luxor Resolution adopted in 2017, the Framework of Standards sets out baseline global standards on cross-border e-commerce. It contains 15 Standards that are concise, progressive and focused on the e-commerce environment, with a view to providing pragmatic, fair and innovative solutions whilst taking into account the diverse expectations and concerns of Customs administrations and stakeholders. Going forward, the Framework of Standards will be further enriched with Technical Specifications and Guidelines for its expeditious and effective implementation in a harmonized manner.

The State of African Cities 2018: the geography of African investments (UN-Habitat)

The report focuses on four industrial sectors: manufacturing, services, high-tech and primary resources. It contends that, if “guided wisely” and with the appropriate financial and policy interventions, FDI can help alleviate urban poverty and unemployment by supporting Africa’s transition towards growth led by manufacturing and knowledge-intensive industries, such as services and high-tech, rather than by primary resource sectors. According to the report, high-tech has the highest FDI growth rate in Africa, while manufacturing FDI has the largest share of investment and is the most important in terms of employment generation, with both sectors reducing income inequality if local skills are used.

The report explains that, while 15% of the world’s population resides in Africa, only 5% of global FDI goes to the continent. However, Africa’s FDI growth rate is the second highest in the world, with FDI comprising a third of foreign financial resources flowing to Africa. North Africa receives most of its FDI from Europe and the Middle East, while Eastern Africa’s FDI mostly comes from Asia, especially China. The report identifies Africa’s main FDI centres as Cairo, Egypt; Lagos, Nigeria; Johannesburg, South Africa; and Nairobi, Kenya. It suggests that these and other major African urban hubs diversify their economies to better complement one another. The report makes city-level, country-level, regional-level, continental-level and global-level recommendations, calling for...

Country news, updates

Tanzania to shut down loss-making State firms (Business Daily)

Tanzania will shut down loss-making state-owned enterprises and retain only those that post profit annually, the country’s Minister for Finance and Planning Philip Mpango said on Tuesday. Speaking at the official opening of a workshop on the role of SOEs, Mr Mpango noted that there are now more than 400 government-owned firms in the country. “The government will not hesitate to close down loss-making SOEs to reduce the burden of running them. I’m not happy to see State-owned firms failing to pay dividends to the government. These firms have to go. There are no more excuses.” He said he had already directed the Treasury Registrar to audit all the companies and identify those making losses for closure.

Losing to blackouts: evidence from firm level data (IMF)

Many developing economies are often hit by electricity crises either because of supply constraints or lacking in broader energy market reforms. This study uses manufacturing firm census data from Ethiopia to identify productivity losses attributable to power disruptions. Our estimates show that these disruptions, on average, result in productivity losses of about 4–10%.

Better loans or better borrowers? Impact of meso-credit on female-owned enterprises in Ethiopia (World Bank)

The paper investigates the impact of credit to female entrepreneurs in a novel context, by examining larger loans, provided to growth-oriented women entrepreneurs in Ethiopia. These entrepreneurs fall in the “missing middle” or “meso-finance” segment of the financial market because their credit needs are too large for microfinance, but not large enough for commercial banks. [Informing durable solutions by micro-data: a skills survey for refugees in Ethiopia]

What noodles can teach us about Nigeria’s reluctance on free trade (CS Monitor)

If you want to understand why trade is such a contentious topic for Africa’s largest economy, just consider the noodles. The instant noodles, to be precise. Over the last three decades, those iconic bricks of dried wiggly dough – known locally as Indomie after a popular brand – have become a staple of the Nigerian diet. Today, in fact, the country has the 12th largest instant noodle market in the world, with 1.76 billion servings of the starchy stuff sold here each year. And thanks to a government ban on noodle imports, almost all is locally produced – a rarity in a country that imports many of its staples.

Kenya: State imports double despite order on local goods quota (Business Daily)

The value of goods ordered from abroad by State departments and parastatals more than doubled in the first four months of the year, pointing to rising appetite for foreign goods in public offices. Import orders placed by the government hit Sh22.33bn in the January-April period, a 133.17% surge compared to a bill of Sh9.58bn paid in the same period in 2017, data collated by the Central Bank of Kenya shows. That is the largest four-month import order since President Uhuru Kenyatta took the reins of power in April 2013 with a directive to ministries and parastatals to stop importing goods which are manufactured locally. [George Wachira: Proposed local content law will only create regulatory confusion]

Kenya Trade Week: preview (Global Times)

Chris Kiptoo, Principal Secretary in the Ministry of Trade and Industry, observed that Kenya is planning to take advantage of the numerous bilateral and multilateral trade agreements signed to diversify export markets. “We also want to push more exports into lucrative markets such Ethiopia, Democratic Republic of Congo, Nigeria and Angola.” He said the government has set a target to create over 1.3 million jobs manufacturing in the next five years through access to key strategic markets in Africa, Europe and the United States. Peter Biwott, the CEO of the Export Promotion Council, said the National Trade Policy will guide Kenya to transform into an export-led economy. Biwott said that the policy will provide a vital nexus between the country’s efforts for investment promotion and trade development. [Related: Kenya seeks new AGOA terms as exports stagnateMPs claim Rotich, Bett allowed duty-free sugar imports after deadline]

SADC Committee of Ministers of Finance and Investment: remarks by SADC’s Dr Stergomena Tax (SADC)

The SADC Integrated Regional Electronic Settlement System (SIRESS) has made progress, moving from single currency settlement system (Rand settlement) into a multi-currency settlement system, with the US Dollar as the additional currency of settlement. Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019. Noting that the facilitation of payments remains a key challenge to intra-SADC trade, the addition of the US Dollar, that account for about 60% of intra-SADC cross-border transactions is expected to facilitate greater cross-border trade and investment in the region. Progress has also been made in making SIRESS a more inclusive payment platform, which will also deal with low value cross border payments in the region.

African Trade Insurance Agency to pay first dividends to shareholders

The African Trade Insurance Agency has announced that its general assembly has approved the first ever payments to shareholders. ATI has earmarked an initial $2.5m in payments to its shareholders which include 14 African member governments. In 2017, ATI recorded gross exposures of $2.4bn and, in the same period, the company covered investment and trade activities across the continent valued at $10bn. ATI also posted a $10m profit, representing a 55% increase over 2016.

Central African Economic and Monetary Community: IMF staff report

While improving, CEMAC’s economic situation remains fragile. Growth picked up slightly but remains well below potential. Governments’ fiscal consolidation efforts, along with BEAC’s tighter monetary policy and stricter enforcement of foreign exchange regulations, have contributed to a significant reduction in the region’s fiscal and external imbalances. However, fiscal slippages in some countries contributed to the underperformance of international reserve accumulation in early 2018. Looking ahead, a further improvement in the economic and financial situation is projected, assuming full implementation of policy commitments by CEMAC member states and regional institutions. This outlook remains subject to substantial risks from possible weaker program implementation, lower oil prices, and insufficient external financing. Extract: The large decline in the current account deficit contributed to the stabilization of external reserves in 2017, but these have levelled off in early 2018. The current account deficit contracted significantly by more than 9% of GDP in 2017, reflecting higher oil exports (+2.5% of GDP) and lower imports (-6.3% of GDP).

Cairo high-level policy dialogue on development planning in Africa (UNECA)

Adam Elhiraika, Director of the UNECA’s Macroeconomic Policy Division: “African countries will need to tap into diverse funding sources for their development programmes, from tax and non-tax public revenues, to public borrowing, to private investments, to innovative sources of finance”. He added that estimates of additional financing Africa needs to achieve the SDGs range from $600bn to over $1.2 trillion annually. “It is also clear that we will need more effective use of the available resources. In particular, public financial management must be improved, including through good budgeting and effective resource allocation towards priority areas,” he told senior government officials from member States (pdf), including Finance and Planning Ministers. These challenges, he said, necessitate a financing framework that can manage the finance mobilised from various different sources.

In 2016, Africa’s tax revenues totalled $500bn, which is around 3 times the level of ODA, FDI and remittances combined. Yet tax to GDP ratios on the continent are around 18%, which is low compared to other regions. Boosting tax collection could significantly increase available finance for development, he said. “There are a number of ways in which tax revenues can be increased, for example by formalising or otherwise taxing the informal sector, which is estimated to account for 50 to 80% of GDP in some African countries and remains largely untaxed,” said Mr Elhiraika. He said tackling illicit financial flows, particularly abusive tax practices of multinational corporations, could mobilise substantial additional revenues needed for Africa’s development.

Wednesday’s Quick Links:

Zimbabwe: ED to kick start Beitbridge border post modernisation

Understanding the changing global investment policy landscape and its implications on the EAC: Dar es Salaam workshop

Nigeria: 6600 containers trapped at Lagos ports

Nigeria’s fintech future will be bundled

UNIDO: E-commerce development report of the SMEs of BRICS countries (pdf)

World Bank: How would cross-border electricity trade stimulate hydropower development in South Asia?

Vietnam: 2018 Article IV Consultation

World Bank: An update on Vietnam’s recent economic developments

Unlocking competitiveness: why invest in rural Vietnam?

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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