Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

The Ministerial session of the Sectoral Council of Ministers Responsible for EAC Affairs and Planning takes place tomorrow in Burundi.

African Business interview with Prof Carlos Lopes: ranging from the South Korean development model to the sector most likely to create jobs in Africa.

African Trade Ministers: AGOA remains critical in developing regional value chains in Africa (DTI)

In their remarks to the AGOA Forum, the African ministers emphasised the strategic importance of the AfCFTA to African countries and the need for AGOA to support this objective. In addition, they emphasised the development integration agenda that combines market integration, industrialisation and infrastructure development in boosting intra-Africa trade. Therefore, AGOA remains critical in developing regional value chains that are beginning to develop in the Continent. Minister Davies stated that “the AfCFTA is a game changer for the continent as it promotes structural transformation through development integration. The core objective of the African countries is to move away from exporters of primary products and move up the value chain. The AfCFTA has transformational agenda that must be observed.”

The ministers underscored the need for the AU member states to develop a common position on the trade and investment relations with the US and engage the US as a block with a view to ensure alignment to the integration efforts of the African Continent. “The increase in intra-regional trade supports the emergence of regional value-chains and increase productive capacity in Africa. This presents opportunities for cooperation at a practical business to business level with the US on infrastructure and industrial development towards a partnership that is mutually beneficial to both sides,” said Davies.

The African Ministers also raised a concern with the erosion of AGOA preferences resulting from the recent Section 232 measures on steel and aluminium, and possibly on automotive and auto components. In this regard, the Ministers called on the US to exempt Sub-Sahara Africa exports from Section 232 measures. Furthermore, the Ministers noted with concern the emergence of trade wars which will have negative implications for global trade, especially African countries. [Related: Remarks by Deputy Secretary of State John J. Sullivan at the AGOA Forum; The US and China in Africa: a 2017 posting from the China Africa Research Initiative - what does the data say? (pdf)]

The Intergovernmental Group of Experts on Competition Law and Policy meeting concludes today: download the background documents, submissions (UNCTAD)

(i) Profiled submission, by the Competition Commission of South Africa - Challenges faced by developing countries in competition and regulation in the maritime transport sector (pdf). An estimated 90% of South African trade which includes over 170 million tonnes of freight and 3 million containers annually is handled through the ports. Further, South Africa’s ports serve as a conduit for trade between South Africa and its trading partners in the Southern Africa region. Given this, factors such as ports reliability, speed of cargo handling and price competitiveness are important for South Africa’s global competitiveness and the efficiency of the region’s international trade flows. In South Africa, port services are carried out by Transnet Port Terminals (TPT) with a limited number of private firms offering port services. This invariably gives TPT market power in the provision of ports services. Where market power exists, it is likely that competition concerns may arise and harm consumers. Given the scale of South Africa’s port activities in relation to its trade flows, any abuse of market power has an inimical domino effect on the econom as a whole. Box 2 below sets out the current investigations by the CCSA against both TNPA and TPT in relation to allegations of abuse of dominance. This, notwithstanding the fact that this is a regulated sector.

(ii) Competition policy ensure markets work for people over profit. Fair and competitive markets get consumers the best goods and services at the lowest price – and this improves livelihoods. Estimates show, for example, that a 10% reduction in the price of food staples could help lift nearly half a million people out of poverty in Kenya, South Africa and Zambia alone. Conversely, anticompetitive behaviour – most often associated with cartels – hurt families’ finances. UNCTAD analysis shows that, on average, a cartel leads to a median overcharge rate of 20%. "We believe that governments have to endeavour to make markets fairer and globalization more equitable and inclusive," Dr Kituyi said to a packed room in the Palais des Nations. With the emergence of digital giants, whose market power transcend national boundaries, tackling anticompetitive behaviour will require increased international cooperation.

(iii) Jan Hoffmann: Competition watchdogs and the forces shaping shipping. Competition authorities must analyse alliances, mergers and acquisitions in shipping and consider not only horizontal competition between carriers but also vertical integration between carriers and terminals. For example, when shipping giant Maersk acquired competitor Hamburg Süd, the latter's services may switch from their previous terminal in Buenos Aires to the one operated by APM Terminals - which belongs to the same group as Maersk. But there are several other phenomena shaping shipping in the 21st century that the national watchdogs must also monitor to ensure that trade continues to boost economic progress in developing countries: Bigger seaports, Domestic shipping markets, Hinterland connections, Trade and transit

 DP World warns of legal action in Djibouti row (Khaleej Times)

DP World, the Dubai-based global ports operator, on Thursday warned of legal action, saying Djibouti government's illegal seizure of Doraleh Container Terminal doesn't give the right to any third party to violate the terms of the concession agreement. DP World reiterated in a statement (pdf)that since the concession agreement with the Djibouti government for the Doraleh terminal remains in force, no third party can violate its terms. The global ports operator's warning came amid reports of the opening of the first phase of the Chinese-built International Free Trade Zone, in violation of DP World's exclusive management rights of Doraleh terminal.

Country news, updates

Tanzania: Government urged to get tough over illegal sugar imports (World Bank)

Sugar producers have called for stronger government control over illegally imported sugar, including tougher measures against the culprits, for the continued protection of local industries. Tanzania Sugar Producers Association chairman Ashwin Rana said in a statement yesterday that local producers are now struggling to sell stockpiles of the sweetener due to a glutted market largely caused by the illegal imports. He expressed concern that producers will find it difficult to sell the 348,989-tonne sugar harvest expected in the 2018/19 season, which will be the highest ever for Tanzania.

Kenya seeks fresh COMESA sugar import safeguard (Business Daily)

Kenya has once again written to the Common Market for Eastern and Southern Africa seeking protection against importation of cheap sugar from the region. Kenya will know its fate tomorrow when the 38th session of the Council of Ministers sits to deliberate on the issue. The ministers’ meeting will be followed by the Heads of State and Government forum on Wednesday and Thursday next week that is expected to confirm the appointment of a new Secretary General to replace Sindiso Ngwenya, whose term has come to an end. [Mumias faces Sh1bn sugar export tax bill]

Côte d’Ivoire Economic Update: Robust growth under the looming threat of climate change impacts (World Bank)

The report [in French] notes that private sector activity slowed in 2017 compared with 2016 and especially 2015, which may curb the pace of growth of the Ivorian economy in the coming years. Against the backdrop of fiscal adjustment projected for 2018 and 2019, it is critical that the private sector remain dynamic and become the main driver of growth. This is particularly important in light of the uncertainty associated with the upcoming elections in 2020, which could prompt investors to adopt a wait-and-see approach. As economic growth in Côte d’Ivoire relies in part on use of its natural resource base, the authors of the report devote a chapter to the impact of climate change on the economy. They raise an alarming point: the stock of natural resources is believed to have diminished by 26% between 1990 and 2014. Several visible phenomena attest to this degradation, such as deforestation, the depletion of water reserves, and coastal erosion. According to the Intergovernmental Panel on Climate Change (IPCC), climate change could reduce GDP across Africa by 2% to 4% by 2040 and by 10% to 25% by 2100. For Côte d’Ivoire, this would correspond to a loss of some CFAF 380 billion to 770 billion in 2040. (ii) Key messages in five charts; (iii) Extract from Jacques Morisset blog: The cocoa sector, which is currently the source of livelihood for more than five million Ivorians and accounts for almost 40% of the country’s export earnings, is threatened by rising temperatures and increasingly irregular rainfall patterns that could dry out the soil and reduce its fertility. Given that the solutions that need to be explored—such as the possible movement of crops to higher ground in the western part of the country—are not simple, an adaptation strategy must be devised as quickly as possible.

Ghana: Importers decry high port demurrage charges again (GhanaWeb)

Importers and exporters are appealing to government to ensure shipping lines reduce their charges on demurrage at the ports. According to them, they are being exploited by the shipping lines as they charge huge demurrage on their containers which erodes all their profits on a daily basis.

Egypt: Third Review under the extended arrangement under the Extended Fund Facility (IMF)

The ongoing energy subsidy reform continues to play a key role in fiscal consolidation. The fuel subsidy bill has decreased from 3.3% of GDP in 2016/17 to a projected 2.7% of GDP in 2017/18. It is expected to decline further to 1.8% of GDP in 2018/19, despite the significant increase in world oil prices over the past year. Despite significant increases since the start of the program, prices for fuel products in Egypt remain among the lowest in the world, which benefits the well-off disproportionately rather than the poor. In June 2018, the authorities increased fuel prices by another 44% on average, which raised the pre-tax price-to-cost ratios to about 73%for gasoline, diesel, kerosene, and fuel oil. Additional increases are planned to achieve the objective of full cost recovery by end-2018/19. In June 2018, the Prime Minister approved an automatic fuel price indexation mechanism for most fuel products, which will be implemented by end-December 2018. [Kenya-IMF: IMF update on status of Article IV report]

South Africa: Cyril Ramaphosa's remarks at Saudi Arabia Business Forum (GCIS)

In taking forward the work of this Commission, our Department of Trade and Industry has been supporting visits by South African companies to Saudi Arabia with a view to increasing opportunities in this strategic market. These efforts have begun to bear fruit with impressive growth in the overall trade relationship. South Africa’s exports to Saudi Arabia showed an increase from R2.6bn in 2013 to R4.4bn in 2017. Trade, however, still remains very much commodity based and skewed in favour of Saudi Arabia. It is important as we strive for a mutually beneficial trading relationship to intensify cooperation in value-added sectors such as agro-processing, infrastructure, minerals beneficiation, services, technology and skills transfer, health care, automotives and aquaculture. As the drivers of our commercial agenda, the onus is upon business to seek a more balanced trading portfolio.

Friday's Quick Links:

ICTSD: US, China tariffs begin taking effect, WTO members begin China trade policy review

ICTSD: BRICS trade ministers look to closer economic ties, issue support for multilateralism

UK-Ghana Chamber of Commerce engages Ghanaian exporters

Ghana: Accountant-General to stop state-owned enterprises from banking with commercial banks

Africa Infrastructure Fellowship Programme: WEF update


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