Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Featured tweet, @WTOAccessions: Did you know that 9 of the 22 countries in the queue for WTO membership are from the African continent? Download: Latest WTO Accessions Newsletter, with updates on various LDCs (Ethiopia, South Sudan Somalia).

Update: The Ministerial Session of the 28th Meeting of the Sectoral Council of Ministers responsible for EAC Affairs and Planning in Bujumbura had to be called off due to a lack of quorum.

38th COMESA Council of Ministers: speech by COMESA Secretary General, Mr Sindiso Ngwenya

My cherished dream is to see COMESA being a borderless economy with regards to trade facilitation. This is within our reach with the application of the blockchain technology which makes it possible for an export document to be a transit and import document. In simple terms what this means is that there is no need to process transit documents and export imports documents for consignments as the sharing of all exports documents from the country, or port of origin, become transit and import documents. This eliminates the need for declaration by freight forwarders at border posts to make new entries in the form of Customs Bill of entries and import declarations.

The provision of this information in advance to all border posts, with the aid of trade facilitation platforms that integrate all trade documents, including Standards and Sanitary and Phytosanitary documents, will eliminate the current business processes that cause delays at border posts. Hence, there is no need to build expensive infrastructure in terms of One Stop Border Posts as transit vehicles and goods will have been pre-cleared. I wish to submit that this application on the Corridor from Mombasa to Kigali reduced transit time from 21 days to 3 days for a truck. The existing technologies and applications, particularly the COMESA Virtual Trade Facilitation System (CVFTS) has these functionalities. The member States participating in the CVFTS will be reaping these benefits in the next six months.

Mukhisa Kituyi, Peter Thomson: 90% of fish stocks are used up – fisheries subsidies must stop (UNCTAD)

Where we stand now, the cost is great: harmful fisheries subsidies are estimated to total more than $20 billion a year. Not only do they fuel overexploitation, they disproportionately benefit big business. Nearly 85% of fisheries subsidies benefit large fleets, but small-scale fisheries employ 90% of all fishers and account for 30% of the catch in marine fisheries. The value of these subsidies could be used instead to invest in sustainable fisheries, aquaculture and coastal community livelihoods to reduce the pressure on fish stocks. Fisheries subsidies come in many forms, and sometimes they are not easy to identify, but one of the main sources is fuel subsidies. Thanks to subsidies, the retail price of marine gas oil varies wildly across countries and regions, with many countries selling below the global average price. [Starting today, in Geneva: 2nd Oceans Forum on Trade-related Aspects of SDG 14]

Country news, updates

Mozambique: Country Strategy Paper 2018-2022 (AfDB)

The new CSP 2018-22 pillars are: (i) Development of infrastructure to enable transformative inclusive growth and job creation; and (ii) Support to agricultural transformation and value chain development. The previous CSP 2011-2015 focused on infrastructure and governance. Extracts:

Economic structure : Mozambique is a Low Income Country with a gross national income per capita of only $460 despite impressive growth for almost two decades, ranking the country 44th out of 54 African countries. Following the adjustment to a market economy starting in 1994, the structure of the economy has remained by and large unchanged since 2000 (see Figure 1), with little structural transformation, registering even a slight deindustrialization (save extractive industries) and featuring a narrow export base and limited integration into global value chains. The Agriculture and Fisheries sector’s share of GDP stood at 24.9% in 2016, compared to 20.1% in 2000. It employs the bulk of the country’s work force (74.6%, 2015) and is marked by low-productivity subsistence-type production patterns and limited value-chains. The country is a net food importer, with 5% of total imports in 2016. The industry / manufacturing sector contributes a meagre 9.6% of GDP in 2016, employs only 3% of the work force, and is dominated by the Mozal aluminium smelter project. Since 2000, the sector experienced a continued decline in its relative GDP share, from 20% to 9.6% in 2016, mainly due to continued sluggish performance of the few SMEs, while other sectors of the economy expanded. The services sector’s contribution to GDP increased from 54.2% in 2000 to 55.4% in 2016 on the back of public sector expansion, increased urban consumption and services to megaprojects. However, the sector currently employs just 22% of the labour force. Main service sub-sectors include wholesale and small-scale retail trade (about 12% of GDP) but with low profit margins and few opportunities of saving and investing; and transport, storage and communication (about 11% of GDP). Since 2010, the extractives industries have been playing an increasingly important role in the country’s economy, reaching 6.9% of GDP in 2016 (from about 2% in 2010), mainly reflecting the start of large-scale coal exports.

Regional integration: While Mozambique is a founding member of SADC, the country is yet to reap the full benefits of regional integration. Mozambique is not a member of other regional integration areas. It has waived duties from all SADC products. It is a growing contributor to the Southern Africa Power Pool, a position that could largely be enhanced with future gas and energy projects. However, apart from South Africa, trade with the remaining SADC countries is low. The further development of quality road, rail and power connections under development to the neighbouring countries, 4 of them landlocked, if coupled with improvements in the business environment, will provide a market for domestic value chains and value addition through in-country processing and industrialization, as well as the creation of a logistics hub. Mozambique ranks 115th out of 122 in the Harvard University’s Economic Complexity Index. The narrow export base and low level of sophistication is reflected in its trade flows: Europe is Mozambique’s 1st export destination (38.6% of total exports, of which 70% is aluminium); South Africa is 2nd (21.2%, mainly electricity and natural gas); Overall 24% of exports go to Asia (mostly India and China). South Africa stands-out as the main origin of imports (30% of total imports, mostly of consumer goods and food), followed by China (8%, consumer goods). [See Annex VI: Country Contextual Analysis] [Download pdf Mozambique Country Strategy Paper 2018-2022 (1.14 MB) ]

Kenya: Quarterly Balance of Payments First Quarter, 2018 (KNBS)

In the first quarter of 2018, the current account deficit improved to KSh 107.9 billion from KSh 129.7 billion in the corresponding quarter of 2017. Merchandise exports grew by 7.1% to KSh 162.9 billion in the first quarter of 2018, while merchandise imports valued on free on board (fob) basis grew by 6.5% to KSh 432.1 billion, in the same quarter. Merchandise trade balance (fob) worsened by 6.1% from a deficit of KSh 253.7 billion in the first quarter of 2017 to a deficit of KSh 269.3 billion in the quarter under review. During the first quarter of 2018, international trade in services registered a surplus of KSh 49.3 billion from a surplus of KSh 38.5 billion in the first quarter of 2017. Receipts from international services increased by 10.8% to KSh 129.4 billion, partly on account of improved tourism earnings. Remittances from the diaspora increased substantially in the first quarter of 2018 and boosted the secondary income to record a surplus of KSh 129.3 billion. [Alarm as Kenya's trade gap increases to Sh495bn]

Note: For detailed data on Kenya's trade patterns, posted by the Central Bank of Kenya: Foreign trade summary, data by month; Value of exports to selected African countries

Botswana: Voluntary peer review on competition law and policy - overview (pdf, UNCTAD)

A fact-finding mission to Botswana took place, 6-1 November 2017. Recommendations addressed to the Government: (i) There should be sufficient allocation of financial and human resources to cover the observed gaps so as to ensure sufficiency at the Authority; (ii) The Authority should be enabled to exercise independence to vary working tools such as the organizational structure without the need for Ministry to endorse the same to allow more flexibility and increased efficiency of delivery; (iii) Consideration should be given to placing sector economic regulation authorities and the Competition Authority under the same central Ministry wherever possible to promote their coexistence, independency and efficiencies.

Tanzania: Can smallholders benefit from the new market opportunities from the extractive industry? (CMI)

The projected boom in the extractive industry will open up new market opportunities for farmers to supply food items for high value buyers such as caterers, restaurants, supermarkets and processors. However, to benefit from rapidly expanding high-end food markets, farmers need to have both the capacity and the incentives to supply their produce at the desired quantity and quality. Extract (pdf): Although the government is actively seeking to leverage this discovery to increase employment and earning for Tanzanians through local content policy, the policy does not directly address the agricultural sector where two-thirds of the labour force is engaged. We found that there is significant market participation by pulse farmers in Southern Tanzania but much less in poultry and vegetables, which are identified as potentially attracting high demand from the extractive industry such as through caterers, restaurants, etc. We also found that many farmers need training in adopting good agricultural practices. Some farmers adopt some of the GAP, but many don’t. This is particularly true for poultry producers.

Transboundary natural resource disputes in Africa: policies, institutions and management experiences  (pdf, UNECA)

Profiled recommendations: (i) There is a need to establish an overarching continental institution responsible for coordinating transboundary regional institutions, support capacity development and use of shared resources and implement the objectives of the Continental Transboundary Resource Sharing Protocol/Policy Framework. A continental institutional framework should be established (perhaps by upgrading the existing AU Border Programme), tasked with building trustworthy communication and cooperation among African States through shared resources; (ii)  The current heightened political and economic tensions over transboundary resources underscore the added significance of prudent border governance. Africa must lead and own the policy framework on the paradigm shift in the border governance agenda. Therefore, it is imperative that Africa develop multi-layered (local, national, regional and continental) transboundary resources governance regimes that are responsive to current and future dispute settlement; (iii) Given the speed needed to settle transboundary disputes, it is recommended that the AU establish a high panel on transboundary natural resources dispute management.

With eye on African market, India readies offers for free trade pact with Mauritius (Business Line)

The choice of items for India for greater market access, though, is not too big as only around 6% of goods in the island nation are dutiable; the rest are already duty-free. However, as Mauritius is part of a host of FTAs in Africa including the just-concluded 44-nation AU FTA, India is hopeful that a bilateral trade agreement with the country could open the doors wider to the entire continent, according to a government official. “In the fifth round of negotiations that concluded in Mauritius last week, we got a clearer picture of what the agreement would be like. While Mauritius understands that the pact can’t be very wide as India’s tariffs are relatively much greater, the Indian side also accepts that actual tariff cuts have to be offered, and merely giving a margin of preference over other countries won’t do,” the official said. The two sides will soon exchange their list of offers. “India has to be careful about protecting its domestic industry in items like sugar and textiles,” the official said.

Mechanized: Transforming Africa’s agriculture value chains (Malabo Montpellier Forum)

The African food and beverage market is projected to reach $1 trillion by 2030. Thanks to advances in renewable energy and digital technology, Africa could leapfrog the stages of technological development other regions have had to undertake, making its mechanization process both swift and extremely lucrative, according to the report. The report addresses concerns that the mechanization of African agriculture could diminish employment opportunities. “Our report busts the myth that mechanization of African agriculture will be labour replacing. When done right, it can be employment enhancing,” commented Ousmane Badiane, co-chair of the Malabo Montpellier Panel. “Mechanization is more than tractors,” commented Joachim von Braun, co-chair of the panel. “This report emphasizes investment opportunities along the entire agricultural value chain – from small farm production, to processing, to transport and storage.”

Analysis of the policies and investments made by seven African countries determined to be at the forefront of mechanization are a key feature of the report. Ethiopia, Morocco, Mali, Rwanda, Tanzania, Malawi and Zambia have all shown strong growth in both mechanization and agricultural output. The seven recommendations set out by the report are:

Monday's Quick Links:

IPS: Blue Economy movement gains traction in Africa

Tanzania set to benefit from influx of French investors

How Kenya is exporting jobs worth billions

Zimbabwe: Trade deficit widens by 34% to $1,26bn, February-June 2018

South Africa's Rob Davies: Steel and aluminium exports to US no threat to national security

UAE - South Africa foreign non-oil trade saw 23% increase last year

Central Bank of Nigeria: Trading in Chinese Renminbi to commence before end of July

Ambassador Lin Songtian: BRICS cooperation and China-South Africa relations

Proceedings of the Fifth Congress of African Economists (November 2017, Malabo): summaries, recommendations


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