Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Forthcoming African trade and infrastructure events:  

Pre-TICAD energy sector and Africa Investment Forum seminar (2 August, Tokyo)

UNCTAD's The rise of Africa's Digital Lions (8 August, Johannesburg)

The inaugural IAPH Africa Regional Conference: African ports and hinterland connectivity (17-19 September, Abuja)

COMESA Summit: communiqué (pdf)

On the COMESA Free Trade Area: (i) Noted the progress made in preparation of the instruments for the Digital Free Trade Area, such as the electronic certificate of Origin, and encouraged Member States that are ready to implement the instruments for the DFTA to do so on a pilot basis;  (ii) Stressed the utmost importance of prioritization of programs that promote small scale cross-border trade, taking into account the aspects of gender empowerment and poverty eradication, and called for extension of these programs to cover both goods and services;

On the COMESA-EAC-SADC Tripartite Arrangement: Commended Libya upon its signing of the COMESA-EAC-SADC Tripartite Free Trade Area Agreement at the Summit

Swore in the new Commissioners for the COMESA Competition Commission:  

AfCFTA: Impact on the Nigerian manufacturing sector (The Punch)

Presenting a paper at the AGM of the Manufacturers Association of Nigeria, Lagos branch, Professor Ademola Oyejide drew a comparison between the results of the AfCFTA-induced changes in the real income, tariff, revenues and terms of trade in South Africa and Nigeria.  The professor said that while the changes in real income of South Africa would be 0.7%, Nigeria would be -0.4%; for tariff on revenues, South Africa would have 5.9% while Nigeria would have -16.7%; in terms of trade, South Africa would record 1.2% while Nigeria would see a change of -0.2%. He also analysed the result of AfCFTA-induced changes in real wages, stating that in unskilled real wages in agriculture, South Africa would have 0.93%; Nigeria, – 0.54%; unskilled real wages in non-agriculture, South Africa, 0.56, Nigeria, 0.12; skilled real wages, South Africa, 0.80%, Nigeria, 0.42%.

Oyejide linked the results to the differences in the features of the two economies. For instance, he said Nigeria was more protectionist in its trade policy than South Africa. And in order to achieve the post-AfCFTA target, the country would have to reduce its tariff and this in turn would put a downward pressure on the economy. He said that Nigeria’s import-export exposure structure was not the same as that of South Africa, adding that South Africa’s import and export structure was better diversified than that of Nigeria that was heavily dependent on imported food products, in spite of its heavy protection of the agricultural sector.  Import bans and tariffs were routinely used by Nigeria to manage this external dependency and any AfCFTA-induced tariff change could destabilise this delicate management process, the don concluded. [MAN moves to combat smuggling: constitutes private anti-smuggling committee]

Namibia: Misgivings over free trade agreement (The Namibian)

Labour Resource and Research Institute of Namibia director Mike Akuupa says the government has not engaged stakeholders enough regarding the implications the African Continental Free Trade Area agreement has on the country. Speaking in an interview with The Namibian, Akuupa said the country did not consider the various protocols contained in the agreement in detail for the country to have a clear understanding of it. “Access to markets is one thing, but what comes with it is another ball game entirely. How is the agreement going to affect the worker, the small businessman, or the manufacturer? What are the finer details on protocols on trade and services, and trade in goods?” Trudi Hartzenberg, Trade Law Centre executive director, said the signing by South Africa and Namibia is important, and that there are no legal consequences arising from this.  Hartzenberg added that the longer-term benefits of the AfCFTA will depend on the specific provisions in the agreement, “for example, keeping in mind that South Africa and Namibia are part of SACU, and that they will negotiate the tariff reduction commitments, collectively, is important. There may well be opportunities to enable trade between member states of SACU and the Economic Community of West African States (such as Nigeria).”

Kenya-UK trade and investment relations: taking stock and promoting exports to the UK (SET, ODI)

This paper and briefing discuss the current state of trade patterns and investment flows between the UK and Kenya, develops tools relevant to help identify key products and promising sectors for export, and proposes a range of policy measures to support these sectors. It is undertaken jointly with the Export Promotion Council in Kenya in support of the national export development and promotion strategy for Kenya 2017-2022. It identifies appropriate sectors for UK exports and discusses a range of measures to increase trade and business linkages between Kenya and the UK. Extract (pdf):

Kenya is losing market share in the UK. Kenya’s export share of its top 20 products in UK imports has halved from 26.7% in 2001 to 13.5% in 2016. Especially in areas of black tea and fresh roses, which are Kenya’s main foreign exchange earners. Kenya is facing significant competition in the UK from other East African countries: Rwanda, Ethiopia and Tanzania. This implies that Kenya either has to improve marketing of its existing products or diversify. There are severe data limitations on trade in services, but the data that do exist suggest service exports to the UK increased 3.6 times in value terms between 2001 and 2012. Transportation and travel services make up the largest share of exports (almost 86% of the total) of services to the UK, followed by insurance and then financial and government services, respectively. The growth rate of financial and insurance services, software, and hardware information and communication technology (ICT) is swiftly overtaking transportation and travel.  [Download: Briefing paper (pdf); Commentary by ODI's Phyllis Papadavid]

Ghana: Mid-year fiscal policy review of the 2018 budget statements and economic policy (full text, Mof)

External Sector Developments:  The provisional trade balance for the period January to May 2018 recorded a surplus of $1,354.89 million, 6.59% higher than the surplus of $1,271.09 million recorded during the same period in 2017. The improvement in the trade balance was as a result of higher export earnings, driven by oil and non-traditional exports which outweighed the value of imports. The value of merchandise exports for the first five months of 2018 was provisionally estimated at $6,910.36 million, indicating an increase of 10.5%, compared with $6,253.46 million recorded in the same period in 2017. High receipts from oil exports accounted for the improvement in export earnings.

Gold exports during the review period amounted to $2,316.66 million, compared to $2,668.01 million during the same period in 2017. The fall in receipts was as a result of a decline in the volume of exports, which was moderated by favourable developments in gold price. The volume of gold exported declined by 20.01% to 1,733,243 fine ounces. The average realised price increased by 8.56% to settle at US$1,336.60 per fine ounce. The value of crude oil exported in the review period was $1,908.22 million, compared to $1,033.35 million recorded in the same period 2017. The increase in the value of the oil export was due to both price and volume effects. Earnings from the exports of cocoa beans and products totalled $1,402.72 million, compared to US$1,612.76 million for the same period in year 2017, representing a 13.02% decline.

Total value of merchandise imports for the period January to May 2018 amounted to $5,555.48 million, up by 8.88% compared to $4,982.37 million recorded in 2017. The increase in imports was as a result of an increase in both oil and non-oil imports.

South Africa: AfDB approves Country Strategy Paper 2018-2022

Articulated around two main strategic pillars, namely, promoting industrialization and deepening regional integration, the country support plan will help accelerate South Africa’s economic transformation and re-industrialization agenda for inclusive growth, job creation and social equity. As part of the plan, the African Development Bank will support programs and initiatives with cross-cutting themes that include gender equality, climate change, green growth and assist South African authorities in strengthening governance in public institutions. The Bank will leverage its knowledge and institutional resources to provide policy advisory to the government and attract investments to the country’s private sector. Additionally, it will support reform efforts aimed at repositioning State Owned Enterprises as efficient vehicles for industrialization and economic transformation. The  support package comes at an interesting time for South Africa.  [Note:  the CSP is not yet available for download on the AfDB's website]

Development Compact for Lusophone African countries: AfDB update

The Compact will strengthen the role of the private sector in advancing sustainable and inclusive development in Portuguese-speaking African countries (PALOPs). “The AfDB recognizes that Portuguese-speaking African countries do not form contiguous economic blocks similar to the French- or English-speaking zones. They therefore tend to be marginalized,” remarked Adesina during his speech. While there are similar characteristics binding these countries, “the situations in each of the Lusophone African countries differ from one to another,” said Adesina. “No one size will fit all. The Compact is not going to duplicate existing initiatives.” [Africa50 meeting: Kenyatta and Adesina call for accelerated private sector investment in infrastructure]

Namibia secures R3bn budget support loan from African Development Bank (AfDB)

The program builds on Phase 1 approved last year, which has achieved positive results. These include reduction of the budget deficit from 8.2% of GDP in 2015/16 to 5.4% in 2017/18. It has also helped to improve the country’s liquidity situation at a time when domestic market liquidity was low, occasioned by constrained cash flow; and funding to retire pending invoices in critical ministries, including education and health, which helped to avoid a looming crisis of private credit crunch.

West Africa:  Incentives and constraints of informal trade between Nigeria and its neighbours (West African Papers, OECD)

This paper explores (pdf) how policy choices and government actions continue to drive informality and the critical steps that might be taken to create a business environment that is more conducive and supportive of trade between West African neighbours on a formal basis. It goes on to examine the steps that have been taken since 2015 regarding trade promotion by West African states and considers the options for further policy action and public investment. The discourse in this paper will seek answers to two key questions: How has the regional environment been improved to encourage more of Nigeria’s trade with its ECOWAS neighbours to take place on formal terms with more officially recorded transactions? Also, what do current policy choices and government actions by regional decision makers tell us of their understanding informality?

Lagos seeks Buhari’s intervention to end Apapa gridlock (ThisDay)

The Lagos State Government, Thursday, lamented the intractable traffic congestion, which had crippled commercial activities in Apapa and other parts of the state and appealed to President Muhammadu Buhari to save the situation. The state government also set up a joint operation involving security agencies and stakeholders in the maritime sector to remove all trucks and tankers parked along the Oshodi-Apapa expressway with immediate effect. The Commissioner for Information and Strategy, Mr Kehinde Bamigbetan said the state government, at a meeting with stakeholders, blamed the renewed congestion on the recalcitrance of owners and drivers of articulated vehicles to fully comply with the subsisting directive that restricts their movement within the state.

Caroline Freund: Impacts on global trade and income of current trade disputes (World Bank)

Our analysis shows that a tariff escalation, coupled with a shock to investor confidence, could reduce global exports by up to 3% ($674 billion) and global income by up to 1.7% ($1.4 trillion) with losses across all regions. A major concern is that firms will delay investments because of uncertainty over market access, reversing the ongoing recovery in global trade and investment. Looking at the possible impacts of tariff escalations on developing countries, we see that third-party countries can benefit from increased preference margins in the US and Chinese markets when the two trading partners impose tariff surcharges. But, when investor confidence is shaken, these gains are more than offset for all regions by negative income effects. In this scenario, income losses range between 0.9% for South Asia and 1.7% for Europe and Central Asia.

Friday's Quick Links:

BRIDGES:  US, African officials prepare for post-AGOA trade future

S&P Global Ratings: Emerging market sovereign rating trends for mid-year 2018

Ghana’s debt hits GH¢154bn; reaches 63.8% of GDP

Zambia’s external debt swells to over $9bn – Mwanakatwe

Uganda, Egypt trade volume rises

Nigeria: FG to boost intra-Africa trade with metrological infrastructure

Nigeria to need up to $300m for new national carrier - document

Dangote Cement lists N50bn commercial papers in FMDQ

ARM's Nigeria Strategy Report: Nigerian fiscal - déjà vu all over again?

United Capital Report: Nigeria Outlook H2-18 - caught between two stools


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