tralac’s Daily News Selection
Starting today, in Addis Ababa: AfCFTA negotiations on Rules of Origin (1-11 August)
Diarise: 38th Ordinary Summit of the Heads of State and Government of SADC (17-18 August, Windhoek)
tralac’s July newsletter is posted: it focuses on the SADC-EU Economic Partnership Agreement
The dialogue (26-27 July, Dakar) brought together over 50 participants comprising policy officials from the AUC, ECOWAS Commission, senior government officials from ECOWAS member countries, the private sector, civil society organisations, research institutions, academia, trade unions, women groups and the media across West Africa. There were other representatives from Central and Southern Africa. The regional dialogue recognized that the AfCFTA could make a positive contribution to Africa’s economic integration and help correct the structural deficiencies facing African countries in world trade. They, however, noted that several challenges need to be addressed in relation to the AfCFTA to make it appropriate for Africa’s development.
First and foremost, the tariffs liberalisation should provide enough space for policies needed in the context of the African Union’s Policy Framework and Vision defined by Agenda 2063 and pillars such as Boosting Intra-Africa Trade, the Accelerated Industrial Development of Africa, and the Comprehensive Africa Agricultural Development Programme among others. Without this the AfCFTA could undermine Africa’s development.
Related to the above is the ability to accommodate the different levels of development of the countries of the ECOWAS region, comprising 4 developing countries and 11 least developed countries. Participants also called for flexible rules of origin with a view to ensuring priority access for African companies to the continental market, development of productive capacities and creation of regional and continental value chains. The rules of origin should also give protection to sectors to ensure linkages within sectors and thereby ensuring that industrialisation takes place.
In relation to services, participants underscored the importance of services sectors such as infrastructure, finance, and energy to Africa’s integration. However, they noted that the liberalisation of services is not necessarily the most appropriate way to realise the potential of the sector. Regional cooperation for building local regional companies could be explored. This is particularly so since most of the areas targeted for liberalisation are dominated by foreign companies as a result of years of Structural Adjustment Programme. [Note: various downloads are available; AFCFTA: A poisoned chalice for the continent?]
South Africa: A R12bn trade surplus for June (SARS)
South Africa’s trade statistics for June 2018 recorded a trade balance surplus of R12bn. The year-to-date (1 January to 30 June 2018) trade balance deficit of R1.79bn is a deterioration on the surplus for the comparable period in 2017 of R25bn. Exports year-to-date increased by 1.5% whilst imports for the same period showed an increase of 6.6%. Top 5 countries for exports in June: United Kingdom (9.1%), China (7.9%), United States (7.0%), Germany (6.5%), India (5.1%). Top 5 countries for imports in June: China (17.5%), Germany (10.6%), United States (6.0%), Saudi Arabia (5.1%), Nigeria (4.3%). [Download: SARS statement, pdf]
SADC Industrialisation Week: We have failed for 28 years – Tweya (The Namibian)
Namibia’s Trade and Industrialisation minister Tjekero Tweya says the government has dismally failed to deliver on industrialisation of the country since independence. Tweya said the government had also failed to put policies in place to facilitate easier trade between Namibia and other countries in SADC and the rest of the world. Instead, he said the government has been making policies and laws to “lock everyone out”, which he said hinders regional integration and industrialisation. “As policy makers, we make policies and we forget about regional integration. We go and make policies to lock out everybody else except ourselves,” he said, adding that the government has also failed to implement SADC policies for regional integration, that “we adopted a couple of years ago” and they have done little to solve the youth unemployment problem, “which is a ticking time bomb”. At the event the minister also mentioned the example of Namibia’s inability to produce toothpicks as testimony of the government’s failure to foster manufacturing.
Kenya Trade Week (and other) updates
Uhuru picks 5 envoys in China, India trade quest (The Standard)
Deputy President William Ruto said yesterday in Nairobi the country had appointed five ambassadors to the two Asian economies with the aim of growing its exports. Speaking at Trade Week 2018, the Deputy President said Kenya’s trade balance was highly skewed in favour of the two Asian giants. He noted that while China and India contribute about 40%of Kenya’s imports, combined exports to the two economies made up a measly 4% of the country’s total exports. “That will have to change; we will have to turn it around. And that is why we are enhancing our diplomatic footprint to support our export strategy,” said Mr Ruto on a day that the Government also unveiled three export strategies. These are the integrated National Export Development Promotion Strategy, the Second National African Growth Opportunity Act Strategy and the Action Plan for 2018-2022 of the Made in Kenya Grand Vision.
The export strategy that was unveiled identifies eight sectors with the potential to triple Kenya’s exports from 8% to 25% of GDP by 2022. Some of these sectors include manufacturing, agriculture, livestock, fisheries, trade and services, and emerging sector such as oil and gas. With the Second AGOA strategy, the country aims to increase the volume of exports to the US and widen their reach. President Kenyatta also announced policy changes to enable the achievement of these goals. “We have agreed to establish the export promotion sub-committee of Cabinet to spearhead the execution of this strategy to diversify and grow our exports.”
Kenya Trade Week: Extract from speech by Peter K. Biwott (CEO, Export Promotion Council)
The realisation of the 15% share of the manufacturing sector would require massive investments in the production of raw materials and value addition and fully taking advantage of the infrastructure to reach the world with the ‘Made in Kenya’ brand. Kenya has signed and ratified the AfCTA, signifying its interest to deepen exports to the continent. Economic history shows improving productive capacity and enhancing market access to neighbouring countries builds a nation’s or region’s base for economic transformation. The history of the EU, where about 28 countries created a monetary union, invested in massive infrastructure such as SGRs and affordable energy, can be emulated. [Related: ‘Made in Kenya’ label to be added to all export products; Ruto: Merge Export Promotion Council with Brand Kenya]
Stimulating a reliable market for maize through public-private partnerships (Global Communities)
With this challenge in mind, Global Communities and Cargill partnered to identify and link Cargill to suitable farmers’ groups that can supply good quality – and sufficient quantities – of grain. In the 2017/2018 harvest season, the partnership facilitated the sale of 6,200 bags (90 kg) of maize to Cargill. This volume came from the sale from just nine farmer organizations that were ready to sell at that time. Preparations are already underway to expand this group up to 150 groups for next harvest season which begins in October 2018. In an effort to scale up the volume, to date, Global Communities has identified and profiled a total of 143 farmer organizations based on their production capacity and potential to be a reliable supplier to Cargill.
Commodity trading set for October – CS Munya (The Star)
Trade Cabinet secretary Peter Munya has said that the national commodity exchange will be functional by October. He said the exchange will enable farmers sell their produce at real time market prices, helping them cut out middlemen. Munya spoke at a panel discussion at the ongoing National Trade Week at KICC, Nairobi. He said lack of market information poses a major challenge to local traders.
Plan to build 11 new ports kicks off (Business Daily)
Rotterdam-based Maritime and Transport Business Solutions (MTBS) is offering consultancy services for developing a master plan for the ports. The Kenya Ports Authority announced on its website that MTBS will carry out the project together with Nairobi based Runji and Partners. The master plan will facilitate the development of the ports “taking due cognisance of the long term development framework as outlined under Vision 2030. The KPA is responsible for the Port of Mombasa and today’s coastal small ports such as Funzi, Shimoni and Vanga located in the south coast, Mtwapa, Kilifi, Malindi, Lamu and Kiunga further north,” said part of the announcement. KPA said that apart from the 11 ports, an assessment has been made regarding other potential sites along the coast. Two additional potential port sites identified are Takaungu and Ngomeni.
Joseph Njoroge, Principal Secretary of the Ministry of Energy, told an energy forum in Nairobi that the 1045 kilometre line is 70 per cent complete on the Kenyan side and 90 per cent complete on the Ethiopian side. The Ethiopia-Kenya interconnector is a 500 kv High Voltage Direct Current (HVDC) line, with 612 km on the Kenyan side and 433km on the Ethiopian side which is being funded by the African Development Bank. Njoroge said the transmission line was initially meant to evacuate 400 Megawatts of power from Ethiopia to Kenya but negotiations are ongoing to revise the capacity in line with electricity demand in Kenya. [African economic blocs in Sh819m energy pool deal]
As the Apapa gridlock worsens despite all efforts to ameliorate the sufferings of Lagosians and exporters of agricultural produce are now counting their losses as they have already lost over $10bn to the fracas. According to the National President, Cashew Farmers Association of Nigeria, Tola Faseru, exporters of agricultural produce and other goods are losing about $10 billion on yearly basis. Vice President, Prof Yemi Osinbajo, had last week, given matching orders to relevant authorities to clear all the articulated trucks within two weeks. But a week after the order, the situation has not abated.
West African MPs support Morocco’s ECOWAS membership – survey (North Africa Post)
A survey shows that 75% of West Africa’s MPs support Morocco’s membership in the Economic Community of West African States. The survey, conducted by French institutes, Opinions et Région and IPSE, shows that the majority of MPs considered Morocco’s membership as a factor that will strengthen the ECOWAs while the remaining 25% considered the move as a matter that requires careful thought. 63% interviewees backed Mauritania’s return to the regional grouping. Only 32% of MPs taking part in the survey supported Algeria’s potential ECOWAS membership while 73% of them backed Tunisia.
Wednesday’s Quick Links:
Buhari elected ECOWAS Chairman
Senior AfDB appointments: Dr Kapil Kapoor (DG, Southern Africa Regional Development and Business Delivery Office); Ms Bajabulile Swazi Tshabalala (VP, Finance and Chief Finance Officer); Dr Mateus Magala (VP, Corporate Services and Human Resources)
Afreximbank’s Trade & Development Finance Brief (pdf)
War on Indian Ocean piracy cost Sh140 billion last year
An introduction to the Federico-Tena World Trade Historical Database
IMF: Challenges for central banking – perspectives from Latin America