Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Arne Hoel | World Bank

Ahead of the 38th SADC Summit of Heads of State and Government (17-18 August): Namibia takes over Chairpersonship of SADC Committee of Senior Officials. An SARDC preview of the summit.

The 19th Annual SADC Lawyers’ Association Conference and General Meeting takes place next week in Maputo. Profiled session: Regional integration – harmonisation of laws in the SADC region (pdf)

Namibian MP, McHenry Venaani, has been elected the new Chairman of the Pan African Parliament’s Trade, Customs and Immigration Committee

The Association of African Central Banks annual meetings concluded yesterday in Sharm El-SheikhECA’s Vera Songwe delivered the keynote address on Africa in a changing global financing architectureAgenda sessions included: (i) Declining correspondent banking relationships and possible rise of underground financial sectors in developing countries; (ii) Illicit capital flows in Africa – challenges and policy implications for African countries.

Related AACB, other resources:

  1. Assembly of Governors Meeting August 2017: list of decisions (pdf),

  2. Documentation from the August 2017 symposium: Monetary integration prospects in Africa: lessons from the experience of the European Monetary and Financial Integration’; Symposium report (pdf)

  3. African Consultative Group Meeting: statement by the Chairman of the African Caucus and the MD of the IMF (July 2018)

  4. African Central Bank project: AU update (February 2018)

  5. Egypt, China to renew currency swap deal: CBE governor to AACB

African Pharmaceutical Development Fund: AU, AfDB, Afreximbank consultation

The organized consultation represents a platform which brings key stakeholders together to brainstorm and define the type of fund, scope of work, legal and institutional modalities leading to the set up a mechanism able to catalyze, mobilize and channel financial resources to the development of the pharmaceutical manufacturing sector in the African continent. The objective of this fund is to maximize the return on investment made to develop the African pharmaceutical industry. The urgent need for such a fund is substantiated by the existing financing gaps in the pharmaceutical industry, which precludes innovative private firms to access finance, technology and innovation required to develop and grow the industry. Related:The continent unfortunately remains awash with fake, substandard and counterfeit drugs,” said Dr. Margaret Agama-Anyetei, Head of Health, Population and Nutrition of the AUC. “This situation draws the continent away from its aspiration to guarantee high standard of living, quality of life and well -being of the citizens of Africa as envisaged by Africa’s Agenda 2063. In this regard, the AUC seeks to advance the implementation of the Pharmaceutical Manufacturing Plan for Africa, building on continental trade initiatives, such as, the Continental Free Trade Agreement, recently endorsed by African Heads of States and Government.” [India: Pharmaceutical exports up 3% to $17.3bn in 2017-18]

Accelerated Industrial Development for Africa: AU roundtable

The roundtable (7-9 August) follows the successful setting up of the Implementation and Coordination Unit in the Department of Trade and Industry, a technical unit set up in May 2018 with financial support from UNIDO, with responsibility to oversee, and coordinate the implementation of AIDA and other pan-African industrialisation frameworks such as Africa Mining Vision. The session also provided a platform to re-orient the key stakeholders (RECs, private sector, public sector, and development partners) towards rejuvenating momentum to implement AIDA.

TFTA update: Africa free trade talks pass the halfway mark on new rules (Business Day)

South African Department of Trade and Industry chief director Wamkele Mene told the National Council of Provinces select committee on trade and international relations on Wednesday that negotiations over the rules were 60% complete and were expected to be finalised in mid-2019. Mene said the biggest challenge was to agree on policy, with some countries arguing for a general rule that would allow all products from outside countries to be eligible for TFTA preferences. SA opposed this approach on the grounds that it would limit the region’s ability to industrialise as there would be no requirement for value addition to the imported products. SA’s position is that products from outside countries should only benefit from preferential tariffs when exported to other countries in the region if there has been value addition within the country that first imported it. The ultimate agreement was that there would be common product-specific rules of origin for each of the more than 7,000 products in the tariff book. [EU-Africa free trade will create more imbalances, say critics]

Zimbabwe: Business lobbies government to engage SA on trade pact (The Independent)

Local businesses have urged government to pile pressure on the South African government to reverse its decision to terminate a Bilateral Trade Agreement between the two countries. South Africa last year gave notice of its intention to terminate the trade agreement which had been in place since 1964, opting for the SADC Trade Protocol on Trade. For South Africa, the SADC Trade Protocol on Trade is more comprehensive but for Zimbabwe — which in 2016 imposed a ban on a wide range of South African imports under Statutory Instrument 64 — the deal means Harare stands to lose its preferential access to Pretoria. The agreement, which will now cease in November, favoured Zimbabwean exports of clothing and textiles due to relaxed rules of origin of “single transformation” compared to “double transformation” under SADC. The prior arrangement allowed local clothing makers to import fabrics from foreign markets, especially Asian suppliers such as China, India and Bangladesh, to produce finished clothing items, and then re-export to South Africa under favourable terms. Under the SADC protocol, however, there is the double-transformation rule which requires that the fabric should be produced in Zimbabwe or within SADC.

Trade policy in Lesotho

Supporting Lesotho’s economic diversification and trade integration: structural transformation through greater export competitiveness (World Bank)

This report provides a multifaceted diagnostic overview of Lesotho’s export competitiveness, including an analysis of the macroeconomic environment in which exporters and importers operate in Lesotho; level, growth, composition, and market share performance of Lesotho’s exports; the evolution of FDI inflows and their sectoral composition; the diversification of products and markets, as well as the quality and sophistication of Lesotho’s exports. It builds on this with CGE analysis of potential impacts based on specific trade-related scenarios as well as diagnostic tools to facilitate the analysis of global and regional value chain participation and integration. pdf Download the report (1.44 MB) .

ExtractsLesotho’s current trade strategy is not sustainable and requires a move away from reliance on exports of low-value added apparel to the US under AGOA. Uncertainty surrounding the future of Lesotho’s AGOA privileges underscores the need for reform and a renewed sense of urgency. Future export growth will be challenged by the emergence of new low-wage competitors in Asia and Africa and the expected erosion of preferential market access in main export destinations over the next decade. Despite the withdrawal of the United States from the Trans-Pacific Partnership, the significant difference in tariffs paid by apparel duty-free exports from Lesotho under AGOA and from Vietnam and Malaysia will likely be mostly eliminated in the next decade. Additionally, the current authorization of AGOA will expire in 2025. Although a further re-authorization of AGOA is not ruled out, its potential phase-out or replacement is of key importance for Lesotho since, in the absence of this preferential program, apparel exports will have to compete on equal footing against other low-wage competitors. Computable General Equilibrium analysis carried out for this study finds that the negative impacts due to a sudden suspension of AGOA privileges would reach 1% of GDP in 2020, while exports of textiles and apparel would drop by 16% leading to a drop of textiles and apparel output by 9%. The decline of average real consumption by 0.5% would have significant negative consequences for the population.

This changing external environment is likely to also offer new opportunities to Lesotho’s export industries in the medium term. Through its location, a relatively educated and largely English-speaking workforce, low wages, and significant potential as a tourism destination, Lesotho has the scope to diversify into services industries and integrate into existing and emergent value chains in Southern Africa. Regional integration in sub-Saharan Africa is progressing rapidly, and greater integration and liberalization in SADC and among the tri-partite alliance, as well as movement towards a Continental Free Trade Area means that Lesotho can improve its market access throughout sub-Saharan Africa. This makes a multifaceted diagnostic overview of Lesotho’s export competitiveness, including an assessment of medium-term impacts of potential trade policy changes, particularly salient, and would contribute to the development of the Second National Strategic Development Plan (2017/18-2020/21).

This report has five main messages: (i) Lesotho remains reliant on very few products and markets for exports, (ii) As demonstrated using CGE analysis, an immediate loss of AGOA preferences would have substantial economic impacts that far exceeds that of a potential future US-Vietnam FTA, (iii) While Lesotho’s investment climate has improved, several issues make doing business in Lesotho expensive and difficult, (iv) Lesotho has used its preferential margin to successfully integrate into textile and apparel GVCs but has not managed to integrate into other value chains, (v) Over the past few decades, trade in services has been the most dynamic sector of international trade. Lesotho’s services industries could be an increasingly important driver of economic growth.

Kenya’s food imports cross Sh100bn mark for first time (Daily Nation)

Kenya’s food imports crossed the Sh100 billion mark in the six months through June for the first time, official statistics show, underscoring the country’s growing reliance on foreign markets despite improved weather. Food and beverages order bill from abroad stood at Sh108.51 billion in the January-June period, a 12.55 per cent rise over Sh96.41 billion in the same period last year, data collated by the Kenya National Bureau of Statistics indicate.

UN urges EAC to liberalise trade services to spur manufacturing sector (New Times)

Stephen Karingi, the Director of Capacity Development Division at UNECA, told Xinhua in Nairobi that the region’s manufacturing sector is not as competitive as it should be due to relatively high cost of services including in the insurance, legal, logistic and finance sectors. “There is empirical evidence that efficiency gains occurs when markets are opened up. The EAC will further its industrialisation agenda if it can access cheaper services from a liberalised market,” Karingi said on the sidelines of the Fifth COMESA Annual Research Forum. Karingi called for the partners of the trading bloc to amend their national laws so that they permit free movement of professionals across the region. He said that the region has already signed the EAC Common Market Protocol which calls for free movement of capital and labor but implementation has not been completed. Karingi said that for every manufactured good, there is an element of services input which must be procured at a competitive cost in order for merchandise to compete regionally and globally. [COMESA Research Forum: Successful implementation of regional free trade area pegged on digitization]

24th Intergovernmental Committee of Experts of Southern Africa: Blue economy, inclusive industrialization and economic development (UNECA)

The 24th Session of the ICE (18-21 September, Mauritius) will: (i) review the social and economic conditions in Southern Africa (ii) consider and endorse the implementation of the programme of work of the ECA Southern Africa Sub-Regional Office, the planned programme of work and the budget for 2019; and (iii) review the implementation of regional and international agendas, including NEPAD and other special initiatives in the sub-region. In reviewing the work programme, the delegates will proffer recommendations towards ensuring that the development priorities of the sub-region are fully accommodated in the work of ECA to align technical support provision to member States and RECs to these priorities. [Download the concept note, pdf]

Friday’s Quick Links:

African Leadership Forum 2018: Vera Songwe urges leaders to act collectively to combat money laundering, tax evasion and bribery

Reuters: Aliko Dangote’s huge Nigerian oil refinery likely delayed until 2022, say sources

Reuters: AB InBev to build new brewery in fast-growing Mozambique

Mauritius-India: MoU signed to further strengthen cooperative sector

Mauritius workshop to validate African Union Malabo Commitments, develop Action Plan


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