tralac’s Daily News Selection
Freight trends: All regions except Africa reported a year-on-year increase in freight volumes in June 2018, but the slow growth in Asia-Pacific, which accounts for nearly 37% of the entire air cargo market, dragged the global growth rate down. African carriers saw freight demand contract 8.5% in June 2018 compared to the same month last year. Capacity also fell, by 1.4%. It is difficult to be positive about the current picture in Africa.
Passenger trends: June international passenger demand rose 7.7% compared to June 2017. All regions recorded growth, led by airlines in the Middle East and Africa. African airlines’ traffic soared 10.9% in June, up substantially from just 2.1% growth in May, although this partly also reflect volatility in the monthly data. Capacity rose 5.5%, and load factor jumped 3.3 percentage points to 68.0%. Higher oil and commodity prices are buoying the economies in a number of countries, including Nigeria.
Mauritius-China FTA: Third round of negotiations underway ahead of signing at FOCAC (GoM)
The three-day third round of negotiations on the Mauritius-China Free Trade Agreement opened yesterday at the Hilton Hotel in Flic en Flac. The Mauritian delegation is led by Dr Sunil Boodhoo, Director, International Trade Division, Ministry of Foreign Affairs, Regional Integration and International Trade. The twelve-member Chinese delegation is headed by the Deputy Director General, Ministry of Commerce, Mr Hu Yingzhi. Mr Lutchmeenaraidoo highlighted that it is necessary to find a solution which is related to the finalisation of two agreements namely: the first FTA which China is currently negotiating with an African country that is Mauritius; and, the Road and Belt initiative. The latter initiative implies that China wants to play more and more a positive and substantial role when it comes to the development of the whole planet, he stated. The Minister also spoke how Mauritius although small in land size can act as a transmission belt and connecting link between the philosophy of China and the vision of Africa.
Mr Hu Yingzhi, observed that the negotiations on the FTA have already reached an advanced stage within a short span of time. The FTA is expected to be finalised by the end of August this year. It will be signed in Beijing in September 2018 during the Forum on China Africa Cooperation Beijing Summit in the presence of Prime Minister Jugnauth and Chinese President Xi. The first round of negotiations on the Mauritius-China Free Trade Agreement kicked off in April 2018 while the second round was held in June.
On the agenda of the meeting: Draft regulations on the electronic certificate of origin; Draft COMESA Regional Authorised Economic Operator Programme implementation guidelines as well as updates on the COMESA Digital Free Trade Area implementation and other related matters. The Secretary General of COMESA, Chileshe Kapwepwe, said the meeting will advance the implementation of the adopted Customs and Trade Facilitation Work Programme covering 2018 – 2020. The outputs from the discussions will be presented to the Trade and Customs Committee meeting scheduled for Friday and Saturday this week.
Senior African policymakers on Monday resolved to adopt a common position aimed at propelling growth of ICT sector and embed it in the continent’s transformation agenda. The policymakers and experts who met in Nairobi for a preparatory meeting ahead of the International Telecommunications Union summit to be held in Dubai in October, said that a consensus is required to hasten the fourth industrial revolution in Africa that is based on technology and innovations. Joe Mucheru, Kenya’s Cabinet Secretary for ICT, stressed that harmonization of policy and regulatory frameworks is key to ensure the benefits of digital revolution in Africa are spread evenly. “Africa should safeguard its interests in the global ICT arena by speaking in one voice. Our collective obligation going forward is to ensure there is uniformity in policies and regulations to reap from the benefits that the digital era has ushered.”
Kenya: June 2018 trade data (KNBS)
Volume of trade dropped from KSh 226.90 billion in May 2018 to KSh 213.51 billion in June 2018. The value of total exports decreased to KSh 52.92 billion in June 2018 while the value of imports dropped from KSh 171.59 billion in May 2018 to KSh 160.59 billion in June 2018. [Note: Table 12: External trade; Table 13(a): Major destinations of domestic exports; Table 13(b): Domestic exports by Broad Economic Category; Table 14 (a) Major origins of imports; Table 14(b): Imports by Broad Economic Category] [Related news items: Coffee earnings drop by Sh700 million in seven months to July; Government plans special zones for export livestock production; How counties can help bridge export deficit gap; Protect us from Tanzania, traders cry out]
Kenya: Banks see increased adoption of yuan as Kenya-China deals rise (Business Daily)
The Kenya Bankers Association is tipping its members to increase the stock of Chinese currency for its transactions as Kenya-China trade ties intensify. The chief executive of the lenders’ lobby, Habil Olaka, says the yuan is becoming important in settling financial transactions with many Kenyan banks reacting to this by setting up China-dedicated desks and increasing the stock of Chinese currency. [Quartz: China’s payments giant is ready to boost financial inclusion in Africa]
While such traditional funding continues to prevail, there has been some broadening of Chinese assistance in the Africa, as it makes equity investments in financial institutions in the continent. This mechanism of what I would call ‘institutionalising Chinese equity into Africa’ is very potent, to the extent where it gets access to the latent opportunities in the region. These initiatives further acts as instruments to implement Chinese policies in trade and diplomacy, and concurrently provide support for promoting the exports of Chinese products and services to Africa.
While China is having stakes in various pan-African and Regional Development Banks in Africa, India has remained a second fiddle. India currently has just a 0.269% share in the African Development Bank, the region’s multilateral institution, while China’s ownership is four times higher at 1.200%. This is a significant anomaly given India’s aspirations in the region. In Afreximbank, India and China are represented as Class C shareholders by their respective export credit agencies — Exim Bank of India has 0.24%, and China Exim Bank has 5.48% shareholding in Afreximbank. China, in fact, has augmented its share recently, and is today the sixth largest shareholder in Afreximbank, and the largest amongst the Class C shareholder. [The author, Rahul Mazumdar, has been associated with Export-Import Bank of India since 2007]
The head of Algerian state oil firm Sonatrach has assembled a new leadership team, a senior company source said, aiming to reverse a flow of talent from an unwieldy state enterprise that keeps the country afloat. President Abdelaziz Bouteflika put US-trained Abdelmoumen Ould Kaddour in charge of overhauling Sonatrach in March, 2017, after years of short-lived CEOs, fraud scandals and red tape had put foreign investors off the North African OPEC producer. Kaddour, who spent much of his career in the US, as well as energy firms in the Gulf and Africa, plans education and training via a ‘Sonatrach Management Academy’ and will bring back retired workers to coach new recruits. He is also seeking to introduce special rewards to retain bright people, working around a rigid salary structure which pays a bureaucrat like a deep-water drilling engineer. [Ghana: 27 defunct SOEs to be deleted from government book; 7 more to be traced]
Mozambique’s ruby mining goes from ‘wild west’ to big business (Bloomberg Africa)
Though it’s difficult to know the value of the global rough-ruby trade because it’s so fragmented, the New York-based Natural Resource Governance Institute estimates the ruby, emerald and sapphire business is worth as much as $2.5bn annually. From nothing 10 years ago, Mozambique now accounts for as much as 80% of global ruby output, according to Richard Hughes, an expert on the stones at Lotus Gemology Co. Ltd. in Bangkok. Many of Montepuez’s rubies are the colors consumers covet -- “like a red traffic light,” he said.
World Tariff Profiles 2018 (WTO, ITC, UNCTAD)
This publication (pdf) is presented in five main parts. The first part shows summary tariff statistics for all countries and territories for all products, as well as a breakdown into agricultural and non-agricultural products. The second part shows for each of these countries and territories one full page with disaggregation by sectors and duty ranges. It also contains a section on the market access conditions faced in their respective major export markets. A new third part has been added to this edition to cover information on non-tariff measures which are of increasing importance in international trade. The fourth part contains the special topic which presents a new subject in each edition. The annexes are in part five and include the data sources and the compilation of “Frequently Asked Questions”.
The summary tariff tables in the first part are designed to allow cross-country comparison as well as comparison of the levels of bound and applied duties. Apart from the standard indicators like tariff averages, maxima, percentage of duty-free tariff lines, peaks and non-ad valorem duties, it also contains indicators of tariff dispersion such as the number of distinct duties and the coefficient of variation. The calculation of these indicators is based, where applicable, on a pre-aggregation to HS six-digit subheadings, which leads to a standardization across countries and thus makes the comparisons more compatible. The tariff profiles tables are divided into two blocks covering (i) the domestic market access protection and (ii) the protection faced in the major export markets.
India is reworking proposed e-commerce rules after a draft, which had signaled a shift toward boosting domestic startups, sparked criticism, according to people familiar with the matter, who asked not to be identified as the discussions are private. Commerce Minister Suresh Prabhu tweeted 11 August that his ministry had received a “few concerns,” and will reach out to stakeholders to address them. The initial document received pushback, including a proposal on foreign investment in some areas and one requiring Indian consumer data to be held locally, one of the people familiar said. The discussions may lead to an overhaul and a fresh draft will be posted in a few weeks on the ministry’s website, the person said.
The 19-page draft, a copy of which has been seen by Bloomberg, underscored India’s intent to examine every aspect of e-commerce regulation from data localization to antitrust rules. The changes would tighten restrictions on global giants like Amazon.com Inc. and Google and may bolster local startups such as digital payments provider Paytm.
Digital trade and market openness (pdf, OECD)
This paper has three parts. The first discusses what we know about how digitalisation is changing international trade and the rules that govern it. The second part focuses on a more in-depth look at the evidence on trade in the digital era, drawing on available data and the illustrative findings from a tailored business questionnaire. Based on this, the third part provides an initial mapping of the types of measures that need to be considered when thinking about market openness and digital trade. The concluding section draws on these three parts to offer a perspective on what market openness means in the digital era.
Tuesday’s Quick Links:
4th meeting of the strategic task force for the implementation of the 2050 Africa’s Integrated Maritime Strategy: outcomes
African Cotton, Textiles & Apparel Monitor: Issue 22 is posted
Nigeria scales up assistance to ACP countries