Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Xinhua

Forum for China-Africa Cooperation: Africa still solidly in the crosshairs of China growth (Standard Bank)

When FOCAC was established in 2000, the rest of the world was perhaps bemused. Indeed, bilateral trade and investment between China and Africa then was minimal and African economic prospects not promising. China’s political embrace of Africa – as framed by FOCAC – has ushered in exponential growth in commercial ties. Now, just 18 years later, China is Africa’s largest trade partner, gaining large swaths of Africa’s market share. China is also a significant source of capital for Africa – loans to be sure, but also direct investment. Cities across Africa are virtually unrecognisable now from just a decade ago, largely due to partnership with China.

Chinese FDI in Africa remains small – at just $40bn. In reality, Chinese FDI into Africa is understated by as much as $10bn-$20bn. Most of Chinese firms in Africa are smaller privately owned firms, and are very poorly understood. When looking at data on greenfield investments announced, around 60% of the projects (measured by estimated capital to be deployed) is by private firms, and as much as USD19bn has been earmarked for manufacturing. As for RMB internationalization, the 13th Five Year Plan for a Modern Financial System – a key policy document overseeing the financial space through 2020 – has two goals: first, the development of direct finance; second, RMB internalization. We foresee one-third of China’s cross-border payments denominated in RMB by 2020. Extracts:

Chinese exporters have made strides in gaining market share in Africa – clearly at the expense of other trading partners. China’s exports to Africa reached $95bn for a second consecutive year in 2017. Overall, Africa has proved a resilient market for China, with exports rising by an average 14% y/y each year since 2010 — five percentage points faster than China’s sales elsewhere.

In fact, 10 of China’s 15 fastest-growing export markets since 2009 are in Africa; Djibouti, Kenya, Ethiopia and Tanzania in East Africa; Senegal, Ivory Coast, Guinea, Ghana and Cameroon in West Africa; and Mozambique in southern Africa. These 10 fast-growing countries now account for over one-fifth of China’s total sales to Africa, from one-tenth seven years ago, together consuming nearly $25bn of Chinese goods in 2017. This reinforces our view that Beijing and, more importantly, Chinese companies – both SOEs and private – are continuing their focused and nuanced approach to Africa.

Fast growth in Africa has managed to offset soft demand in Africa’s largest economies – Nigeria and South Africa – in recent years. Promisingly, there has also been an upturn in demand in both Nigeria and South Africa, with sales to both countries increasing in 2017 for the first time since 2015, by 17% y/y and 13% y/y respectively. Also, the recovery in commodity prices – especially metals and hydrocarbons – resulted in Chinese imports from Africa rising 32% y/y last year, to $75bn. Total China-Africa trade has now returned to growth, increasing by 11.4%, from $151bn in 2016, to $169bn in 2017— the fastest rate since 2012. This recovery in trade growth is good news, laying a positive foundation for FOCAC. [The author: Jeremy Stevens. The report can be downloaded from the author’s profile page on the Standard Bank Research Portal]

Nigeria: Why is the share of non-oil export to GDP declining? (BusinessDay)

If you haven’t seen the recently released annual report of the Central Bank of Nigeria for the period ended December 31, 2017, especially with regard to the values of the nation’s non-oil export revenues on one hand, and the amount each of the top 100 exporters made as earnings during the same period, you might not understand the rationale behind this question. The CBN reported improvement in the nation’s non-oil export earnings as at the end of 2017 but the share of non-oil exports relative to GDP is declining. It is on record that in the last two years the CBN had devalued the naira with a view to addressing the pressures in the foreign exchange market. The policy was also meant to make Nigeria’s goods competitive at the international market. In the last quarter of 2017, trade with countries on the African continent accounted for 2.1% of Nigeria’s exported agricultural goods; 7.7% of raw materials exports; 34% of solid minerals exports; 98% of energy goods exports; 45% of manufactured exports, and 6.1% of other oil non oil exports. Extract from Chapter 7: External sector developments (pdf):

Non-oil imports, by country of origin: A disaggregation of non-oil import to Nigeria by country of origin showed that China remained dominant in 2017, accounting for 26.7% of the total. This was followed by the USA and India, with 9.8% and 7.1%, respectively. Non-oil import from Germany was 4.2%, while the United Kingdom had a share of 4.2% of the total. Import from Brazil represented 4.3%; The Netherlands, 3.4%; and Belgium, 2.6%.

Non-oil exports to ECOWAS sub-region: Non-oil export to the ECOWAS sub-region increased, significantly, by 31.8% to $370.24m, compared with $281.0m in 2016. Among member-countries, export to Ghana remained dominant at $114.99m, or 6.4% of the total. This was followed by Togo, $%85.53m (4.8%); Niger,$62.07m (3.5%); and Cote d’Ivoire with $56.55m (3.2%). At $0.39m, export to The Gambia was the least. The dominant export products to the sub-region remained: tobacco, plastics, rubber, plastic footwear, soap and detergents, and polybags.

What Uhuru must discuss with Trump during his visit to USA (Daily Nation)

As President Uhuru Kenyatta visits the White House this weekend, his agenda must be unassumingly firm because - let’s face it - with the Trump presidency, this won’t be an ordinary meeting and the traditional give-and-take diplomatic rule book may not apply. It’s telling enough that President Donald Trump has only hosted one African leader - President Muhammadu Buhari of Nigeria - with the agenda largely being security and terrorism in the African country’s restive north and Sahel region. It is, therefore, in many ways remarkable that he chose Kenya for his second one-on-one. Perhaps Trump’s primary agenda remains security and global terrorism, where Kenya is an undoubted regional ally. I am, however, interested in the opposite - in terms of what must be in President Kenyatta’s agenda, considering that this is a rare opportunity to cover some ground with Trump and speak for Africa. [The author: Erick Komolo]

Related perspectives: MFA CS meets African ambassadors in the US ahead of Kenyatta-Trump meeting. Foreign Affairs Cabinet Secretary Monica Juma is already in the United States ahead of a scheduled visit to the White House by President Uhuru Kenyatta on Monday. Upon her arrival at the Dulles International Airport on Wednesday, the CS held talks with 28 African resident ambassadors on trade cooperation with the US post-African Growth and Opportunity Act framework. She also engaged the ambassadors on the African Continental Free Trade Agreement. [Jaindi Kisero: Uhuru should not hold begging bowl but seek US tech assistance; The delicate Sh380bn road gamble US is pushing Kenyans to take]

Presidents of Vietnam, Ethiopia hold talks (Vietnam News)

At the end of the talks, the leaders witnessed the signing of co-operation documents, including a MoU on investment co-operation between the Vietnamese Ministry of Planning and Investment and the Ethiopian Investment Commission, an agreement on visa exemption for diplomatic and official passport holders and an MoU on co-operation between the two ministries of foreign affairs. President Quang also met with Ethiopian Prime Minister Abiy Ahmed, during which the two leaders pledged that Vietnam and Ethiopia will make better use of co-operation opportunities, promote trade exchanges and expand the list of high-quality goods with competitive prices while increasing information sharing and facilitating businesses’ investment promotion. Quang suggested Ethiopia enable Vietnamese firms, including the telecom group Viettel, to seek investment co-operation opportunities in Ethiopia in telecommunications, trade, agriculture, aviation and the construction of small and medium-sized hydropower plants. As regards agriculture, the host and guest said Vietnam’s experience in agricultural cultivation could be applied in Ethiopia to help the country ensure food security and agricultural development.

Ethiopia signs a host country agreement with Trade Mark East Africa (2Merkato)

Trade Mark East Africa, a non-profit organization, signed an agreement with Ethiopia to open a new office in Addis Ababa. Professor Afework Kassu, State Minister of Foreign Affairs, and Mr. Frank Matsaert, Executive Director of TMEA, signed a host country agreement today. The Minister said Ethiopia is undergoing socio-economic reforms which need regional economic integrity. The Minister appreciated the decision of the organization to open office in Ethiopia and said the government would assist in the process.

Tanzania: ATCL all set to go international from next week (IPPmedia)

Air Tanzania Company Limited is now set to extend its services to international skies with flights to Entebbe, Uganda and Bujumbura, Burundi starting next weekend. The company MD said flights to Mumbai, Bangkok, Johannesburg, and Guangzhou, via Dar es Salaam, will begin in the fourth quarter of the year. The government has this year spent billions of shillings in the purchase of new planes to kickstart an ATCL revival process being overseen by President John Magufuli himself. [SADC Aviation Safety Organisation Charter: GCIS update]

Francis Atwoli: Strengthening labour movement in Africa (The Standard)

Since inception in 2003, TUFEA’s pre-occupation has been to develop the region’s policy positions and strategies on political, economic and trade union integration process in the region in close consultations with our Pan-African organization, the Organisation of African Trade Union Unity, OATUU and our continent’s International Trade Union Confederation of Africa, ITUC-Africa. As TUFEA member countries, we continue to take a leading role in advocating for the importance of intra-African trade and trading blocks to challenge similar ones in both Europe and USA while advancing strong arguments in promoting South-South economic integration based on the theory that all counties will have a comparative advantage in manufacturing relative to the global economy. To this end, let us exploit our position in mobilising international solidarity campaigns whenever massive violations of trade union rights occur.

India: New industrial policy to focus on jobs, push tech use, cut red tape (Business Line)

The much-anticipated New Industrial Policy, which will replace the 27-year-old existing policy and pave the way for promotion of new technology and reduced regulations, has been placed before the Union Cabinet for approval. “The New Industrial Policy is now just a Cabinet nod away. Its implementation will lead to job creation and modernisation of units, and will encourage entrepreneurs to experiment with new technology to improve efficiency,” a government official told BusinessLine. This will be the third industrial policy drafted in independent India. The first was announced in 1956, and the second, in 1991. The draft industrial policy floated in August 2017 by the Department of Industrial Policy & Promotion aims to create jobs over the next two decades, promote foreign technology transfer and attract $100 billion FDI annually.

Economic Survey of Latin America and the Caribbean 2018: evolution of investment in Latin America and the Caribbean (ECLAC)

“Our region continues to grow, although at a slower pace than what was projected several months ago, despite international turbulence, said Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean during a press conference in Mexico City. While she noted that this steady growth is “positive,” she noted that “it demands that we redouble our efforts to prompt a reactivation, without resorting to excessive fiscal adjustments. “Regional integration can play an important role here, and we must aim in that direction,” she added. [Various downloads]

Friday’s Quick Links:

Kenya: The Dangote angle in ARM Cement’s troubles

Bitange Ndemo: How state intervention could boost the fortunes of Kenya’s pharmaceutical sector

Nigeria: FG to submit 2019 budget in September

Nduom: MTN deserves accolades for popularizing mobile money use in Ghana

Owei Lakemfa: The African road to China

Understanding Niamey’s flood risk through open source mapping, drones, and modeling

India’s falling rupee is also dragging down businesses along with it

‘Finding global solutions for global problems’ is the focus of UN-civil society forum

Mapping the landscape of transactions: the governance of business relations in Latin America

ORF: Lessons from transboundary waste trade – why India should focus on the judicious use of its own waste


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