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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: M. Johannsen | Fotolia

05 Sep 2018

Next week, in Lusaka: World Export Develop-ment Forum 2018:

ITC will launch several publications throughout the conference (11-12 September, Lusaka), including the Business Guide to the African Continental Free Trade Agreement; Promoting SME Competitiveness in Africa – Data for De-Risking Investment; a guide on the WTO trade facilitation and technology agreements, as well as regional approaches to trade facilitation. [Download: Programme (pdf)]

Next week, in Kigali: 2018 Development Finance Forum:

This month’s Development Finance Forum (11-12 September, Kigali) brings together public and private sector leaders to talk about how they can drive more private finance in three sectors that are key to development in East Africa: agribusiness, housing finance and tourism. This new financing model is letting IDA reach an unprecedented level of resources - $75bn for this three-year period. We expect to commit about $45bn of this to Africa by the end of the cycle in June 2020. And our first year of IDA18, which recently ended, shows we are on track. In the year ending June 30, we committed $15.4bn for Africa out of a global total of $24bn in IDA resources. In total, the East African countries have access to over $7bn of allocations over the three-year period, and they can also leverage additional funds through regional and other special windows. [The author, Axel van Trotsenburg, is the World Bank VP of Development Finance]

pdf Zambia: 2019-2021 Medium Term Expenditure Framework and 2019 Budget (2.24 MB)

In the external sector, preliminary data shows that in the first half of 2018, the country recorded a balance of payments deficit of $142.5m from a surplus of $181.4m in the first half of 2017. The deficit was largely explained by deterioration in the current account which widened to $756.5m compared to $340m in the first half of 2017. The deterioration in the current account was due to a higher growth in imports relative to that in export earnings. Imports registered growth of 27.17%, while exports grew by 20.7%. The major imports were copper ore, chemicals and iron, food, petroleum, rubber and vehicles.

Implementation of customs valuation database: Over the medium term, the Government will establish and regularly update a Customs Valuation Database in order to curb under-declarations of the value for duty purposes of selected imports and, therefore, safeguard Government revenues.

Debt management: The Government will, over the medium term, act decisively to reduce the risk of debt distress. In this regard, Government has undertaken the following measures to ensure debt sustainability: (a) Indefinitely postpone the contraction of some pipeline debt until the debt is brought back to moderate risk of distress; (b) Cancel some of the current contracted loans that are yet to be disbursed to reduce the debt service outlays; (c) Undertake refinancing of selected bilateral loans, both local and external, to extend the maturity profile and attain lower costs on debt; (d) Carry out an asset liability management exercise on the debt to ensure sustainability of cash flows; (e) Cease issuance of guarantees to commercially viable projects; and (f) Cease the issuance of letters of credit and guarantees to state owned enterprises that are technically insolvent until their balance sheet challenges are resolved.

Ethiopia: Investment board lifts restrictions on logistics industry reserved exclusively for Ethiopians (Addis Standard)

A landmark decision by the Ethiopian investment board has reversed a major regulation that restricts foreign investors from engaging in parts of Ethiopia’s investment incentives and investment areas reserved for domestic investors by lifting the restriction on logistic industry which was exclusively reserved for Ethiopian nationals. Accordingly, the board, which comprises of key ministries and the National Bank of Ethiopia, and is led by PM Abiy Ahmed, has lifted the restrictions imposed under Article 3.1(b) of the Investment Regulation No. 270/2012, “including the provision of bonded warehouse, consolidation and de-consolidation services, and allow joint venture participation of international logistics service providers holding up to 49% or less stakes,” according to a statement from the board which was exclusively obtained by Addis Standard.

China-Africa updates

Chinese yuan should be steady for wider use in Africa as reserve currency and in trade (Global Times)

The Chinese government should keep the yuan steady and increase investment channels in Africa for the yuan to become a widely used currency in that continent, experts said on Wednesday. “The yuan’s use in Africa still does not match China’s increasing business interaction with African countries,” Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics, told the Global Times on Wednesday. A trader from Guangzhou, capital of South China’s Guangdong Province, surnamed Dai who does business in the African country of Togo, said that the yuan is rarely used there.

Ghana: IMF unsure if $2bn China deal is loan or barter (GhanaWeb)

The Akufo-Addo government has left the International Monetary Fund confused about whether a $2bn China deal constitutes a loan. The classification is important because Ghana’s debt stock of at least 120bn cedis will shoot up if the China deal is classified as a loan. It would also raise questions about Ghana’s debt sustainability. The government has insisted the deal, in which China will provide $2bn worth of infrastructure in exchange for equal worth of bauxite, is barter, not a loan. The Minority has insisted this is a loan. Dissatisfied with government’s explanation, the Minority petitioned Ghana’s economic policy supervisor, the IMF and asked for clarification. The IMF Country Representative Natalia A. Koliadina has replied the petition from Haruna Iddrisu and Minority spokesperson for Finance Ato Forson. “Given the complexity of the transaction, I am unable to answer your questions immediately”, the response dated August 30, 2018, reads. The IMF Resident Director said the Fund will be discussing the financial agreement at its next meeting where Ghana’s IMF deal will also be reviewed. [IMF asks for time to decide on $2bn Sinohydro deal]

FOCAC: Kagame backs new China-Africa development framework (New Times)

The President said that increased private sector investment in the continent in key sectors of production will further drive growth in Africa. “Higher levels of long-term, private sector-led investment in key sectors of production in Africa is essential. The concrete targets offered by President Xi Jinping in this domain are very much welcome and appreciated,” he said. He called on parties to focus on implementation as well as continuous engagement. “Our focus now should be implementation. This will require continuous engagement and attention from leaders at the highest level in between Summits.” [Corrupt government? You voted for them – China pushes back at Africa summit]

Nigeria: NNPC, Chinese firms to build 10 biofuels complexes nationwide (Leadership)

The Nigerian National Petroleum Corporation yesterday said it has signed two MoUs in China with Nigerian-Chinese consortia to build not less than ten large biofuels complexes across the country. “The aspiration for the exploitation of renewable fuel resources in Nigeria is to implement our nationally determined contributions to the Paris Agreement; part of which requires the blending of 10% by volume of fuel-ethanol in gasoline and 20% by volume of biodiesel in automotive gas oil (diesel) for use in the transportation sector,” Baru stated.

Nigeria-China partnership yields over $5bn in projects – Buhari (Premium Times)

President Muhammadu Buhari says Nigeria’s partnership with China through the Forum on China-Africa Cooperation has resulted in the execution of vital infrastructure projects across the country, valued at over $5bn. The president disclosed this in Beijing, in a statement on Tuesday in Abuja by his Senior Special Assistant on Media and Publicity, Garba Shehu. The president also cited the construction and operation of the first rail system in Africa that used modern Chinese standards and technology. “This 180-km rail line that connects Abuja and Kaduna was commissioned two years ago at a cost of $500 million. Today, the rail line is functioning efficiently with no issues – indeed, a sign that Chinese technology is world class,” he noted. [Adamu Garba: Why Nigeria needs to be cautious about China]

Nigeria: Customs collects N140b in August (The Nation)

The Nigeria Customs Service yesterday said it recorded the highest monthly revenue collection of N140,415,355,659.97 in the month of August this year. The Comptroller-General of Customs, Col. Hameed Ibrahim Ali (rtd) said it was a result of the dogged pursuit of the organisation’s reform programmes. The programmes include: strategic deployment of manpower; upgrade on the electronic systems from Nigeria Integrated Customs Information System (NICIS I) to NICIS II which has blocked leakages; and strict enforcement of extant guidelines by the Tariff and Trade Department. He also attributed the feat to the robust stakeholder engagements resulting in higher compliance and increased disposition of officers and men to change the way of doing things for the better.

Connections beyond trade crucial for economic growth in Europe, Central Asia (World Bank)

International connectivity through trade, investment, migration, communications, and transport is critical to economic development in Europe and Central Asia. These connections work together to help firms become more productive through knowledge and technology transfers, says a new World Bank report, Critical connections: promoting economic growth and resilience in Europe and Central Asia. The new World Bank report measures connectivity by creating a new indicator, the Multidimensional Connectivity index, that combines several channels of international connections, including: trade, FDI, migration, ICT, and transport links. According to the report, the best connected sub-regions of Europe and Central Asia are Western Europe followed by Northern, Central, and Southern Europe. The Western Balkans, Central Asia, and the South Caucasus have the lowest levels of overall connectivity.

2018 Business and Finance Outlook (OECD)

The risks to financial stability in China arising from elevated corporate indebtedness make it all the more important to ensure that China’s Belt and Road Initiative results in economically viable projects. The Outlook recognises the important contribution that the BRI can make to filling the global infrastructure gap, but emphasises that all international infrastructure efforts should be mutually reinforcing and respect global standards. Five areas that could benefit cross-border infrastructure investments from greater alignment with international standards stand out:

Wednesday’s Quick Links:

Ghana: Government to impose 5% fiscal deficit capping on state – Senior Minister

Nana Addo lobbies for Alibaba Africa headquarters in Ghana

Mozambique: Baseline survey on the school-to-work transitions of university graduates

Mozambique: 40% spike in tourism earnings in 2017

Kenya: Private sector expansion rebounds in August – PMI

South Africa: Private sector activity falls to 2-1/2 year low in August – PMI

From rupee to rupiah, emerging market currencies feel the heat

WEF: What do the economic woes of Turkey, Argentina and Indonesia have in common?

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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