tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Jan Hoffmann

03 Oct 2018

Nigeria: ‘Economy losing over N6.16tr from Apapa chaos monthly’ (Guardian)

The Nigerian economy is currently losing about N600 billion in customs revenue, an estimated $10 billion (N3.06 trillion at N306.35/$1) on non-oil exports, and about N2.5 trillion corporate earnings across the sectors on a yearly basis, latest data from joint research by the Lagos Chamber of Commerce and Industry, and other members of the Organised Private Sector, has shown. Specifically, the LCCI explained that the data showed a worrisome level of deliberate resistance by some ministries, departments and agencies (MDAs) to implement enabling regulations including the 2017 Presidential Executive Orders relating to the ports. The chamber added that fights for supremacy, conflict of interests among the MDAs and revenue ambitions that conflict with trade facilitation objectives among the MDAs are common issues.

Besides, the LCCI added that about 10% of cargoes are cleared within the set timeline of 48 hours while majority of the cargoes take between 5 to 14 days to clear, as a result of deliberate delays induced by MDAs’ officials. According to the study  pdf Maritime Ports Reform in Nigeria: Feedback from the OPS (1.88 MB)  undertaken by LCCI, in collaboration with the Nigerian Economic Summit Group and OPS, made up of MAN, NECA, NACCIMA, NASME, NASSI, and Centre for International Private Enterprise, the chamber noted that the port reforms undertaken by the Federal Government are being frustrated by businesses and government agencies thriving from the inefficiency of the ports. These developments, in the views of the chamber, have very huge adverse implication for job creation, tax revenue and real economic activities with estimated downside effect of about 3% on the country’s GDP. [LCCI holds special press conference on Nigerian maritime ports] [Nigeria: Shippers’ Council faults exclusion from review of ports concession agreement]

Mills Soko, Kobus van der Wath: China now – what SA boardrooms should be discussing (Fin24)

The opportunity is very real and, for many SA businesses, it is a strategic imperative to gain a foothold in the Chinese market. Healthy bilateral government relations between China and SA mean that there is political will to see both nations reach their respective goals, politically and economically. These ties should serve as a conduit and allow ease of access to their respective marketplaces. Above all, business leaders from SA and China must make the SA-China opportunity landscape a strategic priority in corporate boardrooms. This is true for large companies but also for small and medium-sized firms. Thus, [eight] key focus areas ought to be to: [Chinese delegation to study South Africa’s mineral codes]

Isabella Neuweg: China is investing in developing countries – what is it really up to? (LSE Business Review)

Although large opportunities still exist to align these infrastructure projects with the climate and energy goals of both China and the recipient countries, China is nevertheless filling a role that has been left empty by many of the multilateral development banks and bilateral aid agencies. The eight largest multilateral development banks together provided about $340bn of infrastructure financing between 2004 and 2013, i.e. roughly the same size as China’s investments. China provided more than $360bn for energy generation and supply, transport and storage in developing countries during the period 2001 to 2014. In light of the large infrastructure investments that are still needed in developing countries in the future, Western and Chinese donors can join forces. If China were to increase transparency and disclosure of their investments, the opportunities to learn from them could help improve international understanding of the impact infrastructure investments have in developing countries. With a more open sharing of data there could also be opportunities and willingness to explore collaboration between the West and China. [The author is a policy analyst at the Grantham Research Institute on Climate Change and the Environment]

COMESA region annual inflation rate stood at 22.5% in July 2018 (AfDB)

The year on year, inflation rate (annual percentage change) in the COMESA region as measured by the Harmonized Consumer Price Index, stood at 22.5% for the month of July 2018, down from 22.3% registered in June 2018. A year earlier, the rate was 27.5%. The month on month inflation rate in the COMESA region as measured by HCPI-COMESA stood at 2.9% for the month of July 2018, up from 2.8% registered in June 2018. It was 2.7% in July 2017. HCPI-COMESA comprises of twelve divisions of expenditure (pdf). These divisions registered the following average price changes during the month of July 2018 compared with July 2017:

SADC Harmonised Consumer Price Indices, July 2018 (AFDB)

The SADC Region registered annual inflation rate of 8.7% in July 2018 compared to July 2017 as measured by the HCPI. Month on month inflation rate registered an increase of 0.6% in July 2018 compared to June 2018. The reported annual inflation rates for July 2018 of SADC Member States indicate that three Member States have recorded highest double-digit inflation rates, as follows (pdf): Angola (19.4%), DRC (28.0%) and Malawi (10.2%) whilst Zambia registered lowest inflation rate of 2.0%. The annual inflation rates for the rest of the other member states were: Botswana (2.6%), Eswatini (4.5%), Lesotho (3.1%), Madagascar (8.5%), Mauritius (4.2%), Mozambique (4.7%), Namibia (5.2%), Seychelles (3.5%), South Africa (5.4%), Tanzania (3.3%) and Zimbabwe (4.0%), as reflected in table 2.

Francis Mangeni: African Continental Free Trade Area’s momentum needs refueling (EABW)

The African Continental Free Trade Area process seems to be stalling. There is concern that some critical timelines will not be met. Funds for the long meetings to undertake the ongoing negotiations are running out. Ratifications have dried up, though the number quickly grew to seven since the launch of the Agreement in March this year, mainly from countries that have championed the process or vying to host the new Secretariat for AFCTA. The ambivalence of Nigeria in not signing the Agreement has not helped. The product-specific approach being taken in negotiating the rules of origin, and uncertainty over trade liberalisation of the most critical sectors for intra-Africa trade, making up 10% of total products, is proving to be lengthy and tedious. These processes need to build on what already exists in the regional economic communities and the COMESA-EAC-SADC Tripartite.

It is important that any adverse developments be spotted early and decisively addressed to maintain the high momentum around the AFTA process. Sustaining high-level political engagement, and participating in regional events such as the Intra-Africa Trade Fair planned for 11-17 December in Egypt, provide opportunities for fuelling the momentum. However, there are structural reasons why the current high momentum for regional integration in Africa should be irreversible:

IMF-Africa updates:

Guinea-Bissau: “A weak cashew harvest this year has dampened economic activity, with lower cashew production and prices weighing heavily on overall output, exports, and consumption. The mission projects real GDP growth of 3.8% in 2018, down from the roughly 6% pace maintained during 2015–17. Driven by lower cashew exports, the external current account deficit is projected to widen to 3.6% of GDP in 2018 from an estimated 1.9% in 2017. Government revenue has suffered from weaker economic growth along with slow progress on reform measures underpinning the 2018 budget. Tax collections for the first half of the year fell 9.7% below the program target. Cashew-related receipts have declined and there have also been delays in, among others, collection of tax arrears and stamp duty on air transportation. The underperformance of tax revenue was, however, partially offset by higher non-tax revenue, including receipts from sales of seized timber.”

Seychelles: “Macroeconomic performance continued to be strong in 2018. Real GDP growth is estimated to reach around 3.5%, reflecting strong output in the fishery industry and the information and communications sector. The external current account narrowed thanks to strong tourism earnings. The program is on track—with reserves and the primary surplus exceeding targets—and the mission reached a staff level agreement on policies for completion of the review.”

Rwanda: “The authorities have undertaken policies to improve Rwanda’s competitiveness, diversify production, promote exports, and contain imports. With export growth of 17.9% in the year to August 2018, and import growth of 7.4%, the trade balance has continued to improve. While export growth is expected to remain robust, the construction of Bugesera airport and a pickup in foreign-financed investment are expected to fuel imports, notably of capital goods, and is expected to lead to a rise in the trade deficit in 2018. Nonetheless, project disbursements and robust foreign direct investment are expected to maintain the balance of payments in surplus and support central bank reserve accumulation.”

Sierra Leone: “The economic environment remains challenging, with output growth still recovering from the recent loss in iron ore mining and reduced activity in the non-mining sectors. Output growth is likely to remain below 4% this year, and inflation remains elevated at 18%, reflecting a combination of factors including food and fuel price developments and pass-through from modest exchange rate depreciation. At the same time, the corrective actions the authorities have taken in recent months to shore up public finances in response to the cash shortfall have led to an increase in revenue and helped arrest the rise in public spending arrears. This is expected to result in some improvement in the 2018 budget performance this year.”

Today’s Quick Links:

WTO 2018 Public Forum: news updates from the WTO

Institute of Statistical, Social and Economic Research launches The 2017 State of the Ghanaian Economy Report

Central Bank of Nigeria: Manufacturing Purchasing Manager’s Index for September (pdf)

Central Bank of Egypt: Balance of payments performance, 2017-2018

SA Reserve Bank: speech by Daniel Mminele at Federal Reserve Bank of New York

Kenya: Bolloré Logistics to let go hundreds of its Kenyan workers

Monitoring EU agri-food trade: developments until July 2018 (pdf)