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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Bloomberg

05 Oct 2018

Next week, in Nairobi: Seventh Conference on Climate Change and Development in Africa (10-12 October)

The World Bank, IMF Annual Meetings take place next week in Indonesia:

(i) 32,000 people to attend IMF-WB meetings. Coordinating Maritime Affairs Minister Luhut Pandjaitan has said about 32,000 people have registered for the IMF-World Bank Annual Meetings in Bali. “There are 32,000 attendees, more than the initial estimate [of 19,000],” Luhut said as reported by Antara after chairing a coordination meeting to prepare for the event in Nusa Dua on Thursday. With the latest figure, Luhut said the meetings would welcome the largest number of participants since the annual meetings were first organized in 1946.

(ii) Annual Meetings Preamble: 10 years after crisis, World Bank and IMF fight for relevance amidst mounting global economic pressure. CSOs have also questioned the cost-effectiveness of the PPPs model. A forthcoming joint CSO report compiling negative outcomes from 10 PPP projects in different sectors, and across four continents, some of which have been supported by the WBG, will be launched at this year’s Annual Meetings’ Civil Society Policy Forum, adding to an ever-growing body of evidence, such as that provided earlier this year by the UK’s National Audit Office and the European Court of Auditors, which question the logic of PPPs. The Bali meetings will also see the launch of the Bank’s much-promoted Human Capital Index, which will rate countries on their investments in the human capital of their citizens when they depart school. While few would doubt the need to invest in education and other essential development needs of children and youth in developing regions, the HCI is likely to do little to overcome acute development challenges linked to structural inequality and may indeed distract attention from equally pressing policy debates.

Diarise: (i) Organisation of Women in International Trade Conference (24-25 October, Nairobi) on the theme Bridging the gap; empowering businesses to go global; (ii) 13th African Economic Conference (3-5 December, Kigali) on the theme, Regional and continental integration for Africa’s development

South Africa’s pdf Presidential Jobs Summit: Framework Agreement (946 KB)

Extract: Enforcement/illicit trade interventions: It was agreed that improved tactical interventions on sites where suspected illegal imported goods are kept or sold, are an important tool in dealing with customs fraud. It was acknowledged that there is room for improvement in this area. It was agreed that the partnership between SARS and other relevant government entities must be strengthened, including joint interventions, issuing of search warrants and conclusions of Memoranda of Understanding. The Social Partners agreed that specialist enforcement teams, with a focus on key commodities, e.g. clothing and textiles, tobacco, and fuel, should be reconstituted. Raids will focus on major distribution nexus of imported goods, including warehouses. It was agreed that the partnership between SARS and other relevant entities must be strengthened to address obstacles to successful prosecution. High-profile investigations would be prioritised with an aim to convict as this will boost confidence in the fight against customs fraud. Enforcement successes leading to conviction will be publicised in the media. [Address by President Cyril Ramaphosa]

EU-Nigeria trade volume hits N8.9trn (EU)

The total trade volume between Nigeria and European Union Member States stood at 25.3 billion Euros (about N8.9 trillion) in 2017. Deputy Head of Delegation, European Union to Nigeria and ECOWAS, Mr Richard Young, revealed this while briefing the press on the EU-Nigerian Business Forum yesterday in Lagos, saying that to further build on the relationship with EU companies in Nigeria, the EU Delegation, EU member States and European companies active in Nigeria have established a European Business Organisation which would represent the voice of European companies across various sectors of Nigeria economy. “The EBO Nigeria will also ensure a high-level policy dialogue with Nigerian authorities and organised private with the objective of improving the business and investment and fostering business and trade relations between the EU and Nigeria,” he said.

Doing Business in Nigeria Conference: keynote address by Dr Jumoke Oduwole (Executive Secretary of the Presidential Enabling Business Environment Council)

Country updates

At Nigerian borders, creeks, smuggling is business as usual (Leadership)

Also, last week, the CGC’s strike force intercepted about 6660 bags of rice which is equivalent to 11 trucks of rice in the south- west after it was successfully smuggled into the country through the land borders. The other seizures by the ad-hoc unit further range from vegetable oil, second hand clothes, cartons of frozen poultry products, unprocessed firewood, sugar to vehicles of different brands that were smuggled into the country through the land borders. Speaking on the sidelines of the arrest, the national coordinator of the Strike Force, Abdullahi Kirawa, disclosed that the seizures were made by the CGC Strike Force team from August 11 to September 18, 2018. He gave a breakdown of the seized items:

Ghana: Government to incur additional GHC1.5bn debt in subsidising cocoa price (GhanaWeb)

Government will incur an additional debt of GHc 1.5 billion in subsidising the price of cocoa, the Ministry of Agriculture has announced. Deputy Minister of Agriculture in charge of perennial crops, Mr Kennedy Osei Nyarko said at a press conference on Thursday, government had to incur GHc 2 billion in subsiding the price of cocoa in 2017. He was reacting to the allegations by the Minority in parliament that, government was fleecing cocoa farmers by refusing to increase the price of cocoa. He refuted the allegations and insisted that, government maintained the price despite the reduction of price on the world market.

Rwanda: The politics of second-hand clothes – a debate over ‘dignity’ (Al Jazeera)

The C&H factory in Kigali’s Special Economic Zone is bustling with activity. Hundreds of workers cut fabric, check labels, operate sewing machines, and carefully monitor the “Made in Rwanda” products for quality. Originally starting out as an export-oriented manufacturing plant, mostly for clients in the US and Europe, this Chinese-owned factory has moved into producing garments for the local market. Since the import tax on used clothing was implemented, orders from the US have decreased. But custom inside Rwanda has increased. C&H has opened a second plant to deal with the rising demand. “At the moment, we export 80% (to the US and Europe) and 20% is for the local market. We hope to act like a catalyst for the local manufacturing sector,” Malou Jontilano, marketing director of C&H, tells Al Jazeera.

Uganda: Banks urged to blacklist counterfeit manufacturers (Daily Monitor)

Speaking during a financial sector dialogue on counterfeits in Kampala, Mr Fred Muwema, the Anti Counterfeit Network director legal and corporate affairs, said banks must not lend to businesses involved in counterfeits, given their impact on the economy. “There is need to develop an anti-counterfeit policy in the financial sector through increased training and awareness,” he said, noting that a number of counterfeit businesses thrive on loans that they use to edge out legally conducted businesses. Counterfeits, according to a 2017 report from the Standard Bank, make government to lose in the excess of Shs15b taxes annually. Mr Muwema said the increased rate of counterfeiting and substandard goods, which Uganda National Bureau of Standard puts at 54%, needs to be fought head-on with government and institutions such as banks blacklisting involved companies.

Kenya: Chinese inspection company suspended by Kebs (The Star)

Kenya Bureau of Standards has suspended one of the main inspection agents, China Certification and Inspection Group (CCIC) Limited following a government review on performance to counter illicit trade. CCIC has been a Kebs’ appointed agent since 2015, mandated to carry out inspection of inspection of imported products at the country of origin. The inspection is done in line with the Pre-export Verification of Conformity to Standards programme that ensures goods comply with the approved specifications before issued with certificate of conformity. Trade and Industry CS Peter Munya said the inspection agent covering China mainland or Zone 2 breached its contract, letting substandard goods into the country. “Kenya cannot continue being a dumping ground for these goods. We need to protect our industries,” Munya said. SGS (Zone 4) was also suspended of its activities in Indonesia, Malaysia, Thailand and Vietnam. PS Betty Maina said the companies have been given between 40-50 days to pay a levy 10 times the cost of inspection charged on to importers.

How should the government bring small firms into the formal system? Experimental evidence from Malawi (World Bank)

Developing country governments seek to reduce the pervasive informality of firms for multiple reasons: increasing the tax base, helping firms access formal markets and grow, increasing the rule of law, and as a means to obtain data that can be used for other government functions. However, there is debate as to the best approach for achieving these goals. This study conducted a randomized experiment in Malawi to test three alternatives: (a) assisting firms to obtain a business registration certificate that offers access to formal markets but imposes no tax obligations; (b) assisting firms to obtain business registration and tax registration; and (c) supplementing the assistance to obtain business registration with a bank information session intended to help firms utilize one of the key potential benefits of formalizing. Extract (pdf):

Our results highlight the importance of how governments attempt to bring firms into the formal system for their ability to achieve their different goals from doing so. Even without tax registration, we find the existing transaction costs of registering a business are enough to deter the average firm from registering their business. Yet when we offer our assistance, which brings the costs close to zero, a large majority (75%) of the firms register their businesses. This brings most firms into compliance with this law and provides the government with basic data on firms. However, on its own, this registration brings no discernable private benefits to the firms, nor does it increase trust in state institutions. Second, the disincentive to register for taxes outweighs any potential benefits plus the removal of transaction costs: the take-up of our offer of assistance for tax registration was around 4%, similar to the take-up rates in several other tax formalization experiments. Finally, it appears that transaction costs are not the only barriers that prevent formalization from contributing to firm growth.

Diamond trade must reform in face of threat from synthetic stones: US (Reuters)

The diamond trade must confront its tarnished image and revamp its certification scheme or risk seeing increasingly demanding consumers spurn natural stones in favor of cheaper synthetic diamonds, a senior US official said. “(Consumers) probably think they’re getting anything from a green standard to a human rights standard to a high labor standard, and in fact none of that is really conveyed by the Kimberley Process,” Pamela Fierst-Walsh told Reuters on Monday. Fierst-Walsh - senior advisor on conflict minerals for the United States, the world’s top consumer of diamonds - spoke as Kimberley Process members weigh reforms ahead of a meeting in Brussels in November.

Global value chain policy series: regulatory coherence (WEF)

A key challenge in the International regulatory cooperation (IRC) agenda at the regional level is that some regions, including Sub-Saharan Africa, the Middle East and North Africa and South Asia (pdf) are not forming part of these PTAs that include comprehensive disciplines on regulatory transparency and coherence. Similarly, the G20 discussions involve a limited number of emerging economies. Given that these are important future markets for investment and participants in GVCs, their engagement in IRC efforts would be desirable. Technical assistance and capacity development have an important role to play in this regard. On the other hand, the WTO’s Investment Facilitation for Development initiative does include a considerable number of developing and least-developed countries from all regions. Hence, the WTO initiative provides a good pathway to advance IRC in a manner that is inclusive and calibrated to the capacities and concerns of developing countries.

Today’s Quick Links:

TZ customs official: Let us avoid nursery wars to boost trade

Africa; the next big thing for Kenya’s tourism sector

Daniel Moss, in Bloomberg: The new face of globalization is regional

Taxing the digital economy in Malaysia: How do we balance growth with sustainability?

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