tralac’s Daily News Selection
(i) COMESA-EAC-SADC Tripartite Transport and Transit Facilitation Programme: validation workshop for cross border road transport agreements, model laws and regulations (22-26 October, Addis Ababa)
(ii) Africa Fintech Summit (8-9 November, Lagos)
The African Development Bank has provided a grant of $8.1m to finance the Lobito Corridor Trade Facilitation Project to map out a strategy for its development. The Corridor traverses four Provinces in Angola namely Huambo, Benguela, Bei and Moxico, four Provinces in The Democratic Republic of Congo namely Kantanga, Tanganyika, Lomami and Lualaba as well as two provinces in Zambia namely, Copperbelt and Northwestern. The Financing will go towards Capacity Building for Trade facilitation and Corridor coordination, Technical Assistance for Value chains development and economic Cluster development and project Management to meet part of the investment requirements on the Corridor over the next three years.
Africa Finance Corporation announces its successful acquisition of a loan facility from the Export-Import Bank of China of a $200m five-year loan and a $100m five-year stand-by facility for general corporate purpose. The facility from CEXIM marks AFC’s inaugural financing facility from the PRC. This follows the Corporation’s strategic focus to build a broad coalition of investors by diversifying its fundraising activities to include all sources of institutional capital in East Asia, in addition to its existing partners in Europe & North America. To date, the AFC has invested approximately $4bn in projects within 28 countries across North, East, West and Southern Africa.
Kenya to merge finance agencies to form development bank (The East African)
Kenya plans to merge three state-owned development financial institutions into a mega bank, in an attempt to raise funds for its infrastructure projects, amid growing public debt. The Industrial and Commercial Development Corporation, IDB Capital and the Tourism Finance Corporation, which have a huge combined balance sheet, have been earmarked for amalgamation to form the Kenya Development Bank. The structure of the proposed bank is still under discussion, but The EastAfrican has learnt that the government will be leveraging the large balance sheet of the unified bank to secure long-term funding from foreign financiers, using a banking model similar to that of the East African Development Bank and the African Development Bank.
Jibrin Ibrahim: Researching and understanding West African societies (Premium Times)
A clear winner of the West African crisis is China, which is increasing its commerce with the zone, extracting natural resources for its own benefit but also contributing to the infrastructural and social development of the zone. One example that was examined was the massive transformation in physical mobility enabled by the fact that China is able to produce and deliver extremely cheap Completely-Knocked-Down (CKD) motorcycles to West African shores at the rate CFA200,000 or 60,000 naira per unit. The quality of the products is not very high but for the people of West Africa, this has completely transformed the ability of the masses to move. It is also bringing new trade as each CKD has 2,000 different parts that young mechanics are able to put together. The session on motorcycles raised interesting issues about smuggling into the Nigerian market. In 2016, for example, Nigerian motorcycle imports from China was worth $83 million, while that of tiny Togo was $208 million for the same year, the target being the Nigerian market.
Peter Biwott: Market access key to Kenya manufacturing revamp (Business Daily)
There will be value addition for Kenya’s agricultural export products with target markets within the African region and the US. Our UK trade relations have been balanced, but the volumes show very low bilateral trade. Over the last decade, Kenya’s exports trend to the UK have been declining characterized by a narrow range of products mostly comprising of low value raw or semi-processed products, while imports from UK are diverse high value products. Value addition and manufacturing present an opportunity for increased returns in forex earnings, the ultimate answer to the objective to grow our economies that have impact on the livelihoods of the citizens. This will form main area of engagement during the upcoming Intra Africa Trade Fair in December 2018, where Kenya is seeking to use Government to Government (G2G) as well as Government to Business (G2B) as a platform to ensure over 22 AfCFTA member states ratify the free trade protocols to enable citizens realise free trade and invest within the Continent. [The author is chief executive officer, Export Promotion Council]
Nigeria: Ports inefficiency undermining diversification drive, says LCCI (The Guardian)
Lagos Chamber of Commerce and Industry, says the adverse operating environment of the nation’s ports will continue to hinder Federal Government’s effort, to reduce its dependence on oil revenues for economic development. The LCCI President, Babatunde Ruwase, made the statement during the LCCI Freight Forwarders Group annual seminar on Thursday in Lagos. Tagged, Trade Facilitation on Nigeria Integrated Customs Information System (NICIS II)- advantages and development, Ruwase said significant efforts were made in reforming the maritime sector through concessioning of the ports in the early 2000s, but results of the reforms were below expectations. He said that the regulatory landscape was complex with numerous public agencies regulating private terminal operators and myriad of businesses in freight forwarding, logistics and trade: “Consequently, operators and users of Nigerian ports are faced with bureaucratic red tape, constant delays, high cost and illegal charges.”
The Commitment to Reducing Inequality Index 2018 (Oxfam America)
In 2015, the leaders of 193 governments promised to reduce inequality under Goal 10 of the Sustainable Development Goals. Without reducing inequality, meeting SDG 1 to eliminate poverty will be impossible. In 2017, Development Finance International and Oxfam produced the first index to measure the commitment of governments to reduce the gap between the rich and the poor. The index is based on a new database of indicators, now covering 157 countries, which measures government action on social spending, tax and labour rights – three areas found to be critical to reducing the gap. This second edition of the Commitment to Reducing Inequality Index finds that countries such as South Korea, Namibia and Uruguay are taking strong steps to reduce inequality. Sadly, countries such as India and Nigeria do very badly overall, as does the USA among rich countries, showing a lack of commitment to closing the inequality gap. The report recommends that all countries should develop national inequality action plans to achieve SDG 10 on reducing inequality. Extract (pdf):
Seven of the world’s most unequal countries are in Africa. Across the continent, inequality is harming the potential of growth to reduce poverty and deliver shared prosperity, and is hindering the emergence of a new middle class. Instead, the benefits of economic growth are all too often accruing to a small minority. The gap between rich and poor is greater than in any other region of the world apart from Latin America, and in many African countries this gap continues to grow. Table A5 shows the rankings for each pillar and the overall ranking for Sub-Saharan African countries included in the CRI Index. [Downloads include: summary, full text, statistical audit (all pdf). An interactive version of the report can be accessed here]
Digitalization and industrialization: friends or foes? (UNCTAD)
IMF, World Bank Annual Meetings: selected updates
Simeon Djankov blog: The World Development Report 2019 – the changing nature of work – is finally out, officially
Intergovernmental Group of Twenty Four on International Monetary Affairs and Development. We are concerned with rising debt vulnerabilities. We urge the international financial community to strengthen its support of developing countries’ efforts to deal with the interrelated challenges of debt and growth. Flexible implementation of the LIC Debt Sustainability Framework and Debt Limits Policy should accommodate countries’ much needed infrastructure and social spending while preserving debt sustainability. We call for stronger and faster action from the IMF, World Bank Group (WBG), multilateral partners and donors on capacity building for fiscal and debt management, improving debt transparency and developing domestic capital markets. We encourage countries to maintain institutional capacity in these critical areas. We emphasize the joint responsibilities of debtors and creditors in fostering debt transparency and sustainability, and also encourage effective creditor coordination.
Christine Lagarde: New economic landscape, new multilateralism. This kind of partnership is integral to the new multilateralism - not least because tensions arising from exclusion and climate change do not respect national borders. In that sense, solidarity is self-interest. The new multilateralism must also be more inclusive - open to diverse views and voices. It must be more people-oriented - putting human needs first. And it must be more effective and accountable - delivering results for all. The IMF is at the heart of this new multilateralism.
Keeping Asia at the forefront amid growing risks. The Regional Economic Outlook: Asia and Pacific also finds that declining firm dynamism - the decline in young firms, and the rise of so-called zombie firms in financial distress - has played a role in Asia’s declining productivity growth. Measures to boost firm entry and exit can help support economic growth. Furthermore, the regional assessment highlights the significant impact that digitalization is having on the region. For instance, digital innovations accounted for nearly one-third of Asia’s per capita growth over the past two decades. To ensure that the region fully harnesses the digital dividend, policy makers will need to upgrade education, infrastructure, and the regulatory environment. At the same time, digital disruptions -such as displaced workers from automation - will need to be addressed, and financial stability risks from fintech must be managed. These are all serious challenges, but they are surmountable. With continued sound policy making, Asia should have good prospects for staying at the forefront of global growth over the coming decade and beyond.
Today’s Quick Links:
From manufacturing led export growth to a 21st Century inclusive growth strategy for Africa: summary of inaugural Babacar Ndiaye Annual Lecture delivered by Joseph Stiglitz (15 October 2017; pdf)
Nigeria requires $1trn to modernise energy infrastructure: VP Osinbajo