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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Mercator Media

17 Oct 2018

15 minute read

African trade policy events now underway:

  1. In Nairobi: The 6th Pan African Conference on Illicit Financial Flows and Taxation

  2. In Brazzaville: Republic of Congo, UNECA workshop on the harmonization of ECCAS, CEMAC trade policy instruments

Diarise:

  1. Starting tomorrow, in Cape Town: tralac’s AfCFTA Stakeholder Workshop (18-19 October)

  2. COMESA and the AfCFTA: a perspective by COMESA’s new SG, Chileshe Kapwepwe (Friday, 19 October, Chatham House)

  3. 18th International Economic Forum on Africa: launch of Revenue Statistics in Africa (31 October, Paris)

From this week’s tralac training workshop on trade and integration reporting: Stakeholders call for speedy ratification of Africa’s Free Trade Area Agreement


These are the world’s most competitive economies

How well countries adapt to the Fourth Industrial Revolution (4IR) will determine whether they ‘thrive’ or ‘stagnate’ and could further divide workforces and increase social tensions, according to the latest version of the World Economic Forum’s Global Competitiveness Report. Almost 40 years after its first annual assessment of the global economy, the Forum’s 2018 report uses new methodology to understand the full impact of the 4IR, and finds factors including human capital, agility, resilience, openness and innovation becoming increasingly important. The new index measures 140 economies against 98 indicators, organized into 12 ‘pillars’ or drivers of productivity, to determine how close the economy is to the ideal state or ‘frontier’ of competitiveness. Extracts (pdf):

Looking at regional patterns, the top 20 of the GCI 4.0 rankings is composed almost exclusively of economies from Western Europe (10 economies), North America (2), and East Asia and the Pacific (7). In fact, East Asia and the Pacific achieves the highest median score (72.6) among all regions, slightly higher than Europe and North America (70.8). At the other end of the spectrum, 17 of the 34 sub-Saharan African economies studied are among the bottom 20 globally, and the region’s median is a low 45.2, less than halfway to the frontier. Yet the disparities within each region are profound (Figure 2). Mauritius (63.7, 49th), sub-Saharan Africa’s best performer, is nearly 30 points and over 90 places ahead of Chad (35.5, 140th). Across the seven regions, the average score gap between the best and worst performer is almost 30 points.

Mauritius ranks 49th globally. With a score of 63.7 out of 100 it achieves the best performance in Sub-Saharan Africa, in line with 2017. Mauritius’s leading position in the region is reflected in a GDP growth consistently above 3% since 2006, and above 4% over the past three years. The competitiveness performance of Mauritius is relatively strong in eight of 12 GCI pillars, where it ranks 67th or higher. Among these eight pillars Mauritius has achieved its best score on the product market pillar (65.6, 19th), thanks to a high degree of openness (6th) and a non-distortive fiscal policy (62.6, 16th). In addition, Mauritius is characterized by strong business dynamism (66.5, 35th) and sustained by lean administrative requirements (83.2) that enable companies to open and close with relative ease. Finally, Mauritius has achieved a strong performance on the Institutions pillar (38th, 62.9), second only to Rwanda in the region.

South Africa ranks 67th globally – with a score of 60.8. Among its strengths, South Africa is home to a large market size (68.4), good infrastructure (68.6) and a well-developed financial system (82.1, 18th). More specifically, South Africa’s financial sector offers a relatively balanced access to various sources of finance, including credit (100.0, 11th), venture capital (33.0, 63rd), equity (100.0, 2nd) and insurance (100.0, 3rd). In addition, South Africa’s innovation capability is relatively advanced (44.3, 46th), although limited by insufficient research and development (37.5). Among its weaknesses, South Africa’s performances on the health pillar (43.2, 125th) and security (43.7, 132nd) sub-pillar are among the worst in the world. Only 54% of the adult population has access to the internet, and only 70 out of 100 people have subscribed to mobile-broadband services (66th). Similarly, the digital skills (116th) and critical thinking skills (78th) of the current workforce are inadequate for the progress of a successful economy in the Fourth Industrial Revolution.

Table of contents. Chapter 1: Global findings; Chapter 2: Regional and country analysis; Chapter 3: Benchmarking competitiveness in the Fourth Industrial Revolution: introducing the Global Competitiveness Index 4.0


Rilwan Akeyewale: Who are the winners and losers in Africa’s Continental Free Trade area? (WEF)

What next?. Without comprehensive policy-making and preferential treatment for Africa’s most at-risk economies, the AfCFTA could prove to be a force for economic divergence, rather than a force for good. It is therefore important that participating countries build an efficient and participatory institutional architecture to avoid leaving any economies behind. To increase the impact of the trade deal, industrial policies must also be put in place, especially those concerning SMEs and manufacturing. These must focus on productivity, competition, diversification and economic complexity. Furthermore, individual countries under the agreement should introduce policies that address the concerns of labour unions, encourage healthy competition without killing local businesses, ensure strict adherence to waste disposal and protect intellectual property. [The author is CEO, Grandir Inc.]

Amadou Sy: Get the plumbing right – financial integration should support Africa’s trade integration (OECD)

However, lost in the debate about leveraging Africa’s trade integration for stronger and more inclusive economic growth is a policy discussion on increased financial integration. This is not surprising as architects often pay little attention to the plumbing of the buildings they are designing. Yet, plumbers should be taken more seriously. Indeed, the African financing infrastructure can be seen as the plumbing of the continent’s trade integration. And what are some of the necessary building blocks?

Unlocking markets, cross-border trade in Africa using technology (CIO)

Several key technology trends augur well for the implementation of the AfCFTA once ratified and could act to mitigate some of its risks. Two major examples of this are the rising profile of digital commerce platforms (taken in the context of the increasing interconnectedness of market participants via mobile technology) and the combined impact of such fields as data analytics, artificial intelligence and blockchain technology in optimising the production and flow of these goods and services between member countries, while enabling effective value-capture by harnessing economies of scale.

Israeli businesses, exporters encouraged to expand Africa operations (Jerusalem Post)

Israeli companies and exporters were encouraged to expand their trading operations in Africa on Wednesday, with those operating on the continent due to benefit from a further $700m in trade insurance supplied by the state-owned Israel Foreign Trade Risks Insurance Corporation (ASHRA). Citing increasingly healthy diplomatic ties between Israel and African nations, the Economy Ministry, accountant-general and ASHRA decided to double the existing $700m insurance coverage available to Israeli companies operating in Africa to a total of $1.4bn and thereby encourage more Israeli companies to trade on the continent. ASHRA will provide insurance policies backed by a state guarantee to Israeli companies working in a range of African countries, including allocating $150m in insurance coverage to those operating in Kenya, $105m to those in Nigeria, $70m for those in Uganda, $60m for those in Cameroon and $33m for those in Ethiopia.

China prudent in providing financing to Angola (Macauhub)

Angola obtained additional funding of $2bn from China, less than the $11bn sought, as China became more prudent in its lending to the African nation. Speaking about the State visit to Beijing by Angolan President João Lourenço (8-9 October), a source quoted by Angolan newspaper Novo Jornal, said that the $2bn credit line opened by the China Development Bank represents a policy change in the granting of credit, where the application of the funds should be “well justified” according to the country’s priorities. The amount was lower than that sought by Angola because the Chinese Government considered that the needs submitted can initially be met with the amount now available. [China, Angola agree to promote ties as presidents meet in Beijing]

UK-Ghana Investment Summit: address by Baroness Fairhead

It is part of our drive for a stronger, more coherent and more targeted UK approach to Ghana. Only last week, our Trade Envoy to Ghana, Adam Afriyie, witnessed the announcement of a joint venture between the UK’s Baird & Co. and the Precious Minerals Marketing Company for the establishment of an assaying plant in Ghana’s International Airport zone – a first for the region. And yesterday, we convened the first UK-Ghana Business Council – a six-monthly government to government forum to take forward our new strategic partnership. UK Export Finance support in Ghana is in high demand. It has capacity to offer local currency financing, so firms can ‘buy UK, pay Ghanaian’. UKEF’s impact has already been demonstrated through projects such as the Offshore Cape Three Points oil and gas project, for which UKEF provided $400m in finance, and the recently financed Kumasi Airport Phase 2 expansion project. And this is only a part of the wider strategic agenda we have across Africa. [The author is the Minister of State for Trade and Export Promotion]

Nigeria: Senate probes state oil company over import subsidies (News24)

The Nigerian Senate launched a probe on Tuesday into spending by the state oil company of some $3.5bn in import subsidies which was not approved by parliament, a statement said. The fuel subsidy scheme has been described as a sprawling web of patronage and mismanagement, a microcosm of the dysfunction in modern Nigeria. There have been mounting allegations that the Nigerian National Petroleum Corporation (NNPC), which is solely responsible for these imports, has been spending money to subsidise the products without first seeking approval from parliament.

Women’s rights and trade: time for a radical shift (CONCORD)

Today, European decision-makers widely acknowledge that the EU trade policy is not gender-neutral, and that this needs to be addressed. A concrete policy measure that receives a lot of attention is the integration of specific provisions – such as a dedicated chapter – on trade and gender in trade agreements. CONCORD welcomes this greater attention to the interactions between trade and women’s rights and would like to contribute to ongoing debates with this submission. We highlight (pdf) the limitations of what a separate gender chapter or provision can achieve, especially if it is not enforceable, and suggest considering the possibility to include gender equality and women’s rights in the existing sustainable development chapters of trade agreements, that should become enforceable.

Improving food security early warning systems for East and Southern Africa (World Bank)

An assessment of food security early warning systems was conducted to improve food security and resilience in East and Southern Africa. The study aimed at assessing challenges and opportunities for improving food security EWSs for enhanced resilience in ESA. The performance and capacity of EWSs at the regional economic cooperation level and at select member states were assessed. The challenges that recur across the RECs and member states fall into institutional, technical, and sustainability and financial challenges. Actions required to overcome the challenges include:

Today’s Quick Links:

Wandile Sihlobo: The problem with being a net importer of wheat

New APRA briefs: (i) The political economy of agricultural commercialisation in Zimbabwe (ii) Policy processes and political economy: Ghana country review

In Second Committee debate, countries call for moving beyond income to achieve SDGs

Caribbean countries set to reduce cross-border trade hurdles

Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development: Boom to challenge lithium-rich developing countries

Multi-agency meeting: Economic challenges lie ahead as climate change wreaks havoc

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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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