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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Dominic Chavez | IFC

30 Oct 2018

Alert: The Doing Business 2019 report will be released tomorrow (Wednesday)

Featured newsletter: African Cotton, Textiles & Apparel Monitor #32

Featured trade commentaries: Raj Bhala: The resurrection of import substitution (BloombergQuint Opinion); Phil Levy: What’s wrong with the World Trade Organization? (Forbes)

Turning tides: EY Attractiveness Program Africa

After facing its lowest economic growth in over 20 years, Sub-Saharan Africa posted a slow recovery in 2017 The IMF forecasts a modest rise in the region’s GDP growth from 2.8% in 2017 to 3.4% this year. In tandem with improved economic performance, FDI projects into Africa rebounded from their lowest level in a decade. Last year, Africa registered 6.2% growth in inward investment projects compared with 2016. Extract (pdf):

Africa’s FDI is more evenly spread than ever before. For the first time since we began tracking FDI in Africa, four of the five regions (East, West, North and Southern Africa) hold an almost equal share of the continent’s FDI projects. We are also seeing investment shifting between countries for the first time. South Africa, once the clear leader in attracting FDI, now shares the top rank with Morocco. This is the first time that South Africa has been challenged in terms of being the most preferred investment destination (measured by FDI project numbers). Ethiopia jumped seven places to become the fifth-largest FDI recipient, its highest ranking yet. These shifting FDI dynamics illustrate a broader trend. Outside South Africa, as growth across the rest of the continent accelerates, so they take a greater share of inbound investment.

Rwanda is, by far, Africa’s most successful country in terms of attracting FDI. This is evidenced by the fact that Rwanda ranks as one of Africa’s most business-friendly destinations. It is also one of the continent’s most consistent rapid growth economies. Rwanda receives 1.5 FDI projects for every US$1 billion of GDP. Measured on the same criteria, South Africa receives only 0.32 projects, attracting only 20% of what Rwanda does, given its relative size. Major economies, such as Nigeria and Angola trail by an even larger margin, receiving only 0.16 and 0.02 projects respectively. Both countries also rank very low on the Ease of Doing Business rankings compared with their counterparts in the continent. That, coupled with their recent low growth after plunging oil prices in 2016 and the same scenario persisting in 2017, would explain their low score according to this methodology.

Zimbabwe: Finance Minister’s speech on promoting FDI (UN-OHRLLS)

In the area of infrastructure development and maintenance, Zimbabwe is currently in the process of upgrading and modernising its road infrastructure along major trade corridors that serve East and Southern Africa, linking the North-South transport Corridor. For those road projects already completed, a Costs-Time-Distance study government has shown that the average speed of heavy trucks has increased from 33km/hr prior to the rehabilitation exercise to the current 48km/hr. This does not only reduce transit time and costs, but also improves competitiveness. Being a landlocked country, Zimbabwe has undertaken a number of reforms to promote and facilitate investment. The country has signed 35 Bilateral Investment Treaties and 10 of these are in force. These provides for pre-and-post investment facilitation and protection. Zimbabwe has also signed 9 Treaties with Investment Provisions and 7 of these are in force. [Various downloads available]

Ease of doing business in Nigeria: a case for eliminating multiple tax reviews, audits and investigations (Deloitte Nigeria)

The National Assembly, EFCC, Ministry of Justice, and other bodies have also been involved in the review of records of various taxpayers. FIRS and SIRS also conduct different types of reviews on taxpayers’ records some of which cover the same taxes and periods. The duplication of activities by government bodies in monitoring and ensuring tax compliance in Nigeria is clearly an inefficient use of resources by both government and taxpayers. Bearing the above issues in mind, as FGN seeks to achieve the budgeted tax revenues for 2018 and beyond, by ensuring increased tax compliance and improved efficiency in tax collection, the following actions may be considered:

Wandile Sihlobo: Predicting the El Niño effect (Fin24)

Admittedly, it is too early to tell how most Southern African countries will cope with the expected weak El Niño in the summer season. Typically, an El Niño weather phenomenon would lead to drier weather conditions in most countries on the continent, almost similar to what we witnessed in the 2015-16 drought years. However, when it is weak, as expected, the impact could be minimal. Above all, the production estimates [noted above] seem to show that they will be able to tide most southern African countries over this forecast El Niño, as it is not expected to be as harsh as the 2015/16 edition which caused widespread drought. The countries that could be pressured, such as Zimbabwe, could find supplies from South Africa, which should comfortably sit with surplus maize. Most importantly, the South African farmers and maize exporters might not face tough competition from neighbouring producers such as Zambia and Malawi, as was the case in the previous year, due to expected tighter supplies in these countries. [AfDB rolls out programme to boost climate risk financing and insurance for African countries]

UAE, Uganda to establish one of the world’s first agricultural free zones (The National)

The UAE signed a deal with Uganda yesterday to establish one of the world’s only agricultural free zones in an attempt to enhance food security in the Emirates. The 2,500-hectare free zone will allow private companies from the UAE to invest in agricultural production and development in Uganda. Mariam Al Mehairi, Minister for Food Security, told The National it will also act as a launch pad for further investment into East and Central Africa. “There is a lot of potential to be unlocked in that area,” she said. The agreement was signed at Agriscape, a two-day exhibition in Abu Dhabi that convenes dozens of producers, suppliers and investors from across the globe. The deal will promote agribusiness between the two countries and lead to an increase in UAE imports of Ugandan crops and beef. [Quick take: Why is African agribusiness luring GCC investors?]

AfricaRice Council of Ministers sends strong signal of commitment to drive Africa’s rice agenda (CGIAR)

The 31st Ordinary Session of the Africa Rice Center (AfricaRice) Council of Ministers held recently under the chairmanship of Dr Papa Abdoulaye Seck, Minister of Agriculture and Rural Infrastructure of Senegal, reaffirmed strongly its commitment to support AfricaRice to help accelerate Africa’s rice self-sufficiency. Calling it a “historic” session, the chair stated: Extracts from resolutions: The Chair of the AfricaRice Council of Ministers should address a letter to the System Council and the System Management Board conveying the concerns of member states of AfricaRice about the drastic reduction in financial resources allocated to Centers, and in particular destined for rice research, whereas rice constitutes a strategic crop for Africa. AfricaRice should solicit institutional and financial support from the AU and the RECs in Africa, through advocacy actions. AfricaRice should extend the Continental plan for Accelerating Rice Self-Sufficiency in Africa study to other member countries in order to provide strategic evidence-based information that will guide decisions for investments in priority areas of the rice value chain and accelerate the attainment of rice self-sufficiency by 2025 in all member countries of AfricaRice. The Council ratified the adhesion of Mozambique and accepted to examine and ratify in due course the request of Kenya for adhesion to AfricaRice. [We’ll make Tanzania major rice producer in region, pledges JICA chief]

Local pharmaceutical appeal to EAC govts for protection against imported drugs (New Vision)

Pharmaceutical manufacturers in the EAC have appealed to authorities in partner states to impose duties on imported medicines that compete with the locally manufactured. They say the medicines imported from mainly China and India, where manufacturers enjoy big economies of scale and get subsidies from their governments were killing local industries by selling cheap products, making it hard for them to compete in the market. The manufacturers also complain that importers of cheap medicines win tenders to supply medicines to government institutions and agencies because they bid with relatively lower rates.

Uganda: Government puts SGR on hold over unresolved issues (Daily Monitor)

Finance minister Matia Kasaija has said government has put on hold the Standard Gauge Railway venture and has instead turned attention to revamping the old metre-gauge railway network until unresolved issues with Kenya and China have been concluded. “It is apparent the SGR is going to take us a lot of time to complete. First, we have to wait for Kenya to reach at the Malaba [border] point then we can start,” Mr Kasaija told Daily Monitor yesterday. He said government, in the interim, is refurbishing the old railway line as “an alternative” to lower transportation costs for traders. Uganda and Kenya first agreed to construct the SGR in 2008 but the arrangements were only concretised in 2012.

President Museveni, according to sources familiar with the venture, in recent months had been directly involved in discussions on the project, and had hoped to secure financing for the first section of the railway line during his visit to China last month when he attended the seventh FOCAC summit. But he returned empty-handed. However, Mr Kasaija revealed that during the discussions in Beijing, it was agreed that “Uganda and Kenya will embark on joint financing negotiations” after Kenya has completed the current Nairobi-Naivasha section. “Kenya also has its own problems which we cannot speak about in public. We shall wait for them to settle but on our side, we have already compensated people from Tororo to Iganga. When they finish their part, we shall proceed with it.”

American trade delegation looks to expand business opportunities in Southern Africa (Engineering News)

An American trade delegation, comprising businessmen from more than 30 American companies and state government leaders, is in South Africa seeking to expand agricultural export opportunities in the region. The trade delegation, which arrived in South Africa on Monday and will conclude its visit on Friday, is being led by US Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney.

Ghana: Enforce laws on retail trade – GUTA (Ghanaweb)

The Ghana Union of Traders Association has implored government to enforce the Ghana Investment Promotion Centre Act 865 section 27, which bars foreigners from engaging in retail business or trade. Ashanti Regional Secretary of GUTA, Mohammed Ali, noted that the call was not to intimidate foreigners in Ghana but rather to encourage authorities to implement the statutory laws of the country without fear or favour. According to him, most foreigners in the retail business evade taxes as well as sell sub-standard products. [Related: The Lagos Chamber of Commerce and Industry will hold a roundtable discussion tomorrow on ECOWAS integration and the challenges faced by Nigerian traders in Ghana]

Ghana: GRA revokes licenses of 20 freight forwarders (Ghanaweb)

The customs division of the Ghana Revenue Authority has revoked the operating licenses of 20 freight forwarders for falsifying the port of loading documents from India to other countries. They also under-declared the values presented to customs for duty and tax purposes. Out of the 20 freight forwarders being sanctioned, 13 are said to have diverted transit goods while seven are being punished for falsifying the port of loading documents from India.

Nigeria: Oil firms, others yet to remit $22bn to federation account – NEITI (Leadership)

The Nigeria Extractive Industries Transparency Initiative said yesterday that the Nigerian National Petroleum Corporation) and its subsidiary, Nigerian Petroleum Development Company, and other oil and gas companies are yet to remit a total of $22.06bnand N481.75bn to the Federation Account. According to NEITI, the amount is part of the un-reconciled difference of its audited accounts of the companies for the year 2013 and 2014. These figures were released at a national conference on remedial issues with the theme, “Resolving Remedial Issues In The NEITI Industry Audit Reports”, held in Abuja. [NEITI executive secretary: Why remediation processes are slow]

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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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