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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Arne Hoel | World Bank

31 Oct 2018

G20 Africa Investment Summit: selected updates

Remarks by South Africa’s Cyril Ramaphosa. We are convinced that the impact of the Compact with Africa initiative will be enhanced by the involvement of development finance institutions. Among other things, these institutions have expertise and approaches that could be used to mobilise resources for Africa’s infrastructure. As part of the effort to promote private investment on the continent, South Africa and the African Development Bank will host the inaugural Africa Investment Forum in Johannesburg (7-9 November). The Africa Investment Forum is a transactional platform bringing together international financial institutions, sovereign wealth funds and institutional investors. South Africa, Germany and the African Development Bank will also host the annual Compact with Africa Investor Event on the morning of 8 November.

Remarks by Rwanda’s Paul Kagame. We fully share Chancellor Merkel’s impatience to achieve measurable and sustainable results through new projects. After all, the best way to speed up business climate reform is to attract more global firms to Africa, and small- and medium-sized businesses as well. This produces a demonstration effect, which in turn generates even more productive investment. In other words, a virtuous cycle. The Volkswagen “Moving Rwanda” venture, which Thomas Schaefer will present in the next session, is a very good example of what is possible. Let me share three important features of this project that have broader relevance. First, the supply chain involves multiple countries in East and Southern Africa, in a “hub-and-spoke” system. A regional approach is key to achieving economies of scale in Africa. Continental integration is also making this an increasingly viable strategy, as I referred to earlier. Second, Africa can be a global innovation laboratory. East Africa is a young market for new car sales. But we have a great need for mobility solutions, which raise the productivity of the wider regional economy. Volkswagen is not only assembling vehicles in Rwanda, it is pioneering next-generation business models for shared, environmentally-friendly transport. Third, Volkswagen’s approach has attracted other major players that might not otherwise be in Rwanda, notably Siemens.

Summary of remarks by Ethiopian Prime Minister Abiy Ahmed. “We would like to see similar, more investment from G20 countries and hope this platform continues to play a driving and catalytic role. As I conclude, I would like to assure my government’s commitment and seriousness to take all the necessary measures required to attract and retain investment to Ethiopia.” [Summary of remarks by Ghana’s President Nana Addo Dankwa Akufo-Addo]

IMF’s Christine Lagarde: Realizing the potential of the G20 Compact with Africa. Sixteen months on from the Berlin Summit that effectively launched the initiative, we can, and should, ask ourselves whether Compact countries and their international partners are doing enough to fully implement the initiative, and where we can make further progress. The IMF continues to work closely with Compact countries to build strong macroeconomic, business, and financial frameworks that will encourage a scaling-up of private investment. We maintain a close policy dialogue with all 12 Compact countries, and IMF-supported programs are in place in 10 of those countries. During 2017 and 2018, the Fund fielded 129 technical assistance missions in Compact countries and trained more than 1,700 government officials, in areas including tax administration, public investment management capacity, and financial sector supervision, to name a few. [Germany announces $1.14bn fund for Africa]

DW’s Ludger Schadomsky: New name but same mistakes in Compact With Africa. Once again the IMF and the World Bank are on board. Instead of being called SAP, the investment program has been called the Compact With Africa. The CWA, however, has “missed the point,” according to the German-African Business Association, which is not known for being hostile to commerce. The involvement of private investors in the development programs for – and with – Africa is to be welcomed, and the mode of traditional development aid is rightly discredited. But the mistakes of the SAPs are being repeated: The CWA is very narrowly focused on macroeconomic conditions and neglects UN sustainability targets, as well as the goals set out in the African Union’s Agenda 2063.


Doing Business 2019: main findings

Doing Business captured a record 314 regulatory reforms between 2 June 2017, and 1 May 2018. Worldwide, 128 economies introduced substantial regulatory improvements making it easier to do business in all areas measured by Doing Business. The economies with the most notable improvement in Doing Business 2019 are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d’Ivoire, Turkey and Rwanda. One-third of all business regulatory reforms recorded by Doing Business 2019 were in the economies of Sub-Saharan Africa. With a total of 107 reforms, Sub-Saharan Africa once again has a record number this year.

Case study:  pdf Trading across borders (12.76 MB) : Training has been pivotal when introducing new electronic systems, such as customs management systems or national electronic single windows. Doing Business data show that many economies - including Afghanistan, Grenada and Jamaica in 2016, Cabo Verde and the Comoros in 2017 and Angola and Lesotho in 2018 - have experienced reductions in the time to prepare documentation following training programs or pilot tests when implementing the Automated System for Customs Data World, a customs data management system developed by UNCTAD. Brazil, Brunei Darussalam and Kenya also experienced positive results following the implementation of national electronic single window systems in 2017; by increasing awareness of the new platforms through training and seminars, they reduced documentary compliance time as measured by Doing Business.


African trade, finance updates

Africa Trade Forum 2018: update

The Forum (2-3 November, Lagos) will be hosted by Nigeria’s Ministry of Industry, Trade and Investment, and co-organised by the UNECA, the AUC, and the Rockefeller Foundation. The Forum’s purpose is to look into the challenges and opportunities of the AfCFTA in individual African states, and to better understand how AfCFTA can drive economic development and prosperity on the continent for all of Africa’s citizens.

Angola: Selected policy notes for the incoming administration (World Bank)

The Angolan economy is at a juncture. The current growth model based on oil wealth is nearly exhausted, and has not delivered inclusive growth and shared prosperity. The challenge for the administration is to restore macroeconomic stability and lay the foundations for a new, more inclusive growth model that can support a young and growing population. The objective of these Angola Policy Notes (pdf), written from the perspective of the World Bank, are to support the government in its reform agenda. The 15 concise policy notes, dated 14 March 2018, range from consideration of short-term macro stability to policies in support of economic diversification and long-term inclusive growth. The policy notes reflect the World Bank’s past and current engagement in Angola in several sectors, and provide a short diagnostic of the current situation and present policy options for reforms.

Kenya: China threatens to withhold SGR funds over ‘hostility’ (Daily Nation)

Funding for the next phase of the Standard Gauge Railway could be in jeopardy after China threatened to impose trade sanctions on Kenya in retaliation at a ban on Chinese fish. Acting ambassador Li Xuhang described the ban as a “trade war”, warning that his country could react in the same way it did to US President Donald Trump’s imposition of tariffs on Chinese goods. Mr Li was addressing a group of MPs, academics with links to Chinese institutions and others invited for a familiarisation tour of the SGR at the Chinese embassy in Nairobi Tuesday morning. He revealed that the embassy had a letter from the Fisheries Department cancelling all applications for imports of Chinese fish. Imposition of the ban on Chinese fish follows President Kenyatta’s remarks recently when he publicly wondered why imported fish should be flooding the Kenyan market at the expense of local produce. The refusal to sign the deal was to express displeasure at what China views as an increasingly hostile operating environment, citing negative media reports and public bashing by politicians. President Kenyatta is also expected to sign an agreement during a return visit to China early November, which would ease exportation of Kenyan food and agricultural products to the vast Chinese market.

South Africa: September 2018 trade deficit (SARS)

The South African Revenue Service has released trade statistics for September 2018 recording a trade deficit of R2.95bn. The year-to-date (1 Jan - 30 Sept) trade deficit of R0.33bn is a deterioration on the surplus for the comparable period in 2017 of R44.89bn. Exports year-to-date increased by 5.6% whilst imports for the same period showed an increase of 11.5%. The September trade deficit is attributable to exports of R113.69bn and imports of R116.64bn. Exports decreased from August 2018 to September 2018 by R3.06 billion (2.6%) and imports increased from August 2018 to September 2018 by R8.66 billion (8.0%). The Africa region trade surplus of R14 198 million is a deterioration of R4 624 million in comparison to the R18 823 million surplus recorded in August 2018.

Nigeria: Global Financial Integrity releases new study on trade misinvoicing (GFI)

The report,  pdf Nigeria: Potential revenue losses associated with trade misinvoicing (1.79 MB) , analyzes Nigeria’s bilateral trade statistics for 2014 (the most recent year for which sufficient data are available) which are published by the United Nations Comtrade. The detailed breakdown of bilateral Nigerian trade flows in Comtrade allowed for the computation of trade value gaps that are the basis for trade misinvoicing estimates. Import gaps represent the difference between the value of goods Nigeria reports having imported from its partner countries and the corresponding export reports by Nigeria’s trade partners. Export gaps represent the difference in value between what Nigeria reports as having exported and what its partners report as imported. The portion of revenue lost due to the misinvoicing of exports was $1.3bn during the year which was related to a reduction in corporate income taxes. The portion of revenue lost due to the misinvoicing of imports was $880m. This amount can be further divided into its component parts: uncollected VAT tax ($100m), customs duties ($365m), and corporate income tax ($415m). Lost revenue due to misinvoiced exports was $1.3bn for the year which is related to lower than expected corporate income and royalties.

Alibaba founder Jack Ma in Kigali (New Times)

China’s e-commerce billionaire and Alibaba Group founder, Jack Ma, is expected in Kigali today to launch a number of initiatives on which his firm will partner with Rwanda. According to Alizila, Alibaba Group’s news platform, one of the major announcements expected to be made is the launch of the Electronic World Trade Platform (eWTP).

TradeMark East Africa gives Rwanda Revenue Authority $1.5m to upgrade system (Taarifa)

The Rwanda Revenue Authority has received US$ 1.57 million from TradeMark East Africa (TMEA) to upgrade its Electronic Single Window and Authorised Economic Operator Programme. This marks the start of the second phase of the Rwanda Electronic Single Window (RESW). The second phase will be marked by various upgrades which will be implemented up until June 2022.

ODI’s Linda Calebrese has launched a bi-monthly blog of China and international development: six things to read in October

IATA forecast predicts 8.2bn air travelers in 2037: Africa will grow by a CAGR of 4.6%. By 2037 it will see an extra 199 million passengers for a total market of 334 million passengers.

International Centre for Settlement of Investment Disputes: 2018 annual report. Demand for the Centre’s services continues to increase, demonstrating the importance of its role. In FY2018 ICSID registered 57 new cases, the highest number in ICSID’s history. A full analysis of the cases is published in the ICSID Caseload – Statistics every six months and is summarized in Chapter 3 of this report.

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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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