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tralac’s Daily News Selection

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

08 Nov 2018

Featured trade policy tweet, @CohenOnAfrica: US government withdrawal of AGOA privileges from Mauritania due to reports of slavery is essentially symbolic – trade with Mauritania is small in volume. Important to maintain a strong relationship with the country, which has the best track record in Africa in counter-terrorism.

The Nordic-Africa Business Summit 2018 is taking place today in Oslo. Profiled panel: Africa’s Gateway to Investment and Trade. The programme can be accessed here.

Institutional reform of the African Union is the major focus of the 11th AU Extraordinary Summit underway in Addis Ababa

Africa Investment Forum: latest press releases. Keynote address by President Cyril Ramaphosa: Economic integration – whether at continental or regional level – will further deepen the inter-connectedness of African economies. The fortunes of any one country will be even more closely dependent on the fortunes of all countries. As South Africa, this informs our approach to investment and development. We have launched an ambitious investment drive to raise $100bn in new investment over the next five years. This is vital to reigniting growth in our economy and creating jobs on a far greater scale. Two weeks ago, we held the inaugural South Africa Investment Conference here in Johannesburg, where several companies announced new investments to a total value of R290bn. Any investment in South Africa is an investment in Africa. [Gauteng premier David Makhura: This is the right time to host the Africa Investment Forum]

Regional integration and non-tariff measures in ECOWAS (UNCTAD)

This study provides an institutional overview of NTMs and an assessment of its impacts on regional integration in West Africa. It is part of a global initiative, the Global transparency in trade Initiative, jointly implemented by the Bank, UNCTAD, ITC and the World Bank to improve transparency in and access to trade data. ECOWAS was the first region in Africa in which the partners systematically mapped, collected, organized and analyzed all NTM data, including non-tariff barriers and behind-the-border regulations such as SPS measures and TBTs. The report utilizes innovative methods to assess regulatory convergence and evaluate the impact of NTMs from an economic, legal and institutional perspective. From the analysis, clear policy recommendations are identified for policy makers in ECOWAS and their development partners. Extract:

The incidence of quantitative restrictions in ECOWAS is low on average but these restrictions tend to be concentrated in some countries and important sectors and have significant impacts where they appear, increasing product prices by almost 50%. The number of technical measures (including SPS and TBT) varies as well across countries, being relatively high in the economically more developed countries and low in most of the least developed countries in ECOWAS. Each single measure tends to increase product prices by about 1.5%. Regulatory convergence is beneficial for ECOWAS countries and can reduce trade restrictions by over 25% only by aligning existing measures. This could increase intra-ECOWAS trade by 15% and increase income in ECOWAS countries by $300m annually. A higher reduction of trade costs can be achieved through further regulatory convergence. Regulatory convergence towards international standards has the highest benefits for ECOWAS for both intraregional trade and export competitiveness. Converging towards international standards increases intraregional trade by 14%and income in ECOWAS by $1.57bn annually. [Download pdf Regional Integration and Non-Tariff Measures in ECOWAS (957 KB) ]

NANT commends ECOWAS for its role in resolving trade dispute (ECOWAS)

The Vice President of the Commission of ECOWAS, Madam Finda Koroma, urged a delegation from the National Association of Nigerian Traders to have confidence in the Commission to handle disputes among member states and community citizens in line with ECOWAS protocols and utmost neutrality. Madam Koroma made this statement on 7 November in Abuja, while receiving the President of the NANT, Ken Ukaoha, who led a delegation to thank and show appreciation to the Commission for the role it played in the re-opening of over 400 shops and businesses belonging to Nigerians in Ghana. Mr Ukaoha expressed his delight with the fact that after the association made its grievances known to the Commission, its management moved swiftly to ensure that the shops and businesses were re-opened as a result of a meeting between the Nigerian President Muhammadu Buhari and his Ghanaian counterpart Nana Akufo-Addo on the margins of the United Nations General Assembly which was held in September 2018.

South Africa: New Africa, global trade, investment and industrialisation strategy framework approved (GCIS)

Cabinet approved the Strategy Framework for the pursuit of South Africa’s strategic economic interests globally as it relates to trade, investment and industrialisation. The strategy aims to ensure that international engagements serve the country’s domestic policy imperatives such as poverty alleviation, unemployment and inequality. The strategy advocates that South Africa pursue development integration in the rest of Africa supported by an investment led strategy and build strategic alliances to advance its agenda. It also consolidates its trade and investment relations with developed countries and pursues inward investments, skills and technology transfer and value–added exports. [Shabby South Africa ‘misses the boat’ at China trade fair]

Kenya-China trade relations: tweeted updates by @Trade_Kenya

Today in Shanghai, a bilateral meeting between the Ministry of Commerce, People’s Republic of China and the Ministry of Industry, Trade and Cooperatives, Republic of Kenya was held on the sidelines of the China International Import Expo. In furtherance of the political goodwill and their commitment to create market access, the two Ministers signed the Memorandum of Understanding on the establishment of a Working Group on Promoting Trade. Furthermore, the two sides also agreed that the Agreement on Sanitary and Phytosanitary cooperation between Kenya and People’s Republic of China will be signed as soon as China legal procedures are finalized. The signing of the MoU will facilitate the opening up of Kenya’s export of agricultural commodities to People’s Republic of China. [KNCCI chairman Kiprono Kittony asks Kenyans to learn Chinese]

Debt sustainability in developing countries is deteriorating fast (UNCTAD)

UNCTAD Deputy Secretary-General Isabelle Durant agreed that the facts were worrying. “By the end of 2017, the ratio of global debt to global GDP was almost one-third higher than it was on the eve of the world’s worst global financial crisis in 2008. The world’s outstanding debt accounts for more than three times the world’s GDP, the main concern being the growth of non-financial corporate debt.” She said that the debt-to-GDP ratio exceeded 70% in a fifth of emerging and middle-income countries and was more than 60% in low-income countries. “This leads to the following observation: in mid-2018, the number of low-income developing countries in over-indebtedness or at high risk of it reached 31 – as against 13 in 2013. The number has practically tripled!” Ms. Durant said.

Extracts from the background paper: pdf Financing for development – debt and debt sustainability and interrelated systemic issues (704 KB) : An immediate implication of rising debt ratios are higher debt service burdens, even under favourable financing conditions. For developing and transition countries as a group, the debt-service-to-export ratio rose from 8.7% in 2011 – its lowest point since the onset of the global financial crisis – to 15.4%in 2016. In 2017, this fell to 13.6%, largely due to a recovery of some commodity prices since mid-2016. In the least developed countries, this ratio also saw a pronounced increase from 4.1% in 2008 to almost 10% in 2017, and in sub-Saharan Africa it more than tripled from 3.8% in 2011 to 12.9% in 2017. In poorer economies, interest payments as a percentage of government revenue more than doubled from 5.7% in 2008 to 14% in 2017, and to 18.5% in sub-Saharan Africa, reaching as much as 30% of tax revenue in some sub-Saharan economies.

Throughout the 2000s, there has also been a marked shift from public and publicly guaranteed towards private non-guaranteed debt, with the share of private non-guaranteed debt in developing country external debt rising from 28% to almost half of total external debt between 2000 and 2009. Initially led by South and South-East Asian economies, this pattern of debt composition spread to sub-Saharan Africa, where the share of private non-guaranteed debt in total long-term external debt stocks increased sevenfold in the first 15 years of the millennium, from $10bn to $70bn. Non-financial corporate debt in emerging market economies has now risen to over $30 trillion or just under 95% of combined GDP, surpassing comparable levels for developed markets.

Aubrey Hruby: The future of development finance (Atlantic Center)

The BUILD Act has big implications for African markets, in which demographic growth has fueled an employment crisis and funding for entrepreneurial ventures remains painfully limited. A new issue brief by Africa Center Senior Fellow Aubrey Hruby, The future of development finance (pdf), suggests that the new USDFC can catalyze job creation and conflict-prevention efforts while countering China’s rise – but only if policymakers create an agency prepared for future market realities. Hruby also recommends that the new USDFC should prioritize investments in areas of US competitiveness, such as finance, management services, and entertainment, rather than in Chinese-dominated sectors such as infrastructure. Hruby’s brief offers the policymakers tasked with creating the USDFC in the next 120 days with a practical outline for creating a development finance institution capable of capturing the accelerating returns of the African marketplace.

pdf Power Africa Transmission Roadmap to 2030: Practical approach to unlocking electricity trade (5.04 MB)

The Power Africa Transmission Roadmap identifies 10 major immediate opportunities for regional power trade in East, West, and Southern Africa. These opportunities reflect current or projected imbalances in power supply/demand, and have an economic rationale, i.e., importing power would be cheaper for a given country than generating it domestically or resorting to emergency power generation. Specifically:

Two opportunities in East Africa: Exports to Tanzania (EKTZ line) and Southern Africa, and sub-regional trade in the Nile Basin (NELSAP power interconnections). Four opportunities in Southern Africa: Central corridor from South Africa to the DRC; integrating Malawi into the power pool; western corridor delivering power to Namibia; and bringing new power capacity to the region (e.g., Mozambique). Four opportunities in West Africa: Interconnection of the Senegal-Guinea axis (OMVG line); addressing power deficits in landlocked countries (e.g., Burkina Faso); enabling Côte d’Ivoire to export to the West (CLSG line); and addressing regional imbalances in the eastern Gulf of Guinea.

Africa-Europe Partnership: speech by Vice-President Federica Mogherini (EU)

And so I come to the real centre of our cooperation and I close on this. Beyond migration, beyond security, our cooperation is now driven by two main goals: create good jobs and good opportunities for the African youth and engage constantly with the young people of Africa. I am happy to see here youth representatives because the rhetoric, the narrative of you being the future for Africa is simply not matching reality. You are the present of the continent and the only way to get it right is to let you influence the policies we are putting in place. We have established as European Union, together with the African Union, initiatives to have the young generations of Africa and of Europe and of the diaspora heard and to get their voices, that are very clear and loud, to the decision making process. We have established in particular an [AU-EU] Youth Plug-In Initiative that created an opportunity for young people to create proposals on concrete projects. I am happy to say that next week in Paris they will be at the [Paris] Peace Forum to present their ideas to world leaders and influencers, to make these projects reality and some of them are supported by the European Union.

OFID Quarterly: Africa – a bright future? (pdf)

Third “1+6” Roundtable: statement (World Bank)

Premier Li Keqiang of the State Council, together with WBG President Jim Yong Kim, IMF Managing Director Christine Lagarde, WTO Director-General Roberto Azevêdo, OECD Secretary-General Angel Gurría, FSB chairman Mark Carney and ILO Deputy DG Deborah Greenfield held the “1+6” Roundtable in Beijing, and reached the following common understanding: We support the objectives of the Belt and Road Initiative and its synergy with other relevant regional connectivity initiatives to facilitate open and inclusive economic cooperation, ensure affordable, accessible, inclusive and broadly beneficial infrastructure to enhance connectivity and trade and investment liberalization and facilitation of participating countries. We emphasize the importance of social, fiscal and environmental sustainability of projects, while striking a good balance among economic growth, social progress and environmental protection.

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