tralac’s Daily News Selection
Today’s trade-related event postings:
The Government of Djibouti and the World Bank are, today, co-hosting a high-level event to explore the potential benefits of digital development and propose a concrete roadmap of action. The event will also highlight the need for bolder action on digital development engagement across the region.
Policy dialogue on strategies to broaden the investor base (14-15 November, Nairobi). This CABRI dialogue aims to improve communication and mutual understanding between the supply and buy sides and will consider policies and practices that may allay investor’s concerns which could lead to more sustainable sources of financing for the public sector.
Diarise the launch of UNCTAD’s Least Developed Countries Report (20 November)
Africa Trade Forum: Third World Network-Africa’s AfCFTA information brief
Stakeholders in the Dakar consultation were concerned about the role of technology and the overall digital economy with its potential benefits and challenges. The meeting further acknowledged that the digital economy in all its forms is central to the future of Africa’s economy and hence the imperative for Africa to develop its own space for trading without an external intermediary. The meeting also acknowledged that data is the fuel that drives the digital economy and hence African data is highly valuable, and should be kept, and exploited on the continent and therefore urged the AUC to lead on this. The Dakar consultative workshop also discussed imminent challenges and threats to the AfCFTA. Participants were concerned with the possible uneven distribution of costs and benefits. Countries with large productive capacities such as South Africa, Kenya, Egypt and Nigeria, in manufacturing may experience significant economic growth and welfare gains while small economies and LDCs may face substantial fiscal revenue losses and threats to local industries. Shrinkage of some sectors may result in unemployment. Consequently, substantial fall in budget revenues may adversely affect governments’ capacity to invest in infrastructure, education and social programs which are crucial for attaining sustainable development. [Related: Africa objects to e-commerce regulation]
Identification for Development: Uganda country diagnostic (World Bank)
The ID4D diagnostic was undertaken between November 2017 and June 2018 at the request from the Ministry of Internal Affairs of the Government of Uganda under the umbrella of the World Bank’s Identification for Development (ID4D) initiative.This work was done with excellent collaboration from NIRA’s management and personnel. Its objective was to analyze the identification ecosystem in Uganda, highlight strengths and achievements, suggest areas of improvement, and build consensus around recommendations and next steps. This was done through in-person interviews with over 40 government and private stakeholders, a field visit, and a literature review. Draft findings and recommendations were presented at a consultation workshop in August 2018, attended by over 50 experts representing 30 MDAs and private sector organizations. Feedback from the workshop is reflected in the report. [National survey and segmentation of smallholder households in Tanzania: understanding their demand for financial, agricultural, and digital solutions; e-Nigeria tasks govt on knowledge based digital economy]
Singapore Fintech Festival: keynote speeches
Narendra Modi. With the power of fintech and the reach of digital connectivity, we have started a revolution of unprecedented speed and scale. To begin with financial inclusion has become a reality for 1.3 billion Indians. We have generated more than 1.2 billion biometric identities – called Aadhaar or foundation – in just a few years. With our Jan DhanYojana, we aimed to give a bank account to every Indian. In three years, we have opened 330 million new bank accounts. These are 330 million sources of identity, dignity and opportunities. Less than 50% of Indians had bank accounts in 2014; now, it is nearly universal. So today, more than a billion biometric identities, more than a billion bank accounts and more than a billion cell phones give India by far the biggest public infrastructure in the world. More than Rupees 3.6 lakh crore, or $50bn dollars of benefits from government have reached the people directly. In short, the Indian story shows six great benefits of fintech: Access , inclusion; connectivity; ease of living; opportunity; and, accountability.
Christine Lagarde. When it comes to fintech, Singapore has shown exceptional vision – think of its regulatory sandbox where new ideas can be tested. Think of its Fintech Innovation Lab, and its collaboration with major central banks on cross-border payments. In this context, I would like to do three things this morning: Frame the issue in terms of the changing nature of money and the fintech revolution; Evaluate the role for central banks in this new financial landscape – especially in providing digital currency; Look at some downsides, and consider how they can be minimized. [IMF analysis: Casting light on central bank digital currencies]
Africa will continue to strengthen bonds of friendship and cooperation with the citizens of her sister continents. It is therefore a matter of great satisfaction and promise that our partnership with the European Union is as strong as it has been enduring. It is grounded in responsibility, respect and mutual accountability. The nations of the EU are a source of investment, trade, skills and knowledge, which has worked with us as South Africa in our quest to grow our economy and improve the lives of our people. As we look to the future, we will continue to count on the strength of this partnership between our countries and our peoples. It was international solidarity that enabled us to extinguish the evil system of apartheid. It was collaboration and partnership that bound the countries of Europe in a pact to never again return to the excesses and divisions of the past. Unity, partnership and solidarity are the principles that have underpinned our cooperation, across two vast and different continents, out of dark histories and into a promising new dawn. South Africa, Africa and the European Union are bound by shared values of democracy and respect for human rights.
South Africa: Potential revenue losses associated with trade misinvoicing (GFI)
Analysis of trade misinvoicing in South Africa from 2010-2014 shows that the potential average loss of revenue to the government was approximately $7.4bn per year or $37bn during the period studied, according to a new study by Global Financial Integrity. The report analyzes South Africa’s bilateral trade statistics for five year period 2010-2014 using information from United Nations Comtrade and data made available from the South African Revenue Authority. The detailed breakdown of bilateral South African trade flows 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 South Africa reports having imported from its partner countries and the corresponding export reports by South Africa’s trade partners. Export gaps represent the difference in value between what South Africa reports as having exported and what its partners report as imported. The average annual revenue lost due to the misinvoicing of imports was $4.8bn. This amount can be further divided into its component parts: [Download: pdf South Africa: Potential Revenue Losses Associated with Trade Misinvoicing (794 KB) ]
Engineers seek fairplay in major projects in EAC (The East African)
East African Community governments are under pressure from engineers, who are seeking equal opportunity in working on infrastructure projects in the region. The engineers say that despite a Mutual Recognition Agreement which was signed by four EAC member states to ease mobility of labour and services, they are yet to venture into major projects which are currently being undertaken by foreign contractors. Kenya, Tanzania and Uganda signed the MRA in 2012 and Rwanda joined in 2016. However, Burundi and South Sudan are yet to design because they have not yet established legal and institutional frameworks that regulate and oversee engineering work.
ASEAN Investment Report 2018: foreign direct investment and the digital economy in ASEAN (UNCTAD)
FDI flows to ASEAN rose to a record level, from $123bn in 2016 to $137bn in 2017, underpinned by significant rise in investment in eight Member States. As a result, ASEAN’s share of FDI flows to developing economies rose from 18% in 2016 to 20% in 2017. Of the total FDI flows to East and South-East Asia, ASEAN’s share also increased from 31% in 2016 to 34% in 2017. Intra-ASEAN investments, the biggest contributor to FDI flows in the region, reached a new high of $27bn, or around 19% to total inflows in the region. An important development in ASEAN is the rising investment in the digital economy, which includes e-commerce, fintech, venture capital and other digital activities such as in the development of data centres and various ICT infrastructure. Foreign and ASEAN digital MNEs and ICT companies are now increasing their attention on the region.
International Debt Statistics 2019 (World Bank)
International Debt Statistics 2019 is the World Bank’s compilation of statistics covering external debt and financial flows of 121 low- and middle-income countries during 2017 and an analysis of these data. Among key developments shown in the data (pdf): Net financial flows (debt and equity) to low- and middle-income countries rose 61% in 2017 to the highest level in three years, driven by a rebound in net debt inflows; Long-term debt inflows increased by 58% in 2017 to $309bn as a result of a rise in bond issuance; While external debt burdens on average remained moderate and were little changed from 2016, one third of low- and middle-income countries had a ratio of external debt-to-GNI above 60% at end 2017 and nearly half the countries had debt-to-export ratios exceeding 150%; Equity inflows of $511bn were little changed from the previous year as a sharp rise in portfolio equity inflows offset a downturn in FDI inflows; Public sector entities in the world’s poorest countries borrowed externally on a large scale in 2017 despite rising concerns about debt sustainability. [Related World Bank blog by Evis Rucaj]
GVC participation and deep integration in Brazil (World Bank)
One avenue to raise participation in global value chains is through (deeper) preferential trade agreements, and to this end the paper characterizes the level of integration of Brazil’s current preferential trade agreements. Brazil has witnessed high growth in total domestic value added embodied in gross exports since 1995, yet it exhibits lower international engagement in global value chains, but tends to be stronger as a seller than a buyer. Most of the participation on the selling side comes from indirect linkages with domestic input sectors, and services sectors have been important for growing the indirect value added in global value chain-oriented exports. A deep integration agenda focusing not only on border measures, but also on beyond-the-border measures, would help Brazil to maximize the benefits from participation in global value chains. Other than its natural partners, Brazil should integrate with countries where global value chains are taking place.
Examining the crude details: Government audits of oil and gas project costs to maximize revenue collection (Oxfam)
The petroleum sector offers governments huge potential revenues that could be invested in poverty alleviation and inequality reduction, but those revenues must first be collected. Taxes are levied on profits, but companies may seek to reduce their taxes by deducting ineligible or exaggerated costs, often paid to related parties. Governments’ essential tool to combat petroleum cost overstatement is the right to audit costs, but there is limited data on whether governments use this right effectively. Cost auditing practices in Ghana, Kenya, and Peru suggest that governments face significant challenges. Oxfam proposes recommendations to address these challenges and ensure that governments collect the taxes owed for the exploitation of their finite, nonrenewable petroleum resources.
Impact assessment for EA oil pipeline nears completion (The Citizen)
The Environmental Social Impact Assessment report for the East Africa Crude Oil Pipeline is in the final stages and will be completed by next month. The pipeline, which links Hoima in Uganda to Tanga Port in Tanzania, is expected to cost $3.5bn and planned to have a capacity of transporting 216,000 barrels of crude oil per day. Civil society organisations in Uganda and Tanzania yesterday convened a multi-stakeholder meeting to discuss updates on progress on the pipeline development, environmental social impact assessments, resettlement frameworks, commercial arrangements and other aspects related to the pipeline roll-out. “We expect to see a massive flow of foreign direct investment in the country amid completion of the pipeline project,” Tanzania Petroleum Development Corporation’s advocate Goodluck Shirima said when he addressed the meeting.
Today’s Quick Links:
Ghana’s 2019 Budget Statement will be presented tomorrow: a preview
TPDF soldiers arrive in Lindi to revamp cashew nut processing plant
World Bank: Economy profile of the DRC
Egypt’s private sector wins big at the Africa Investment Forum
India to deepen trade opportunities in Nigeria’s fashion industry