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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: UNDP | AusAid

27 Nov 2018

Diarise: Role of capital markets in mobilizing domestic resources in Africa – a capacity building workshop (5-7 December, Gaborone). Download the concept note (pdf)

Featured commentary, by Vera Songwe: African countries should demand loans are made in local currencies

Featured blog, by Pinelopi Goldberg: First day on the job...and WDR 2020

My vision for the next WDR, which we have already started work on, is that it reflects the zeitgeist as it sets out to analyze the implications of the changing face of globalization for development. Our starting point is this wholly new level of country interdependence. The world has always been interconnected – but international trade today is fundamentally different, both qualitatively and quantitatively from the last World Development Report on Industrialization and Foreign Trade written thirty years ago. Tariff reduction and significant advances in production, communication and transportation technologies led to the emergence and expansion of global value chains. From the early 1990s until the mid-2000s global trade grew at twice the rate of income growth. Which brings us to the present, where production is fragmented and distributed across multiple locations, and the parts produced in each place are shipped across the globe – often crossing borders multiple times.

WDR 2020’s goal is to understand why global value chains have formed in some sectors and regions, while others have been left out. It will examine how they affect growth, inequality and poverty. The report will consider the role of new technologies and trade policies in creating incentives to produce closer to home. It will explore how national policies can promote sustainable development and if international cooperation on trade, as well as other policies, can support inclusive growth. [The author is the World Bank’s new Chief Economist]

Commonwealth Regional Consultation on Multilateral, Regional and Emerging Trade Issues for Africa: outcomes, documentation

The regional consultation was held on 15-16 November in Mahé, Seychelles. The meeting, following the Second African Trade Negotiators Meeting, brought together over 40 participants, including trade policymakers from various African capitals, Geneva-based trade negotiators, eminent policy experts from the WTO, UNCTAD, AUC and prominent regional bodies such as COMESA. Acting Head of International Trade Policy at the Commonwealth Teddy Y. Soobramanien: “These consultations are timely, give the tremendous evolution of global trade landscape in the last decade. With the rise in non-tariff barriers to trade, slow progress in WTO trade talks, and the threat of trade wars, it is important for African countries to strategise on how to respond to these trends.”

Sessions covered: Presentation of the 2018 Commonwealth Trade Review: key issues and findings for Africa; WTO issues of interest to the Commonwealth African countries; Harnessing digital trade opportunities for Africa; E-commerce discussions and the development dimension for African countries; Improving African micro-small medium enterprises access to markets; Implications of investment facilitation and services facilitation for Africa; Strengthening regional integration in Africa

Andrew Mold: The consequences of Brexit for Africa – the case of the East African Community (Journal of African Trade)

This paper looks at the available empirical evidence and carries out a Computable General Equilibrium simulation, focusing particularly on the prospects for the EAC. The paper makes three main points. First, while the direct impacts through investment, trade and remittances are likely to be relatively small, African countries may benefit from the creation of new export opportunities. However, these are mainly in resource-intensive sectors that are not considered a priority for the development agendas of most African countries. Second, indirect consequences, through Brexit’s impact on the global economy, its influence on the EPAs with the EU, or a potential reduction in UK development cooperation, are likely to be equally important over the longer run. Finally, one overlooked consequence of Brexit for Africa is that it could undermine confidence in ‘deep’ regional integration processes like the EAC. [Journal of African trade: articles in press]

The Djibouti City – Addis Ababa transit and transport corridor: turning diagnostics into action (UNCTAD)

Landlocked Ethiopia needs a liberal trade policy and an efficient and reliable transport and logistics network if it is to meet the targets of the country’s Second Growth and Transformation Plan. The targets include expansion of the manufacturing sector, value-addition in all productive sectors, and a three-fold increase in the values of exports. Currently, opportunities created by Ethiopia’s low cost inputs (labour and energy) are cancelled out by factors relating to trade logistics. For example, the labour costs of making a T-shirt in Ethiopia are one third those of China, but the logistics expenses of exporting the T-shirt mean that the Ethiopian-made shirt sells for the same price as a Chinese shirt on international markets.

Ethiopia’s growth strategy has been driven by a massive public investment programme which reached almost a quarter of the country’s gross domestic product in 2014 and has accounted for around half of all growth in the economy since 2011. Spending on roads has been about 4% of GDP every year over the last five years, and the Addis Ababa-Djibouti Railway has cost Ethiopia about $3.4bn. However, without this expenditure on infrastructure there would be limited scope for improving logistics, and without such progress, Ethiopian manufacturers and other producers will not be price-competitive in most regional and international markets. The Ethiopia- Djibouti corridor provides Ethiopia’s only significant commercial access to the sea. The study is the culmination of a series of activities to implement the actions (terms of reference) agreed on and to prepare a project proposal for the establishment of a management authority for the Djibouti-Ethiopia corridor. [Note: The study was drafted by Mark Pearson, under the supervision of Stefano Inama, UNCTAD’s ALDC. Download:  pdf The Djibouti City-Addis Ababa Transit and Transport Corridor: Turning Diagnostics into Action (1.46 MB) ]

2018 PIDA Week: updates

  1. AU High Representative for Infrastructure Development, pdf Mr Raila Amollo Odinga (193 KB) , said Africa needs to move away from the conference and feasibility study syndrome and move to implement agreed projects if it is to successfully integrate and achieve sustainable development and change the lives of its citizens for the better. “Transformational decisions have to be taken if we are to move ahead. Africa must deal with political bottlenecks that hamper its development or we shall never compete. We must also overcome the habitual of feasibility study after feasibility study syndrome without implementing. We must change.” [African leaders must change, says Raila Odinga]

  2. CEO of the NEPAD Agency, pdf Mr Ibrahim Assane Mayaki (266 KB) , said Africa needs to accelerate the development of trans-boundary infrastructure projects if it is to fully integrate. He said a lot of progress has been made since African leaders adopted PIDA in 2012. “We recognise that optimal solutions for continental problems lie in regional integration. We are getting there progressively, but we need to accelerate implementation if we want regional integration. It’s not a question of lack of financial resources, it is a question of lack of bankable projects and sound rules. So we need to do our homework.”

  3. The ECA’s Chief of Industrialisation and Infrastructure, Mr Soteri Gatera: “The Luxembourg Protocol will support African economic integration and high speed rail networks through the provision of common rules covering cross border operation of rolling stock,” said Mr. Soteri, adding for public and private operators, the protocol opens up new capital sources and new ways of doing business – operating leasing leading to a larger, more dynamic, efficient, transparent and competitive industry. “As such it will be a game changer and will help Africa achieve its economic potential. We need your help to make this tremendous tool a reality. Governments need to sign and then ratify the Luxembourg Rail Protocol and lead the way.”

  4. pdf Presentation by the NEPAD Planning and Coordinating Agency to the Continental Business Network (405 KB) : immediate next steps for the African Infrastructure Guarantee Mechanism (i) Receive feedback on preliminary AIGM Discussion Paper; (ii) Conduct in-depth discussions with public and private sector providers of risk mitigation, reinsurance, and brokerage functions: define ways to expand coverage and scale to meet pension funds investment criteria; define ways to streamline access to risk mitigation; define optional implementation mechanisms; (iii) Test approach with Pension Funds in March 2019 conference (Mauritius); (iv) Present AIGM Plan at World Bank Spring Meetings; (v) Implement initial mechanism for Pilot Projects; (vi) Refine based on lessons earned and scale.

  5. NEPAD Agency, Global Water Partnership sign MoU to accelerate the implementation of priority continental water infrastructure projects; Accelerating project preparation and financing water projects in Africa. Presentation:  pdf Africa Water Investment Programme support to PIDA Water (1.53 MB)


African Union strengthens its sanction regime for non-payment of dues (AU)

The new sanctions regime stipulates the short and long term measures member states will face for defaulting to pay partly or in full, their assessed contributions, within a period of six months to two years. The categories of the sanctions are; cautionary, intermediate and comprehensive. The Deputy Chairperson of the AUC, Amb. Kwesi Quartey: ”As we speak now in the month of November, member states have only paid 50% of the assessed contributions for the year 2018. We therefore find ourselves in a precarious position where our planning, implementation and execution of programmes and activities is greatly hampered. The sanctions regime will therefore go a long way in addressing the weaknesses in the compliance arrangements.”

International economic cooperation in troubled times: A call for strong action by the G20 (ICTSD)

The leaders of the G20 will meet on 30 November and 1 December in Buenos Aires for their annual summit. They need to acknowledge that the last two years have been characterised by strong headwinds for the world economy. This time, however, it is not a mixture of poor macroeconomic policies and bad business decisions – as in 2008 when they met in Washington for their first summit – that endangers the well-being of billions of citizens around the globe. This time the threat stems from deliberate political decisions, in particular on trade. The danger emerges from an unholy trinity of insufficiencies in the trade book to address persistent trade distorting practices in major players, primarily with respect to a revival of mercantilist ideas, populist governments championing economic nationalism and uncompetitive advantages of state-owned enterprises. The G20 summit in Buenos Aires presents an eleventh hour opportunity to stop or at least mitigate these destructive forces, by taking strong action in favour of an open and rules-based system of multilateral cooperation on trade, investment and tax matters. [The authors: Axel Berger, Uri Dadush, Andreas Freytag, Simon J Evenett, Christian von Haldenwang, Ricardo Meléndez-Ortiz, Raul Ochoa, Agustin Redonda, Karl P. Sauvant]

A way forward on the functioning of the Appellate Body

The European Union with other members of the WTO – Australia, Canada, China, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore and Switzerland – unveiled a proposal for concrete changes to overcome the current deadlock in the WTO Appellate Body. The proposal will be presented at the meeting of the WTO General Council on 12 December. Commissioner Malmström: “The appellate body function of the WTO dispute settlement system is moving towards a cliff’s edge. Without this core function of the WTO, the world would lose a system that has ensured stability in global trade for decades. Now, together with a broad coalition of WTO members, we are presenting our most concrete proposals yet for WTO reform. I hope that this will contribute to breaking the current deadlock, and that all WTO members will take responsibility equally, engaging in good faith in the reform process.” [tralacBlog by Alan Wolff: Assuring Continuation of Effective WTO Dispute Settlement]

Solidarity and The South: new directions in long-term development finance (UNCTAD)

This compendium (pdf) presents some of the key elements of this trend, focusing on south-south banks, funds and other forms of regional financial integration. It shows a recognition of the power that comes when countries collaborate and stand together, melding national development objectives with those of their region. Alongside this trend towards regionalism, there has also been a significant change in attitude towards development banks, recognizing they fill an essential purpose that commercial banks cannot fulfil. The selection of papers and discussion in this volume is unusual in that it brings together first-hand experiences of lenders, borrowers and practitioners from Development Banks and funds (including the founder members of the new Southern-based bank), alongside the views of academics and policy makers.

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