Some keynote, Q1 2019, African trade policy discussions to diarise:

1. Trade Policy Review for the East African Community (20, 22 March 2019, Geneva). This will be the only African trade policy review during the 2019 cycle.

2. Conference of African Ministers of Finance, Planning and Economic Development (20-26 March 2019, Morocco). The theme: Fiscal policy, trade and the private sector in the digital era – a strategy for Africa.

African Economic Conference 2018: updates

(i) Africa’s “easy decade” of accelerated economic growth is coming to an end, and only accelerated job creation and integration will ensure sustainable growth and development across the continent, says renowned economist. This is indicated by Professor Paul Collier, one of the world’s most influential development economists. Dr Collier, Professor of Economics and Public Policy in the Blavatnik School of Government, was delivering a keynote address at the African Economic Conference 2018 during a high-level panel on ‘Drivers, opportunities and lessons for Africa’s integration’. Collier added that connectivity between African countries will unlock the potential of many countries, and this connectivity has to be in terms of both physical transport and political ideology. “Small countries are doomed to poverty unless they have open markets and free societies. And yet, the typical African country is small, with closed markets. That is a disastrous combination. So the African Continental Free Trade Area is a very important step forward.”

Professor Ademola Oyejide, Emeritus Professor of Economics at the University of Ibadan and Chairman of the Centre for Trade and Development Initiatives, noted that regional integration must drive overall continental integration. “We should not destroy regional economic communities by protectionism and unnecessary barriers to trade. We as African leaders are not in the business of designing theoretical regional programmes: we expect real progress from the regional blocs.”

(ii) African countries must leverage their strengths to accelerate drive towards integration: Speaking during the opening ceremony, Claudine Uwera, Rwanda’s Minister of State in charge of Economic Planning said: “Africa's integration is no longer a choice. It's a must for the continent and its people. To become the global player that it deserves to be, Africa should integrate speedily.” Experts agree that a self-reliant approach that emphasizes intra-African trade, would not only help deepen regional economic integration, but contribute significantly to sustainable economic growth, job creation, poverty reduction, and inflow of foreign direct investment.

(iii) ECA Deputy Executive Secretary Giovanie Biha issued an impassioned plea for countries that are yet to sign the historic AfCFTA to do so while also urging those that have already signed to ratify the accord so it can go into force. In her opening remarks to the 2018 African Economic Conference, Ms Biha said it was time everyone interested in Africa’s future, and the continent taking its rightful place on the global arena, galvanized around the AfCFTA. Ms Biha said for the AfCFTA to “Leave no one behind”, the agreement needs to be approached strategically. “For the AfCFTA to truly deliver on expected transformative objectives, it will be necessary to ensure that the benefits are indeed shared. This includes a special attention on gender equality, among other issues of inclusiveness, in the AfCFTA process.” [Download:  pdf Statement by Ms Giovanie Biha (327 KB) ]

(iii) Continental and regional integration for Africa’s development: statement by Ahunna Eziakonwa (UNDP Assistant Administrator and Regional Director for Africa). Africa must not shy away from addressing the potential costs of integration. Regional and continental integration is not without costs. One of them is trade diversion, which displaces low cost products from non-members by higher cost products from the integrating countries. Revenue loss associated through tariff cuts and indirectly from shift away from imports from non-member states that are subject to tariffs is another. The third is preventing cross-border crimes that could be associated to free movement of people and capital. Strategies and mechanisms to ensure these costs are mitigated must be put in place for the benefits for regional integration to be maximized.

Africa Data Center Association: launch details (Trade Arabia)

Initiated by Schneider Electric, the Africa Data Center Association, a non-profit, Pan-African professional association, was launched at BroadGroup’s inaugural Datacloud Africa Leadership Summit, in Marrakech. During the summit, more than 50 members joined the founding members of the association, which now has 30 data centre operators and 30 partners and suppliers; Fatoumata Sarr Dieng, director of wholesales at Sonatel, Orange, was elected as the new president. Other board members are the secretary general, Ayotunde Coker of Rack Centre, Nigeria; and the treasurer, Wouter Van Hulten of Paix Data Centres, Ghana. Dieng said: “Our new association has three main objectives. First, we want to put our assets in Africa together, to hold our data in Africa. Second, we want to solve the issue of latency time and connectivity we have currently on the continent. Finally, we want to become a major actor in the new digital economy.” [Africa Fintech festival begins in Lagos]

World Customs Organisation’s policy commission: India’s Jaitley pitches for easing trade barriers

Union Finance and Corporate Affairs Minister Arun Jaitley: “From the point of view of consumers, they are entitled to goods and services that are indeed the best and most cost-competitive… No nation can manufacture all products or specialise in all forms of services. And therefore, trading across the barriers of nations is an economic imperative of the time.” Revenue Secretary Ajay Bhushan Pandey: “While all assistance is to be given for legitimate cross-border trade, dangers posed by illicit trade are too damaging to be ignored. The key challenge for the Customs today is to arrive at a convergence of facilitation and enforcement. The economic frauds cut at the very roots of our nation and must be dealt with severely.” [WCO: India’s trade facilitation measures remarkable]

China: Customs clearance times to be halved by 2021 (China Economic Net)

China’s General Administration of Customs aims to cut average clearance times in half by the end of 2021, and implement more measures for speedier imports and exports, said an official on Friday. “The general clearance time has been shortened by over 40% for eight weeks in a row,” said Zhang Guangzhi, a member of the Party group of General Administration of Customs, in a press briefing. According to GAC, by the end of October, the average import clearance process took 50.14 hours, nearly half the 97.39 hours seen last December. Export clearance times meanwhile took 6.3 hours on average in October. Zhang said the GAC will continue to implement the 20 measures to optimize the business environment for cross-border trade the State Council put forward earlier this year, including optimizing the process, increasing efficiency, and lowering costs. China Customs has entered into mutual recognition agreements with nine business organizations and 36 countries and regions, including the European Union, South Korea and Singapore. [China to adjust cross-border e-commerce import policies]

A new tax framework for the digital economy (ICC)

In light of the prominence of this topic, ICC has convened a group of business experts to develop a policy framework of internationally established tax principles for consideration in determining relevant policies to address the taxation of the digitalised economy. The framework is intended to help define the contours of a suitable tax framework for the digitalised economy that encourages business activities, job creation and economic growth. It also reinforces the need to build a coherent international regulatory framework for world business which builds on principles that can accommodate continued evolution in digitalised business models.

Malaysia’s Digital Free Trade Zone initiative: Government aims for e-commerce sector to achieve 20% growth in 2020 (Malaysian Reserve)

The e-commerce industry is set to achieve an annual growth rate of 20% in 2020, an increase from 14.3% growth in 2017, with the support of the country’s investment on the fourth industrial revolution. Deputy International Trade and Industry Minister, Dr Ong Kian Ming, said the industry contributed RM85.8 billion to the country’s GDP last year, a figure measured for a period of seven years. He said currently, there are only 5,000 SMMEs that have participated in the Digital Free Trade Zone initiative, an amount that is incomparable to the current state of Malaysia’s SME sector. “The platform has only received 5,000 SMEs in the system and we want to include as many SMEs as possible, because DFTZ itself has been a successful platform over the past couple of years. If we can increase the number to at least half of the current SME presence in Malaysia, (then) we are on the right track to achieve the growth rate and contribution target.”

OECD Jobs Strategy: Good jobs for all in a changing world of work

Governments need to do more to help workers and firms adapt to the fast-changing world of work and drive inclusive growth, according to the new OECD Jobs Strategy. New evidence in the report reveals that countries that promote job quantity, quality and inclusiveness – such as Denmark, Iceland, Norway and Sweden – perform better than those which focus predominantly on market flexibility. While flexibility and adaptability are essential to stimulate the creation of high-quality jobs in an ever more dynamic environment, the gains and costs need to be fairly shared between businesses and workers, according to the OECD. [Various downloads, including country findings]

Developing countries and services in the New Industrial Paradigm (World Bank)

The traditional export-led manufacturing model provided the twin benefits of productivity gains and job creation for unskilled labor in the past. Over the past two decades, however, the peak shares of manufacturing in value added and employment across a range of developing economies occurred at lower levels of per capita income compared to their high-income, early-industrializer precursors. Looking ahead, there is a concern whether labor-saving technologies associated with Industry 4.0 - such as robotics, the Internet of Things, and 3-D printing - will make it even more difficult for lower-income countries to have a significant role in global manufacturing. Can services-led development be an alternative? This paper provides a conceptual framework to inform the discussion, drawing on available empirical evidence from the literature on the subject.

States diverge, cities converge: Drivers of local growth catch-up in India (World Bank)

This paper takes a fresh look at growth convergence in India, combining insights from macroeconomics and urban economics. It departs from the existing literature in three ways. The quality of state-level governance has a significant impact on local growth, but variations in city governance are only mildly relevant. The share of medium and large firms plays a role, but the sectoral structure of economic activity does not. And the coverage of primary education is an important predictor of subsequent growth, but not that of other levels of education. Strong convergence at the local level can be reconciled with lack of convergence at the state level if low-income states fail to generate enough locations with the “right” characteristics.