Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: AU-UN IST | Stuart Price

Starting tomorrow:

  1. Ministerial Retreat, in Nairobi, on trade facilitation in the EAC: ministers are expected to adopt a declaration of policy objectives for a regional trade facilitation strategy

  2. Assessment of the capacity building needs of AU member states and RECs to manage migration (pdf, 13-14 December, Victoria Falls, Zimbabwe)

Diarise: Southern African Business Dialogue (Dutch Ministry of Foreign Affairs, 10 January 2019, The Hague)

Intra-African Trade Fair highlights:

“We plan to have the shortest transition between entry into force of the [AfCFTA] agreement and operation of the market”: pdf Albert Muchanga, Commissioner for Trade and Industry (63 KB)  at the opening ceremony

“It is our duty to create the environment where the entrepreneurial spirit of Africans can succeed. Stronger economies yield the rewards of better health, education, improved employment opportunities and prosperity for all. I want our future generations to have greater expectations, greater choices and greater opportunities to succeed. It should be their right and I want this to become the norm rather than the exception.”: Former Nigerian President Olusegun Obasanjo, who is also Chairman of the IATF Advisory Council.

Africa eCommerce Week: five UNCTAD updates

  1. Mukhisa Kituyi commentary: Making digital development work for Africa

  2. High-level dialogue on trade and the digital economy in Africa. Stephen Karingi, director of the Capacity Development Division of the UNECA, said the African continental free trade area will require half of Africa to obtain a legal identity. This was a prerequisite of forming well-functioning e-commerce markets: “The continental free trade area will offer opportunities of scale and the free movement of people, goods and services.”

    Claire Messina, deputy executive director of the UN SG’s High-level Panel on Digital Cooperation, said that her starting point was that “no single actor” can achieve digital transformation. She also noted that digital transformation was not an end but a means to inclusion and support for human rights. “There is a massive upscaling of citizens and governments needed to move from an analogue to a digital world,” she said. “Digitalization is actually a form of democratization and returns agency from states to people. Africa is in a good place because it is full of entrepreneurs.”

    Ana Hinojosa, director of compliance and facilitation at the Customs Cooperation Council, said that border agencies everywhere were overwhelmed with small parcels and the solution was automation and non-invasive inspections. In Africa, she said, customs services had practical concerns like the ability to raise the revenue needed and stop the smuggling of, for example, arms. They needed to boost their capacity to digitize and attract the funds to do so.

  3. Tear down barriers and African e-commerce will thrive, say CEOs. Nicolas Martin, co-chief executive officer of African e-commerce giant Jumia, said while the most impactful actions were always the most long-term and expensive, there were low-hanging fruit to picked. For example, more needed to be done to tailor bespoke regulatory solutions for Africa in order to attract international investment and creative a conducive environment. He said the African investment climate “needed better PR”. He also said that simply implanting the 25-year old regulatory regimes of Europe into the six-year old market of Africa would be “suicide” for new businesses. “The coordinated effort of millions will bring about the change we need in Africa. The power of the marketplace is huge.” Richard Okot Okello, Uganda’s assistant commissioner for external trade, said cross-border connections remained too costly. “There is a lot that needs to be done,” he said. But without making better goods that are worth exporting, building digital trade platforms would only go so far, noting that so far e-commerce traffic favoured imports to Africa from abroad.

  4. pdf UNCTAD B2C E-commerce Index 2018 Focus on Africa (542 KB) . The top three African countries each has a distinctive strength in one of the four areas measured by the index. Highest ranked Mauritius has a considerable 13 point higher score than the next African country. This small island developing state scores relatively high in all four areas but particularly with regard to the share (90%) of the population having an account. In an effort to get more SMEs online, the Government launched a shopping portal in 2018 offering tax free purchases. Nigeria, the most populous African nation, ranks second, largely thanks to a significant increase in postal reliability as measured by the Universal Postal Union. As Africa’s largest B2C e-commerce market (in terms of both number of shoppers and revenue), reliable delivery of products is critical. South Africa is third, level with several other African countries (Cabo Verde, Gabon, Mauritius and Morocco) for its Internet penetration, with around six in ten inhabitants using the Internet in 2017. South Africa leads by some margin in the number of secure Internet servers per one million people, an indication of websites accepting online sales and payments.

  5. Madagascar, Uganda and Zambia set to exploit digital economy opportunities. For instance, Uganda’s mobile transactions amounted to a staggering $16.3bn, half the national GDP. But Zambia, where mobile money is gaining momentum, lags since Zambians prefer cash-on-delivery for e-commerce transactions. In Madagascar, only 6% of the population use the Internet and only 4% have bank accounts. But this means retailers are more likely to accept online payments via mobile phone. The Uganda assessment (pdf) recommends the establishment of a multi-sectoral task force on e-commerce to help create a common understanding of the opportunities and challenges associated with it. Doing so would also improve public-private coordination, the report outlines. The Zambia assessment (pdf) proposes accelerating the existing national addressing and postcode project. Since 2014, more than 60,000 house number and street number signs have been installed. Weak physical addressing remains a barrier for local e-commerce vendors. This means goods ordered online cannot always be delivered efficiently and reliably. The Madagascar assessment (pdf) highlights the need for a more efficient financing system for ICT and e-commerce start-ups. It recommends strengthening the dialogue between the private sector, the government’s Economic Development Board of Madagascar, technology start-ups and banks, who can together define the most common needs in the field of the digital economy. [ pdf Rapid eTrade Readiness Assessments of African LDCs: Key Statistics, Findings and Recommendations (1.54 MB) ]

Global economy updates

WTO’s Trade Policy Review Body: update on trade restrictive measures initiated by WTO members

The Director-General’s annual overview on trade-related developments presented to members on 11 December shows a significant increase in trade coverage of trade restrictive measures by WTO members from mid-October 2017 to mid-October 2018. While members continued to implement trade-facilitating measures, the trade coverage of the import-restrictive measures was more than seven times larger than that recorded in the previous annual overview. The report provides the first WTO-wide factual insight into the trade restrictive measures imposed in the context of current trade tensions and calls on WTO members to use all means at their disposal to de-escalate the situation. Extract from the DG’s speech: Let me be clear, however, that the trade coverage number does not shed light on the degree of restrictiveness of the measures adopted. Our report, therefore, does not measure the impact of the measures adopted. It simply quantifies the value of trade affected, with no qualitative analysis. [DG Azevêdo: 2019 will be a moment to renew and strengthen the WTO]

Migration and Development Brief 30: Accelerated remittances growth to low- and middle-income countries in 2018 (World Bank)

The Bank estimates that officially recorded remittances to developing countries will increase by 10.8% to reach $528% in 2018. This new record level follows robust growth of 7.8% in 2017. Global remittances, which include flows to high-income countries, are projected to grow by 10.3% to $689bn. Remittance flows rose in all regions, most notably in Europe and Central Asia (20%) and South Asia (13.5%), followed by Sub-Saharan Africa (9.8%), Latin America and the Caribbean (9.3%), the Middle East and North Africa (9.1%), and East Asia and the Pacific (6.6%). Growth was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from Gulf Cooperation Council countries and the Russian Federation. Among major remittance recipients, India retains its top spot, with remittances expected to total $80bn this year, followed by China ($67bn), Mexico and the Philippines ($34bn each), and Egypt ($26bn). As global growth is projected to moderate, future remittances to low- and middle-income countries are expected to grow moderately by 4% to reach $549bn in 2019. Global remittances are expected to grow 3.7% to $715bn in 2019.

Remittances to Sub-Saharan Africa continued to accelerate in 2018 (pdf): Nigeria, the largest remittance recipient country in Sub-Saharan Africa and the sixth largest among LMICs, is expected to receive more than $25bn in official remittances by the end of 2018, an increase of more than $3bn compared with the previous year. Looking at remittances as a share of GDP, the Gambia has the largest share, followed by Comoros, Lesotho, Senegal, Liberia, Cabo Verde, Zimbabwe, Togo, Ghana, and Nigeria.

Agree to disagree: The spillover of trade policy into UNGA voting (UNCTAD)

In this paper we show that there are clear political spillovers from trade cooperation. Using a dataset from United Nations General Assembly votes, we illustrate that countries that cooperate in trade, also cooperate in politics. Our analysis (pdf) tilts the balance towards trade agreements as a tool for political cooperation. UNGA voting patterns between trading partners change when a trade agreement is enacted. Overall, regional trade agreements make countries 4% more likely to register the same vote in UNGA resolutions. Another dimension of the argument is that deeper forms of RTAs have greater impacts on voting synchronization. This result is strongest for Customs Unions, where overall voting synchronization increases by 11% among the RTA members, and by 22% for the disagree votes.

Trade and poverty reduction: new evidence of impacts in developing countries (WTO)

The report was launched by WTO DG Roberto Azevêdo and WB Chief Economist Penny Goldberg in Geneva. It presents eight case studies (pdf) showing how trade helps the extreme poor in the developing world, particularly those who live in conflict states, work in rural areas or in informal jobs, or are female. The country-specific approach of the new publication complements the global perspective in a previous joint report published by the two institutions in 2015. One case study in the publication highlights that women in Africa who work in exporting firms are paid better than those in non-trading firms. The case studies show that not all the poor are affected by international trade equally. The effects will depend on where they live (rural versus urban areas), where they work (industry, firm, formal/informal sector), their individual characteristics such as skill level and gender, and whether the highlighted trade policy change resulted in increased import competition or export opportunities.

In brief:

  1. ACP-EU Joint Parliamentary Assembly: Joint declaration of the ACP-EU Co-Presidents (pdf); MEPs agree on a partnership tailored to the international context

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