Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

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

Today’s event listings:

Underway, in Cairo: African Civil Aviation Commission and preparatory technical committees (17-20 December), under the framework of the COMESA airspace integration project

Underway, in Addis: Day 1 of the experts meeting on industrialisation in Africa for a peer review of #AfricaDynamics2019 on Productive Transformation and Regional Integration. We look forward to working closely with different stakeholders from across the world.

Underway in Accra: The future of work in Sub-Saharan Africa. Selected highlights:

pdf Background paper (1.13 MB) . In this paper, we explore the challenges and opportunities of the Fourth Industrial Revolution for SSA as the region seeks to create jobs for its booming population, tackle the adverse effects of climate change, and face an external environment that may become less supportive. Our approach combines a look at history, economic modeling, empirical evidence, and scenario analysis. The paper’s chapters can be read together or selectively, with each chapter starting with a summary of the main findings. The next three chapters of the paper look separately at labor market developments in SSA over the last two decades (Chapter 1), the nature and potential impact on SSA of the Fourth Industrial Revolution (Chapter 2), and the possible effects of demographics and urbanization, climate change, and the future course of global economic integration on the region (Chapter 3). To explore the Fourth Industrial Revolution, Chapter 2 makes use of both a simple economic model and partial equilibrium analysis of exports’ vulnerability to automation. The final two chapters of the paper then seek to bring together these disparate, uncertain, but very real major changes (see Figure 1). Chapter 4 presents three realistic scenarios for SSA over the next two decades, which incorporate different possible technological, climate, and integration trends. Against this backdrop, Chapter 5 develops policy ideas for sub-Saharan Africa to generate the needed 20 million jobs per year in such uncertain times.

Extracts: There is an additional policy lever that sub-Saharan Africa has at its disposal in this model. That lever is overall productivity growth, which is influenced by many factors, including infrastructure, skill levels, and the institutional and regulatory framework. The model suggests that this lever is potentially strong enough to achieve convergence even if the impact of automation provides a headwind. How much overall productivity growth is needed? The rate of productivity gains realized between 2000 and 2014, 0.9% on average, would not be enough to close the gap with advanced economies (historic productivity growth in Figure 12). However, pushing ahead with trade integration and efficiency gains from reduced misallocation of factors of production could boost convergence and reduce the gap in productivity between sub-Saharan Africa and advanced economies by half in two decades, from a factor of 1 to 15 to a factor of 1 to 7 (potential productivity growth in Figure 12). In this scenario, sub-Saharan Africa would bring its income position relative to the United States to a level that would be slightly ahead of where India currently is.

The numbers: Assessing the impact of the Fourth Industrial Revolution on exports from Sub-Saharan Africa. We construct two indices to gauge the vulnerability of SSA’s exports to automation in advanced economies. The indices are based on different measures of the automatability of occupations that have been suggested in the literature by Frey and Osborne (2017) and Brynjolfsson, Mitchell, and Rock (2018). These indices are mapped to industries, and then to export goods to ascertain how vulnerable an export sector is to automation. The two resulting export vulnerability indices provide starkly different results. Whereas the Frey and Osborne–based index suggests that SSA’s exports, and those of low-income and developing countries in general, are relatively more vulnerable to automation than exports of more developed countries (Figure 13), the Brynjolfsson, Mitchell, and Rock–based export vulnerability index shows the opposite (Figure 14). The contrasting findings reflect the different underlying assumptions on how technology impacts jobs.

Opening remarks by Christine Lagarde. We at the IMF have developed three scenarios, sketching different paths for the future of work in sub-Saharan Africa. Think of these as alternative versions of the future that could happen, depending on how policymakers tackle the forces of demographics, technology, and climate change. The first scenario is called Africa Adrift. The second scenario is called Africa for Africa. The final scenario is Africa Arisen.

Future drivers of growth in Rwanda: innovation, integration, agglomeration, and competition (World Bank)

The report identifies four essential drivers of growth - innovation, integration, agglomeration, and competition - and reforms in six priority areas: human capital development, export dynamism and regional integration, well-managed urbanization, competitive domestic enterprises, agricultural modernization, and capable and accountable public institutions. [ pdf Download the Overview (1.74 MB) ] [East Africa: Regional Private Sector Association highlights priority areas to drive trade]

Dangote’s Mansur Ahmed leads African Manufacturers (ThisDay)

The African Union Trade Commissioner has appointed the executive director of Dangote Group and chairman of Manufacturers Association of Nigeria, Mr Mansur Mohammed Ahmed, as the interim Chairman of the African Manufacturers Association. This appointment was announced on the sidelines of the on-going Intra-African Trade Fair in Cairo by Mr Muchanga, an AU Commissioner. [Meet Africa’s Industrialist of the Year: Quinton Uren]

Africa will still move forward if Nigeria does not sign AfCFTA – OBJ (Signal)

Former President Olusegun Obasanjo says it is absurd that Nigeria, Africa’s largest economy, has not signed the AfCFTA. He said Africa will still move on, with or without Nigeria. Obasanjo is the chairman of the Advisory Council of the Intra Africa Trade Fair. On Sunday, Obasanjo spoke in a session at the maiden IATF in Cairo with delegates, exhibitors and the media. When asked what needs to be done to get Africa’s biggest economy to join the AfCFTA, Obasanjo said that the final negotiation was led by Nigeria, taken to the Nigerian executive council and passed, but at the point of signing: “Nigeria one way or the other developed cold feet. I cannot understand it. I have said better late than never. I sincerely hope and pray that Nigeria will be at the table before AfCFTA comes into effect.”

He said it would be a “bad thing” for Nigeria to be absent from the agreement. He, however, said that with or without Nigeria, Africa will cope. “I went around the pavilions, and Nigeria’s pavilion was fantastic and large with SMEs and government. But how can you be talking about Intra Africa trade when you are not a part of the Africa Continental Trade Agreement? It is absurd. I will say that maybe the signs are getting clearer to the present government of Nigeria that you cannot absent yourself from what is the way for the rest of Africa. And don’t forget we started this from 1963, and in all other things Nigeria has been in the forefront – Lagos Plan of Action, NEPAD, ECOWAS, and everything. So, what has gone wrong?” [Obasanjo, in appearance at Intra-African Trade Fair, urges quick ratification of AfCFTA]

WTO reforms may go against the interest of Africa (New Times)

On behalf of the African Group, South African envoy to WTO, Xavier Carim, told Sunday Times that they have seen proposals from EU, Canada and a group of other countries, as well as US, Japan and EU. “When we look at these proposals, we see them as making the imbalance that we have even worse. They should make it difficult for developing countries to advance,” he said. South Africa is currently coordinating the African Group at WTO. Last year, Rwanda was coordinating the African Group. Carim cited that the proposed reforms seem not to address the issues that are critical to African countries in the WTO – correcting distortions in agricultural trade, public stockholding programmes that African countries want to implement, and improvements to existing agreements that would allow Africa more policy space to industrialise. “All of the things which we have been pushing for a long time are not expecting advances. Our efforts on them have been frustrated.” [tralac October Newsletter: pdf The Multilateral Trading System – quo vadis? (1.10 MB) ] [Peter Fabricius: Should Africa back World Trade Organisation reforms?]

Namibia’s Q3 trade statistics (pdf, Namibia Statistics Agency)

The overall export and import values for q3-2018 were estimated at N$24.313bn and N$27.628bn respectively. The trade balance (exports minus imports) for q3-2018 amounted to a deficit of N$3.315b compared to deficits of N$8.369bn recorded in q3-2017 and N$1.120bn observed in q2-2018 (Chart 1). Y-on-Y, the merchandize trade balance showed a remarkable improvement of 60%. The improvement was mainly driven by exports which strengthened by 56% over the course of the year outweighing imports that grew by 16%. On contrary, q-on-q trade deficit deteriorated by 196% as the country import bill increased (Chart 1) from q2-2018 to q3-2018. During q3-2018, Namibia’s top five export destinations were China, South Africa, Botswana, Marshall Islands and Belgium. Together, these countries made up 69% of the value of all exported goods, with China lodging on top of the list as the largest export destination, accounting for 23% of the total exports. South Africa ranked second with 17%, followed by Botswana with 11% of total exports. Marshall Islands and Belgium each absorbed 9% of Namibia’s total exports. [See: Trade with Export Processing Zone (p10), Trade by economic regions (p13), Trade by mode of transport (p15)]

Anzetse Were: African ‘agency’ crucial as foreigners court continent (Business Daily)

Thirdly, because there are so many different types of actors with agency in Africa, there can be disagreement within Africa as to whose agency is best for the continent. Further, because there are so many centres of agency, their interests can be pitted against each other. For example, African governments can disagree with each other and exercise their agency in manners that undercut each other, and the agency of certain elements of private sector may not align with the interests of government, for example. Thus, it is crucial that different African actors understand the importance of being clear as to what their priorities are and expect resistance for other African actors. This is not to say there are no key issues on which some consensus can be found but the effort to create this has to be deliberate as it will likely not emerge organically.

Angola looks beyond China for aid and investment (Nikkei Asian Review)

Angola aims to reduce its heavy dependence on Chinese capital and diversify its sources of funding, the country’s energy minister said in a recent interview in Tokyo with Nikkei. Joao Baptista Borges, Angola’s minister of energy and water, said the country plans to “receive loans from other countries,” in order to cut back on credit from China, which holds nearly 70% of its external debt. The southwest African country wants to attract more investment and loans from Japan, Europe and the U.S., based on a new private investment law enacted in June, Borges said.

An interview with Ambassador Herman Cohen: US-Nigeria relations under the Trump administration, Nigeria’s low power generation, the 2019 elections (Nigerian Voice)

Q: How has the Corporate Council of Africa of which you are the founding member fared in cementing business relationship between the US and Africa? A: CCA is doing a lot of good work especially, in support of the African Growth and Opportunity Act (AGOA), which gives African manufactures an advantage in sales to the US. There is still a lot of work to be done in attracting US capital to invest in production facilities in Africa aiming for the US market. The internal environments for private investors in Africa need to be improved, especially for local African entrepreneurs. Often, African investors are seen as enemies of the power elites, rather than as partners. I will say that Nigeria has one of the best investment environments in Africa, but it is not focusing sufficiently on exports.

Today’s Quick Links:

Côte d’Ivoire to invest $796m in ECOWAS biometric cards

Graça Machel: Realising the promise of the demographic dividend

IATF 2018: African leaders urged to recommit to boosting continent’s agriculture sector; ECA hosts trade finance for female entrepreneurs workshop

UPU selects first countries to benefit from new financial inclusion programme (including Benin, Côte d’Ivoire, Ghana, Rwanda)

The AfDB posts an EOI for fisheries consultant to review and analyze national and regional blue economy investments in Africa

Trade and regional integration in the Arab States: conference documentation


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