tralac’s Daily News Selection
Today, in Geneva: Retreat of Ambassadors of Landlocked Developing Countries
South African patent lawyer, Ms Esmé du Plessis, has been appointed to serve on the WTO panel to rule on the US-China intellectual property dispute
The Helen Suzman Foundation (Johannesburg) has posted three analyses of the AfCFTA: (i) An introduction to AfCFTA; (ii) Projected impact on South Africa; (iii) Is Africa ready?. The author: Tove van Lennep
African Economic Outlook 2019
Box 3.1. Common external tariffs: Challenges for poor countries. As RECs deepen integration by moving from a free trade agreement to a customs union with a common external tariff, small countries can be left on the sidelines during the negotiations if appropriate measures do not accommodate their peculiar status. Rwanda and Liberia illustrate the contrast between depth and breadth across RECs.
Box 3.3. Does financial integration drive economic activity in Africa? Despite the postulated benefits of financial integration to participating economies, it is unclear to what extent the progress in regional financial integration in Africa has catalyzed aggregate economic activity and thus provided the rationale for accelerating financial integration.
Box 3.7. What night lights reveal about trading across borders. Economic activity is very poorly recorded as remoteness, informality, and poor statistical capabilities combine to produce unreliable GDP and trade data, especially at the subnational level. Poor and sporadic data make it difficult to test whether closer integration concentrates or disperses economic activity. To get around these data problems, illumination (or night lights) captured at a very detailed level from satellite images during 1995–2013 can be used to study light intensity along cross-border corridors, measured as distance to the border. Once corrected for overglow and other confounding influences, light radiance along cross-border corridors proxies the intensity of economic and trade activity across the continent.
Companies to inspire Africa 2019 (pdf, London Stock Exchange)
David Schwimmer (CEO, London Stock Exchange Group): There are 360 companies from 32 different countries across the continent represented in this report, boasting an incredibly impressive average compound annual growth rate of 46%, up from 16% last year. On average, each firm employs over 350 people, with an average compound annual employee growth rate of 25%. A diverse range of industry sectors feature, painting an encouraging picture of the future of the African economy. The growth rates and sector diversity of the firms featured highlight their potential to transform the African and wider economy and become the big global job creators of tomorrow. Forbes review:
The companies featured range from small entrepreneurial businesses (SMEs) through to well-established corporations. Seven major sectors are represented. These spanned Agriculture (53 versus 46 in 2017), Financial Services (48 versus 66 in 2017), Industry (77 versus 81 in 2017), Technology and Telecoms (51 in 2018 - down from 56 last time), Consumer Services (79 - up from 49 in 2017), Renewable Energy (21 versus 29 before), and Healthcare and Education (31 today versus 19). Agriculture remains an important sector for the continent as a whole, with just shy of 15% of all the companies featured. A standout highlight was the number of companies led by women – up this year at 23% - given that it is almost double the proportion for 2017’s report. The fastest growing sectors were found to be within Financial Services and Renewable Energy, which showed revenue growth rates of 70% and 66%, respectively. Consumer Services is the most represented sector with 79 companies from 20 countries this year, which is reflecting the growth of sub-sectors such as Consumer Goods, Food & Beverages, Leisure & Tourism, Media and Retail, as well as the growing middle class in Africa. Nigeria (97), with strong representation from the Industry and Technology & Telecom sectors, and Kenya (66) led the countries represented in the report this year. The East-West African axis dominates this year’s findings with 130 (c.36%) companies from nations in western Africa and 147 (c.41%) from eastern Africa.
Deloitte’s Africa in 2019 Outlook Conference: Moody’s: Rising government debt hampers banking sector. Rising public debt levels affect a country’s banking sector, as this crowds out the private sector - with banks preferring to lend to government, which is seen as lower risk, Moody’s senior vice president Constantinos Kypreos has said. Kypreos explained that tightening global financial conditions are putting pressure on the sector, while banking penetration in Africa remains low and the potential is there for the banking sector to support economies. Asset quality and foreign currency liquidity are of concern for banks on the continent, said Kypreos, adding that “it might not be visible in South Africa because it’s a rand economy, but many, if not most of African countries, are highly dollarised.” He told delegates to the Deloitte Africa outlook conference on Thursday that many banks in sub-Saharan Africa were constrained by size, and unable to fund large projects such as infrastructure. [Related: Deloitte has presented seven predictions or themes that it believes will have a major effect on Africa’s outlook for 2019; African entities urged to be proactive in growing the continent’s economies]
The EY FinTechs in Sub-Saharan Africa report reveals that the FinTech sector in SSA comprises more than 260 active companies. These active companies are split into local (80%) and international (20%) players. South Africa, arguably the epicenter of SSA FinTechs, harbors about a third of the firms, predominantly in Cape Town and Johannesburg. As the most diversified hub, it exhibits great similarities to more developed markets. The sector has an extensive network of venture capitalists and angel investors and is home to many accelerators and incubators. Kenya, the second largest SSA FinTech hub, hosts around 20% of the entire SSA FinTech landscape, and has a stronger focus on the payments segment. The Kenyan hub is located in Nairobi, which is home to more than 50 FinTechs. FinTechs are already one of the main drivers for financial inclusion in SSA. Nigeria is the SSA FinTech sector’s third largest hub, with most of its FinTechs based in Lagos. Like Kenya, the Nigerian FinTech sector is dominated by the payments segment. In addition to the three main hubs, recent developments have shown encouraging signs of FinTech growth in Ghana, Uganda, Cameroon and Rwanda. Given the increasing interest in the FinTech segment, it is expected that the FinTech ecosystem will further improve across more countries in SSA in the near future.
The Africa Fintech Network, which comprises national fintech associations from different African countries, says it plans to unify and channel African fintech initiatives towards producing solutions to drive indigenous creativity and innovation in the continent. According to a statement on Monday, the network was inaugurated recently during the opening session of the maiden Africa Fintech festival in Lagos. It also aims to provide wider market access across Africa in a seamless manner for fintechs and tech-enabled innovative products, explore innovative technology transfer and export beyond Africa to the developed world and other emerging markets, foster multi-national/cross-border fintech policy and regulatory frameworks, engender a coordinated collaboration with the rest of the world, and support the achievements of the AfCFTA and Agenda 2063 of the AU.”
To better understand the realities of promoting local drug production, we undertook a systematic analysis of the current state of the market. The analysis focused on simple, small molecules, such as generic drugs, since the economics and technical challenges would vary for more complex products, such as combination drugs, injectables, and vaccines. We evaluated the costs and benefits of increasing production not only in economic terms but also in their impact on the wider economy and on public health systems. We then compared that to local measures of feasibility, including government will, demand, investment attractiveness, and implementation capacity, especially with respect to quality (See Exhibit 1). [The authors: Michael Conway, Tania Holt, Adam Sabow, Irene Yuan Sun]
Trade experts from ECOWAS member states, in a two-day meeting which ended on 21 December 2018 in Accra, reviewed the implementation of the regional Strategy and Plan of Action for Aid for Trade (AfT) which seeks to increase trade in the region and accelerate the integration of Member States into the multilateral trading system. The meeting agreed on the need to update the regional action plan taking into account the AfCFTA, the African Union Agenda 2063, Sustainable Development Goals 2030 and other emerging issues including digital connectivity, structural transformation, industrialisation and the economic empowerment of marginalised groups such as women and the youth. A key tool for effective coordination and collaboration is the ECOWAS AfT website, which is currently being updated and would be relaunched in February 2019. The representative of the Enhanced Integrated Framework, Paulin Zambelongo, noted that the EIF provides support to 47 Least Developed Countries (11 of them are ECOWAS Member States) and 4 graduated countries (including Cape Verde) which are leaving the status of Least Developed Countries. 68% of EIF initiatives are in Africa, followed by 28% in Asia. [Towards a harmonised framework on the recognition of degrees in ECOWAS: key recommendations]
High-Level Consultative Meeting of Heads of State, Government on the situation in the DRC: communiqué
The Heads of State and Government attending the meeting concluded that there were serious doubts on the conformity of the provisional results, as proclaimed by the National Independent Electoral Commission, with the votes cast. Accordingly, the Heads of State and Government called for the suspension of the proclamation of the final results of the elections. The Heads of State and Government agreed to urgently dispatch to the DRC a high-level delegation comprising the Chairperson of the Union and other Heads of State and Government, as well as the Chairperson of the AU Commission, to interact with all Congolese stakeholders, with the view to reaching a consensus on a way out of the post-electoral crisis in the country. The meeting urged all concerned actors in the DRC to interact positively with the high-level African delegation in the interest of their country and its people. [Communique of the SADC Double Troika Summit on the DRC elections]
Today’s quick Links:
SADC Parliamentary Forum recruiting for Secretary General
“Refusal to follow ECOWAS agreement reason illegal weapons flood Nigeria”
Acrow Bridge’s Paul Sullivan elected Vice Chair of USTR’s Trade Advisory Committee on Africa
What is behind Jack Ma’s footsteps in Rwanda and Africa?
World Bank working paper: Understanding economic growth in Ghana in comparative perspective
IMF on China’s Digital Economy: opportunities and risks