tralac’s Daily News Selection
Talking African economy at Davos: The AfCFTA and a unified market (Africa Times)
When it comes to a unified African market, Bernard Gautier, deputy CEO of French investment firm Wendel Group, made it easy to see the existing barriers to business and Africa’s economic growth. There’s an office in Morocco with a Congolese staffer and one from Cameroon, he said, but they can’t get to Kenya. One will need weeks to get a visa, while the other can’t get one at all. As Akinwumi Adesina, president of the AfDB pointed out, about half of the 54 African nations still require visas for travel; just a quarter don’t require them, while another quarter issue them on arrival. Moving goods isn’t any easier.
“Today it costs less money to bring a car from Paris to Lagos, than from Accra to Lagos,” said Gautier, an advocate of what the AfCFTA agreement can achieve for Africans who are looking to create 18 million jobs each year through 2035. That’s exactly what the panel of five facilitated by Arancha Gonzalez Laya, the executive director of the International Trade Centre, came to talk about. Laya called the AfCFTA “one area of good news” in the faltering globalization arena, which has seen economic growth slow in China and countries like the United States pull back on trade issues. Yet there’s a long way to go for the AfCFTA to deliver on its potential.
Can it be expected that from early in 2019 goods and services can, among the State Parties, be traded under the new preferential rates and market access provisions of the AfCFTA? This will not be possible, for the simple reason that the Protocols on Trade in Goods and Trade in Services are still being negotiated. There are no tariff schedules, no Annex on rules of origin, nor rules for specific services sectors to regulate such trade. And it may take quite some time before they will be finalized. These are sensitive and technically complicated matters; especially when 55 countries at very different levels of economic development are involved. This state of affairs calls for the following observations: [The author: Gerhard Erasmus]
At the 7th AMOT meeting, the ministers deliberated on the outstanding issues of the AfCFTA including, inter alia, ‘the roadmap for finalisation of outstanding work on AfCFTA negotiations; designation of percentages for sensitive products and exclusion lists, anti-concentration clause and double qualification… rules of origin; trade remedies’. At the end of the meeting, the ministers reached consensus on the completion of the AfCFTA outstanding issues. They agreed on the mechanisms and time-frame for liberalising goods on the African continent. [The author: Talkmore Chidede]
Value add in Africa: First steps in a long journey (FT/IPPMedia)
Tanzania President John Magufuli’s orders to hike cashew prices to protect the country’s struggling farmers, backed up by a pledge to buy Tanzania’s entire 2018 crop when private buyers acting for processors in Vietnam and India refused to pay, underscores the enduring problem for so many of Africa’s commodity producers. African farmers grow around 45% of the world’s cashew nuts, yet 90% of the continent’s crop is exported for processing overseas, denying the industry the opportunity to add value at home and increase Africa’s share of global trade. The Africa Cashew Alliance estimates that a 25% increase in raw cashew nut processing in Africa would generate more than $100m household incomes in the sector. As it is, Tanzania’s farmers get rock bottom prices and the country imports its own nuts back after processing to meet buoyant domestic demand. It’s easy to sympathise with the Tanzanian government, but crop seizures and price hikes aren’t a long-term solution. This lies in developing a local processing industry to add value at home, rather than giving the cashews away to Vietnam and India. [Why Tanzania should now become a net food exporter]
Strengthening economic ties with a growing giant: South Africa in India (Tutwa)
The visit of President Ramaphosa to India later this week, therefore, comes at an opportune time to cement these linkages and explore possibilities for even deeper economic ties. Of symbolic importance, President Ramaphosa will be the guest of honour at the Republic Day celebrations in New Delhi. It is worth underlining that, doing business in India is not for the faint-hearted and the President’s visit provides invited South African firms an opportunity to raise challenges they have encountered with government officials as well as share experiences with their Indian counterparts. The size of the Indian economy may be one of its strengths, but it also means it is unwieldy and complex in some respects. It is suggested, for example, that India not necessarily is approached as one market and that South African businesses should consider regional or sectoral approaches where possible. Different geographic areas within India have become associated with specific economic activities, such as Assam state with energy and Odisha with healthcare. States have the ability to levy taxes on the one hand and to offer incentives for investors on the other. It is therefore critical to understand not only the national business environment in India but also conditions at the state level. [The author: Catherine Grant Makokera]
Trade portal launched for easier business between India and Africa (Indian Express)
A trade portal between India-Africa as market intelligence platform to facilitate the traders of both the region in food and beverages trade has been launched by the Ministry of External Affairs and the National Agricultural Cooperative Marketing Federation. This platform will help in realising opportunities between India and Africa, which need to be capitalized by requisite efforts and germane trade policies. At a recently concluded Indus Food Edition II, organised by the Trade Promotion Council of India, with the support of the Department of Commerce, one of the most important issues raised by African delegates was on advance payments. Also, with Africa recently signing intercontinental free trade agreement, which would allow movement of goods across the continent, delegates from the African nations, including South Africa, recommended that India should initiate FTA negotiations with South Africa or overall Africa for easy market access. [Abuja chamber calls for strengthening of Nigeria-India ties]
Kenya, Nigeria trade policy postings:
Kenya to restrict second-hand imports to boost domestic car sector. Kenya plans to restrict imports of second-hand cars to newer vehicles in an effort to boost the domestic automotive sector by reducing the dominance of the used car market. The East African nation undermined what was a thriving vehicle assembly industry in the 1990s with policies that encouraged imports of cheap second-hand cars. The government now intends, by 2021, to restrict imports of cars to vehicles that are three years old or newer, according to a draft policy proposal seen by Reuters on Wednesday. Current regulations allow the importation of cars up to eight years old. Imported second-hand vehicles account for 85% of Kenyan car purchases, amounting to 86,626 vehicles in 2017 and gobbling up precious foreign exchange estimated at about 60 billion shillings ($593m) a year. The target is to gradually but systematically reduce and replace the over 80% market share of used vehicles and used parts with new products manufactured or assembled in Kenya, the government said in the policy draft.
Importers protest order to transport cargo only on SGR. The Kenya International Freight and Warehousing Association (Kifwa) wants the government to allow shippers to have an option of using alternative means of transport other than rail in the wake of revised rates. Kifwa National Chairman William Ojonyo says forcing shippers to use the SGR is a wrong move that will impact negatively on the economy. “With an increase in the SGR cost shippers should be allowed to have an option of using different modes of transport,” said Mr Ojonyo, pointing out that they were talking with the government on the same. He said that the mandatory rule violates the WTO agreement, where Kenya is a signatory to its rules. Kifwa said that WTO rules on trade facilitation allow for free flow of cargo by the most cost-effective means.
KRA to block tax cheats from imports. Individuals and firms that fail to file domestic tax returns may be locked out of import and export business from April, the taxman has said in a fresh bid to boost compliance. The Kenya Revenue Authority says the Integrated Customs Management System, to be fully rolled out by March after more than a year’s delay will be connected to electronic tax-filing, iTax, making it possible to flag tax cheats. “The customs system will have capabilities to share data with iTax so that importers who are not compliant in terms of filing their domestic taxes returns are not able to make their customs declarations,” Commissioner-General John Njiraini said.
Matiang’i, Rotich land powerful posts in new Uhuru order. Interior Cabinet Secretary Fred Matiang’i and his Treasury counterpart, Henry Rotich, secured expanded powers in a new governance structure announced by President Uhuru Kenyatta, technically elevating them to the status of super ministers. The two will now be responsible for supervising and coordinating implementation of President Kenyatta’s ‘Big Four Agenda’ projects through a powerful committee of Cabinet secretaries that will monitor routine progress reports on all projects across the country. Dr Matiang’i will chair the committee, deputised by Mr Rotich. The Big Four projects target manufacturing, universal healthcare, food security and affordable housing.
MAN seeks infrastructure upgrade to boost Nigeria’s exports. The Manufacturers Association of Nigeria, MAN, has called for upgraded facilities at the country’s export terminals to facilitate export of agriculture produce. Mansur Ahmed president of the Association said delays at sea ports during inspection by various government agencies are compounding efforts in getting products from Nigeria in reaching its destinations especially European market, thus leading to damages and rejection. Ahmed, also said that scientific produce inspection has been identified as a major criterion for high quality produce to guarantee enhanced access of several Nigeria exportable agricultural produce to international market.
The EALA Speaker, Rt Hon Ngoga K Martin, has urged the regional legal fraternity to play a key role in sensitization on the integration process and to act as citizens’ point of checks and balances if the EAC is to make significant gains through a people-centred approach. The East African Law Society CEO, Hanningtone Amol, reiterated the regional law society had intensified its efforts in strengthening the integration process through advocacy around the EAC. He said the regional law society had been re-designed to make it more responsive to the region. The EALS, Mr Amol noted, had finalized plans to launch an EAC Integration index, to be released twice a year giving the state of the EAC as well as an avenue and platform to enumerate policy matters. The EALS, headquartered in Arusha, is the largest organized professional/ civil society dual membership organization in the region: its membership spans to over 15 000 members.
Experts in child rights and protection from ECOWAS, in collaboration with the EU and UNICEF, commenced on 21 January in Abuja, the review and validation of the ECOWAS Child Policy and its Strategic Action Plan (2019-2023) which focuses on ending child marriages in the region. The experts identified child marriage as one of the five key priorities for immediate action in the Strategic Framework for Child Protection in West Africa as ECOWAS Member States have the highest prevalence rates of child marriage in Africa and second highest in the world, after South Asia. Opening the meeting, the Commissioner for Social Affairs and Gender of the ECOWAS Commission, Dr Siga Fatima Jagne, noted that the elimination of child marriage in the region has become a priority as six out of fifteen ECOWAS Member States (Niger-76%, Mali-55%, Burkina Faso-52%, Guinea-51%, Nigeria-43% and Sierra Leone-39%) are among the 20 countries with the highest rate of child marriage in the world. The meeting will be followed by a ministerial meeting on 25 January.
The first ministerial meeting of the Africa Renewable Energy Initiative (AREI) kicked off Tuesday in Cairo, with the attendance of energy ministers from Kenya, Chad, Guinea, Namibia, and Egypt. The meeting addressed the Egyptian experience in generating electricity through new and renewable energies during the past four years. The first phase of building an electricity line linking power grids in Egypt and Sudan is set to be completed within the next two months, said Egypt’s Electricity Minister Mohamed Shaker.
Pinelopi Goldberg: Staying focused (World Bank)
The war on poverty will be won or lost on what we do in Africa. While extreme poverty is estimated to have declined to 8.6% globally, it is still stubbornly high in Sub-Saharan Africa where it is projected to remain in double digits by 2030. The model of export-led industrialization that helped millions escape poverty in Asia in recent decades is increasingly under pressure from automation and the backlash against globalization. Regional integration and appropriate investments in infrastructure reducing the costs of transport, communication and trade seem more important than ever – and for this reason we need research to guide sound policies. [The author is WB Chief Economist]