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tralac’s Daily News Selection

tralac’s Daily News Selection

04 Feb 2019

17 minute read

Featured African trade policy tweet, from @DavidLukeTrade: This is very significant and underscores momentum behind AfCFTA. Ethiopia has always been wary of trade agreements, not in the COMESA FTA or WTO. Congrats to Ethiopia and to UNECA for the technical analysis and support that made this decision possible. [See also: thread by Mamo Mihretu, Ethiopia’s chief trade negotiator]

REC updates: EAC, SADC

  1. Tough term for Kagame as chair of deeply divided EAC. Rwandan President Paul Kagame took over the chair of the East African Community on Friday from his Ugandan counterpart Yoweri Museveni, after a long day of heated consultations compounded by hostile relations between Rwanda and Burundi. Highly placed sources in the EAC Secretariat told The EastAfrican that Burundi opposed the takeover of the chair by Rwanda, arguing that its neighbour should not assume the chairmanship before a lasting solution to their disputes has been found. The closed session of the EAC Heads of State Summit delayed the plenary session for over four hours as the leaders reportedly debated the issue. The plenary session was scheduled to begin 2pm, but it was not after 6pm that the closed session was concluded. [Related: Museveni to guide EAC constitutional process, East Africa summit endorses Kenya application for UN Security Council slot, Joint communiqué]

  2. Geingob unhappy with non-implementation of regional goals. SADC chairperson Dr Hage Geingob, who is the president of Namibia, expressed his profound concern on Friday about the regional bloc’s chronic failure to turn its aspirations into actions. Speaking during his visit to the SADC Secretariat in Gaborone, he said the pursuit of regional integration was the paramount objectives behind the establishment of SADC. But President Geingob stressed that failure to successfully implement the regional integration agenda was affecting economic growth in southern Africa. “No one can question the fact that all of these trade agreements were signed in good faith and with the best of intentions. However, the question we need to ask ourselves is whether we have done or are doing enough in terms of implementation. Case in point is the SADC Free Trade Area, which was envisioned as a tool to augment the private sector in the region by increasing domestic production and business opportunities, as well as supporting higher regional imports and exports. Have we achieved this? Alas, sometimes we take decisions and after failing to implement them, we simply move on to another decision. It is imperative that as Africans we should manage our RECs as corporations. Therefore, the core principles of corporate governance should be inculcated at all levels within the SADC Secretariat. Fairness, accountability, responsibility and transparency should constitute the DNA of our organization. This is the only guarantor of future growth and the successful implementation of our developmental aspirations,” Geingob said while addressing the SADC Secretariat staff. [Note: The full text of President Geingob’s speech can be accessed from here]

Trade facilitation updates:

  1. East Africa Market Access Upgrade Programme. To mark the launch of the Market Access Upgrade Programme (MARKUP) – an initiative funded by the EU to boost market access to Europe for East African micro, small and medium-sized enterprises – participants from Burundi, Kenya, Rwanda, Tanzania and Uganda attended a five-day induction workshop that set out the programme’s main features and planned activities. Participants at the workshop included representatives from the EAC Secretariat, Geneva-based EAC ambassadors, and the German cooperation agency. Launched in June 2018, MARKUP is a regional initiative funded under the 11th European Development Fund contributing to the economic development of the EAC. Taking advantage of a growing global demand for avocado, cocoa, coffee, spices, tea and horticulture products, selected SMEs will be trained to adapt their agribusiness to better seize market opportunities in regional and global value chains.

  2. UNCTAD’s mission to unlock Africa’s services sector. Africa is ready to take advantage of its rapidly growing services sector but needs to step up its analytics game to play a more active role in global and regional value chains. This was the consensus among African countries participating in a joint UNCTAD-UNECA project on services trade. The project is helping train African experts to do just that: measure the contribution of services to regional value chains and explore the role of domestic and foreign firms. In partnership with Ethiopia, The Gambia, Kenya, Mali, Nigeria and Togo, UNCTAD-UNECA delivered a three-day ‘train-the-trainers’ seminar, in Addis Ababa, Ethiopia, from 29 to 31 January. The focus was on how to unlock potential in three services sectors – transport, financial services and tourism – in those countries, and help African countries acquire the necessary skill set to measure and monitor services trade value chains.

    African services - the numbers: (i) In 2016, about 55% of Africa’s GDP was generated by services; (ii) The share of services in Africa’s trade reached 22% in 2016, following a steep increase and catching up process to the global average of 24%; (iii) In 2017, Africa accounted for only 3% of the world’s total services imports and 2% of the world’s total exports of services (iv) Removal of tariff barriers will increase intra-African trade by 50%; (v) The improvement of trade facilitation will more than double the intra-African trade.

  3. Afreximbank’s Fund for Export Development in Africa. The operationalization of the newly-created Fund for Export Development in Africa has moved into high gear with the holding of the pre-incorporation meeting of the Board of Directors in Cairo. FEDA, a wholly-owned development-oriented subsidiary of Afreximbank, has been set up to implement the Bank’s Equity Investment Programme by providing seed capital to companies in Afreximbank’s key focus sectors, including agri-business, manufacturing, consumer and retail, financial services, technology, travel and tourism, transport and logistics, and industrial parks. In addition to Prof Oramah and Dr Kamau (both attached to Afreximbank), the other members of the Board of Directors are Jean-Louis Ekra (former President of Afreximbank); Vishwanathan Shanker (Gateway Partners); Dr Sidi Ould Tah (Arab Bank for Economic Development in Africa); Dr Deji Alli (Asset and Resource Management Company Ltd., Nigeria).

South Africa: Joint statement on Foot and Mouth Disease outbreak in Vhembe (GCIS)

Following the sharing of update reports with trade partners, trade restrictions on the export of processed products have been relaxed by many trade partners. Trade in safe commodities to direct neighbouring countries have largely been accepted and, where necessary, negotiation of new health certificates is underway. There has also been good progress with negotiations to re-open markets for deboned matured beef, processed dairy products and processed hides and skins to the other African countries, the Middle East and the Far East. The Trade Task Team has been a very successful platform to streamline the communication between industry, Provincial Veterinary Services, DAFF and trade partners.

Tanzania: Tough new rules see multinationals give up majority stakes (The East African)

In a span of four months, two major international firms in Tanzania have changed shareholding, with the majority stake going to influential ex-government officials. Analysts are seeing this as a sign of the future of multinationals in the country as the President John Magufuli administration seeks a new business order that will see Tanzanians benefit more from foreign investments.

Nigeria: “Over N1bn informal exports originate from Kano monthly” (National Wire)

Informal trade worth more than N1bn takes place in Kano each month, regional coordinator, North West, of the Nigerian Export Promotion Council, Mr Balla Hassan, has said. Hassan, who also disclosed that the Council is aware of the ‘back door’ trade ongoing from the Kano grains market, said the NEPC is working hard to help traders to export formally and reap the benefits of their efforts. He made this disclosure after a capacity building workshop organized by the NEPC-AGOA Trade Resource Centre in Kano recently. “We are aware that people do export from the ‘back door’ through the Dawanau Grains Market in Kano. What we do is visit the market and obtain information on the product(s), volume and value of products being exported through the ‘back door’ and forward to the ED/CEO at the headquarters.” He pointed out that mostly, Agricultural products like maize flour, millet flour, guinea corn flour, ginger flour and other crops valuing above N1.7bn per month are exported informally to Niger, Chad Republic, Algeria and Libya.

Hitting the trillion mark: pdf A look at how much countries are spending on infrastructure (1.76 MB)  (World Bank)

This paper is structured as follows. We discuss previous efforts at estimating infrastructure spending, explain the available data sets as well as their relative advantages, compare the results obtained using these data sets, and propose methods to combine them to “triangulate” and improve accuracy. We then use the uniquely detailed BOOST fiscal data to provide some trend analysis and discuss some budgeting challenges. A final section concludes and discusses potential directions for further strengthening our understanding of what countries spend on infrastructure and the use that can be made of such data.

On the BOOST database: Finally, the World Bank recently developed a regional baseline of public spending by leveraging the wealth of micro fiscal data collected by the BOOST initiative in more than 55 countries (with another 15 in progress). This baseline allows us to examine annual trends, execution rates, funding sources, and levels of capital expenditure by general government across infrastructure sectors. The BOOST database covers 25 countries in Africa - which has enabled the World Bank to develop a regional baseline of annual public spending across infrastructure sectors in Sub-Saharan Africa. It also includes 14 Latin American and Caribbean countries, which the World Bank and IDB teams are using to derive investment estimates ground-truthed in the IDB’s country-specific fiscal analysis. The hope is that, in the future, estimates could be derived from BOOST data instead of requiring costly country visits.

Given the limitations of each of these proxies (pdf), the authors employ several transformations to derive a lower-bound estimate for infrastructure investments in low-and middle-income countries of 3.40 percent of their gross domestic product, a central estimate of around 4 %, and an upper-bound estimate of 5% for 2011. Corresponding absolute amounts are US$0.82 trillion, US$1.00 trillion, and US$1.21 trillion, respectively with East Asia and the Pacific accounting for 55% of infrastructure investments and Africa 4%. The public sector largely dominates infrastructure spending, accounting for 87–91% of infrastructure investments, but with wide variation across regions, from a low of 53–64% in South Asia to a high of 98% in East Asia.

Osaka G20 Summit: Is Japan up to leading WTO reform? (EAF Editorial Board)

If the goal of Japan’s G20 presidency in 2019 is merely to get through the summit in June with a business-as-usual approach, at best it would be a lost opportunity. At worst, Prime Minister Shinzo Abe and Japanese officials could find the global economic order collapsing around them on their watch or end up throwing a hospital pass to the next G20 hosts, Saudi Arabia. This week, Shiro Armstrong explains in our feature piece that ‘the World Trade Organization, at the core of the multilateral trading system, is in crisis’. The dispute settlement system will cease to have a binding appellate body by the end of 2019, with two of its three remaining judges set to end their terms. The usual number of judges is seven and three is the minimum needed for it to function. There is a lot that every country would like to change about the WTO and Armstrong explains ‘there is now an opening for G20 leaders to set the strategic direction of reform for the WTO’ after the leaders’ communique from Argentina opened up that opportunity. The G20 countries are now talking about what WTO reforms are needed, instead of whether they are needed at all. [Abe and Merkel seek to take Japan-Germany ties to ‘higher level’ amid trade turmoil and Brexit]

Today’s Quick Links:

Nonkululeko Nyembezi: Africa shifts to the periphery at World Economic Forum

The EALA’s sensitization programme (1-6 February): EAC Integration Agenda - accessing the gains and assessing the challenges

Enhancing SADC DFI’s role towards industrialization: an interview with Tanzania’s Charles Singili

Trans-Gambia bridge a boon for trade: but a blow for local traders

Battle for US skies: Ethiopian Airlines ups the stakes

Ethiopia takes over Amisom command

Kenya: Shilling hits 6-month high to dollar

IFC’s Sergio Pimenta: Rwandan private sector can do more to seize opportunities

Little known Kenya firm buys Tanzanian cashew nuts for Sh18bn

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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