tralac’s Daily News Selection
32nd Ordinary Session of the African Union: opening address by President Kagame
The future of the global economy is digital. At this Summit, we will consider guidelines for a common African approach to digital identity management. The purpose of this initiative is to increase economic inclusivity and trust for our citizens, particularly in the context of growing regional integration. This is only the first step of what must be a consistent and comprehensive effort by the African Union, and all Member States, to prepare for the technologies that are remaking global commerce, especially artificial intelligence, robotics, data mining, and cyber security. We should not fear these changes or attempt to delay them. That would be futile and counter-productive. They are the future engines of productivity and prosperity for our youth. But in order to secure our place, we must face the world as a unified bloc and work closely with other regional organisations and the private sector to ensure that the interests and the rights of Africans in their own data are guaranteed. [Related: Kagame hands over AU chair to Sisi; AU summit opens with focus on peace and migration]
Note: Tomorrow’s tralac daily news selection will carry a comprehensive set of postings from the summit, which closes today
Africa Tech Summit (13-15 February, Kigali): preview
The Nigerian special committee, set up to examine the consequences of the country’s joining the African Continental Free Trade Area, has just submitted its final report to the authorities, Nigerian Foreign Minister Geoffrey Onyeama told Sputnik on Monday, adding that if the committee’s report was favorable, Nigeria would ratify the deal “very soon.” The Nigerian minister recalled that the agreement required ratification by 23 countries before entering into force, adding that 21 states have ratified it so far. “We would like to accede [the AfCFTA] before the act comes into force, and it’s almost there,” Onyema specified.
Trade flows in these three countries follow the international pattern of commodity-dependent regions. In all three countries, exports are dominated by primary products. In particular: Unmanufactured tobacco is the top export commodity of Malawi, and accounted for 43% of Malawi’s total exports in 2016; Gold is the top export commodity of the United Republic of Tanzania and represented 33% of total Tanzanian exports in 2016; Copper is the main export commodity of Zambia, accounting for 68% of Zambian exports in 2016. In both Zambia and Malawi exports are highly concentrated, with both countries relying on a single commodity as the main source of their exports revenue. Export concentration is lower in the United Republic of Tanzania. Trade flows among the three countries account for relatively small shares of their total exports. This is not surprising given their small economies and trade capacity. Malawi, as the smallest economy among the three, has a relatively larger share of its exports with the United Republic of Tanzania and Zambia (see annex 1, table A1.1). Table 1 presents the main export products in the bilateral trade among these countries. Extract (pdf):
This section examines the measures that specifically apply to small-scale trade through simplified trade regimes (STRs) and other trade-facilitating mechanisms. These provisions have been developed as a result of the complexity of the official trade regime in the three countries under consideration. Table 8 compares the requirements for trade and the applied national systems of the three countries. The difficulty, complexity, and incompatibility of these national systems help explain why small-scale traders opt for unofficial trade. Linked policy recommendation #4: Better tailoring of simplified trade regimes to the needs of small-scale traders and promoting the uptake of those regimes. The low uptake of STRs is largely explained by the requirements and costs associated with them, which remain cumbersome even though they facilitate certain trade provisions. To better tailor STRs to the needs of small-scale traders, in turn strengthening the incentives to use formal routes, policymakers should consider (i) providing faster and streamlined clearance times; (ii) issuing certificates and permits at the border; (iii) expanding (and regularly updating) the list of eligible goods to include products that are most commonly traded, and taking into account seasonality factors; (iv) lifting excise duties for STR transactions involving goods that are regularly traded by small-scale traders such as soft drinks; and (v) increasing the threshold for STR transactions to US$2,000, as has already been done in some countries, which would encourage small-scale traders who deal with medium sized consignments to enter the scheme.
The African Model: Asia’s path may not work, but there is an alternative (African Arguments)
All this suggests that the Asian path may be both unfeasible and undesirable for Africa. But there is an alternative. It may be impossible to reduce poverty without industrialisation, but industrialisation does not necessarily need to focus on exports. Africa’s “population boom” does not just create challenges but also opportunities through a process of domestic market integration. Growing domestic markets enhance consumer demand, while rapid urbanisation increases labour productivity. The greater population density of cities allows for a higher degree of resource sharing, access to public goods such as a health and education, divisions of labour, and faster spill-overs of knowledge. A stronger focus on domestic markets also tends to strengthen the linkages between a country’s agricultural, industrial and service sectors without having one sector alone (i.e. manufacturing) pulling the economy to higher GDP levels. This suggests that rather than producing for international markets, most of Africa’s economic growth in the coming decades may be better realised by catering to and connecting growing domestic markets. For policy-makers, the path chosen and the focus for industrialisation raises many questions. For example, which road should be built or improved next; one that connects urban hubs or one to the coast? Should domestic firms be granted start-up subsidies, and if so, which ones? Under what conditions should African countries allow foreign investors to operate? [The authors: Marlous van Waijenburg, Ewout Frankema]
Tanzania plans to ban fish imports from China (The East African)
The government has announced a plan to review the Fisheries Act and regulations governing the sector to pave the way for a total ban on fish imports, especially from China and Vietnam. Luhaga Mpina, the Minister for Livestock and Fisheries, said that regulations will be put in place to safeguard local fisheries. “We are looking to protect Tanzania’s marine resources through proper arrangements for commercial fishing, to make it beneficial to those in the business,” Mr Mpina said. Tanzania produces about 336,821 tonnes of fish per year, against a demand of 731,000 tonnes. The country imports about 24,000 tonnes of fish per month worth Tsh56 billion ($25m), mostly from China, Vietnam and other states around the Indian Ocean. [China garlic hits 50% of Kenya’s market supply]
Kenya says Tanzania, Uganda are distorting maize market (The East African)
Kenyan farmers have raised the alarm on the saturation of the cereals market with maize from Uganda and Tanzania, causing a glut and denying them income. A bumper harvest across the region last year caused an oversupply and a subsequent fall in prices, resulting in farmers struggling to get market access and leaving governments unable to buy all the maize for their strategic reserves. A presidential task force formed last year has released a report reiterating the farmers’ concerns, accusing the two East African states of distorting the Kenyan market by over-exporting maize to the country. The report, dated January 28, 2019, cites an imbalance of trade between Kenya and the other EAC states, which has seen the country import more maize than required in spite of a bumper harvest in the North Rift region. The report, which will be presented to President Uhuru Kenyatta, comes at a time when maize farmers are embroiled in a tussle with the government over prices that they say are too low, and the failure by the National Cereals and Produce Board to buy all their produce.
US investors demand $96m for loss of Rwanda contracts (The East African)
A group of US investors have taken Rwanda to an international court, seeking compensation of $95m after the government seized their mining concessions, effectively denying them operating licences. The suit before the International Centre for Settlement of Investment Disputes is a setback to Rwanda’s mining sector, which has lately gone through a series of reforms aimed at attracting large-scale investors and increasing revenues from mineral exports. The US investors trading as Bayview Group and Natural Resources Development, filed a lawsuit at the ICSID in 2017under case file No. ARB/18/21, but it was not until mid-2018 that a procedure agenda was developed, documents show. Three arbitrators — two British nationals, Barbara Dohman and Nicholas Phillips, and the American Truman Bidwell — were appointed for the hearing. The ICSID has set a procedure agenda for the tribunal hearing to begin in March and run till December 2020.
UAE eyes Kenya’s maritime sector (Business Daily)
Dubai is set to acquire the freight forwarding business and assets of a Kenyan logistics firm in a move that cements the country’s foray into the local shipping sector. The United Arab Emirates, through its newly incorporated local entity ISS Global Forwarding Limited, is acquiring the freight forwarding division of Dodwell & Co. (East Africa) Limited. The deal, which has been approved by the regulator, Competition Authority of Kenya , could see the UAE government step up competition in the local logistics sector dominated by players including Danish conglomerate Maersk and French firm Bolloré.
“The Ministry of Transportation studied with several consultants establishing a railway line of 600 km in length linking Egypt to Sudan to increase trade movement between the two countries,” Minister of Transportation Hisham Arafat stated. This came during the minister’s tour in the high dam in Aswan with his Sudanese counterpart Hatim Al Sir Ali on Monday, Feb. 11. “This decision came upon President Abdel Fatah al-Sisi’s directions,” Arafat clarified. The High Dam station is expected to become an important logistic area, as it could greatly contribute to strengthening trade exchange and cargo transport between Egypt and Sudan, Arafat said. The minister also revealed that the railway sector will not be privatized, rather shared with the private sector.
A disorderly withdrawal of the UK from the EU would impact many of the world’s economies. As a recent study by the Halle Institute for Economic Research based on data for 43 countries shows, a total of more than 600,000 jobs could suffer the consequences of a hard Brexit. In absolute numbers Germany would be hit the hardest, with more than 100,000 jobs affected, followed by China (just under 60,000) and France (around 50,000) as well as Poland and Italy (around 46,000 jobs each). The shortage of skilled labour in many developed economies suggests that companies may try to keep their staff by, for example, reducing working hours or opening up new markets. IWH economists gave a detailed breakdown of (a) which industries would be affected in (b) which countries and (c) what consequences this would have for the respective labour markets. All calculations are based on the assumption that demand for EU goods and services in the UK will fall by a quarter after a hard Brexit, without British demand for goods from other regions increasing. This is due to higher prices, since imports from the remaining EU countries would become more expensive because of new tariffs.
Today’s Quick Links:
Record EUR 3.3bn EIB engagement across Africa supports private sector, clean energy, transport and water investment
World Bank’s IFC to grow Mena investments in 2019
Preparation of Infrastructure Financing Trends for Africa 2018: AfDB EOI