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tralac’s Daily News Selection
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18 Feb 2019

3rd STC on Finance, Monetary Affairs, Ecnomic Planning and integration (4-8 March, Yaoundé)

The 3rd Specialized Technical Committee on Finance, Monetary Affairs, Economic Planning and Integration will focus on the theme of “Public policies for productive transformation” with discussions on sub-themes such as strategies for productive transformation in Africa; the role of regional integration and the private sector; and transformative leadership and Africa’s productive transformation.

Profiled conference documentation:

(i) pdf Financing the Union: towards the financial autonomy of the African Union (820 KB)

Implementation of the 0.2% import levy. Since the adoption of the Kigali Decision in July 2016, there has been unprecedented momentum gathered around its implementation. By 20 December 2018, there were 25 countries, representing about 45% of AU membership that were at various stages of domesticating the Kigali Decision on Financing the Union. A criteria made up of four elements was drawn to help classify a Member State as having commenced implementation of the Kigali decision:

Member States collecting the levy. Of the 25 Member States stated above, there are 15 countries that are known to be collecting the levy on eligible imports. The following are the Member States: Kenya, Gabon, Congo Brazzaville, Cameroun, Rwanda, Sierra Leone, Chad, Cote d’Ivoire, Djibouti, Benin, Guinea, Ghana, Sudan, Mali, Gambia. As of 31 December 31 2018, an amount of $61,438,497 was received from these Member States ($35,989,757, $4,039,685 as contribution to regular budget and Peace Fund, respectively, representing 60% and 33% of amount expected). Another $1,079,369 was received as advance contribution to the 2019 budget, which came from Cote d’Ivoire and Mali. All the above Member States, except Chad and the Gambia paid their 2018 contributions to the AU using the new system.

Other Member States commenced the process to implement the Kigali Decision. There are a further six Member States that are on record to have started the process of domesticating the Kigali Decision. Their current status on whether they are collecting the levy is not yet known. The following is the list of countries: Nigeria, Comoros, Mauritania, Ethiopia, Senegal, Libya.

All other Member States not yet implementing the Kigali Decision. There are currently 30 Member States that are not implementing the Kigali Decision on financing the Union. The following Member States fall under this category: South Africa, Burkina Faso, Egypt, Madagascar, Morocco, Niger, Angola, Togo, Tunisia, E-Swatini, Tanzania, Eritrea, Congo Kinshasa, Burundi, Zambia, Lesotho, Uganda, Liberia, Equatorial Guinea, Cape Verde, Mozambique, Central African Republic, Botswana, Somalia, South Sudan, Guinea Bissau, Zimbabwe, Sahrawi Arab Republic, Namibia, Sao Tome and Principe.

(ii) APRM support to member states in the field on rating agencies: concept note (pdf). The decisions to establish APRM support to member states in the field of rating agencies emerged from concerns over the impact of poor ratings in African countries by the three leading ICRAs, namely: Standard & Poor’s, Moody’s, and Fitch – which are domiciled in the USA and the UK. These ICRAs provide sovereign credit ratings in Africa, which aim to provide investors with specific insights into the creditworthiness or the ability to repay a borrowed amount together with interest, as well as the level of default risk associated with investing in a particular organisation or economy. The APRM Support to Member States on ICRAs is primarily interested in ICRAs Sovereign Credit Rating as they are essential in determining the interest rates that a borrower entity or a government must pay in servicing its debt, thus affecting the cost of capital. The APRM Support to Member States is accordingly based and modelled on this premise. The APRM Support to Member States on International Credit Rating Agencies is a paramount prerequisite to improve the continental financial architecture and access to affordable capital. The support would complement other AU instruments such as the 2009 African Investment Bank Protocol which aims to provide capital raising capabilities to Member States through the issuance and sale of both bonds and securities and assist in mergers and acquisitions operations.

(iii) pdf Draft Africa Regional Multidimensional Regional Integration Index (1.02 MB) . The AUC undertook this study with a view to producing a more understandable and broader monitoring and evaluation framework for the integration process. With the prior existence of an index (ARII), the AUC also wanted to broaden the base of integration assessment tools. In the first section, the context, basis, and rationale of the preparation of this report were recalled and explained. The existence of ARII required the study to rigorously specify its objectives, methodology and added value in terms of assessing integration. This section has set the scene for a better understanding of the work done by the AUC. Since the Abuja Treaty and the Agenda are the two key programmes on which the entire study is based, it was necessary to recall, in a second section, the main stages, the goals of the Abuja Treaty and of Agenda 2063. The deadlines for each step and the other initiatives taken were recalled as a compass for the evaluation. This section equally made an overview of the vision of Agenda 2063, highlighting the areas of integration selected among the eight priority projects. The selected dimensions were then presented in this section in order to link them to specific goals of the Abuja Treaty and Agenda 2063. There are eight dimensions : (i) free movement of persons; (ii) trade integration (iii) integration of persons or social integration, (iv) infrastructure integration, (v) financial integration, (vi) monetary integration (vii) institutional integration and (viii) environmental integration.

(iv) Report of the capacity building workshop on the role of capital markets in mobilizing domestic resources in Africa (5-7 December 2018, Gaborone); Discussion note by ACBF: pdf Capacity building for the formulation of public policies for productive transformation (539 KB)


China suspends wool trade from South Africa due to foot-and-mouth disease outbreak (ABC)

Australian woolgrowers are set to benefit from the suspension of wool exports from South Africa to China due to an outbreak of foot-and-mouth disease (FMD). The peak body of the South African wool industry, Cape Wools SA, released a statement saying that the industry decided on Friday to postpone a crucial wool auction due to China’s customs department suspending “all greasy wool imports from South Africa as a result of the foot-and-mouth disease outbreak earlier in the year”.

COMESA to intensify lobbying its member states to sign air transport commitment (COMESA)

COMESA will this year intensify advocacy activities in 15 of its 21 Member States to ensure they sign the Solemn Commitment to Implement the Single African Air Transport Market. So far only six COMESA countries (Egypt, Ethiopia, Eswatini, Kenya, Rwanda, Zimbabwe) have signed the commitment. On 28 – 29 January 2019, Africa aviation industry stakeholders met in Dakar and agreed to focus this year to finalize and execute the SAATM Implementation Road Map. They also agreed on the need for early completion of the 55-country study on SAATM socio-economic benefits to Africa. COMESA signed the memorandum of the establishment of SAATM with AFCAC in 2018. It is currently the lead REC on the formulation and implementation of an eight million euros Eastern and Southern African aviation programme to be funded under 11th European Development Fund. In ECOWAS, 13 out of its 15 members have signed the Commitment with the remaining two states expected to come on board soon. [Cross Border Traders Association of Zambia poised for support]

Zambia: World Bank adopts new country partnership framework

The World Bank Board of Executive Directors has endorsed a new five-year country partnership framework to support the government of Zambia address the structural challenges and promote pro-poor growth with a focus on rural areas. The CPF will also support expansion of market opportunities for Zambian firms through increased economic integration with neighboring countries and an adequate rural road network. It is also expected to help reduce the infrastructure gap, increase access to electricity, and water and sanitation, particularly in rural areas.

Seventh African Fiscal Forum: leveraging fiscal policy to manage risks and support inclusive growth (IMF)

The IMF’s African and Fiscal Affairs Department, the Kenyan Treasury and the EC organised the Seventh African Fiscal Forum (14-15 February, Nairobi). In their opening presentations, Abebe Selassie, director of the African Department and Vitor Gaspar, director of the Fiscal Affairs Department of the IMF highlighted the need to build tax capacity and invest in human and physical capital in a context of still muted economic growth and rising debt burdens. Kenya’s Minister of Finance, Henry Rotich stressed that if SSA is to use fiscal policy more actively to manage risks and support inclusive growth, it must do so without compromising two strategic priorities: economic and fiscal sustainability. Félix Fernández-Shaw, director at the European Commission’s DG-DEVCO, stressed the importance of making best use of all financial resources and implementing reforms to improve policies and good governance.

Mauritius is not in the European Commission’s blacklist (GoM)

The adoption of a new list of 23 countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing frameworks was announced by the European Commission, in a Press Release issued on 13th February 2019. Mauritius is not in the European Commission’s blacklist. According to a communiqué published by the Ministry of Finance and Economic Development yesterday, the European Commission’s new list not only confirms that Mauritius has in place the necessary legal framework and controls to prevent money laundering and terrorist financing risks but also underscore the effectiveness of their implementation. The 23 jurisdictions are:

Tanzania hydropower dam to cost more than double – study (The East African)

Tanzania’s Stiegler’s Gorge Dam, due to be built on a Unesco World Heritage site, will cost more than double the government’s estimates, an independent study shows. In December, Tanzania signed a deal with two Egyptian companies, El Sewedy Electric Co and Arab Contractors, to build the $3bn hydroelectric plant. Joerg Hartmann, an independent expert and assessor on the sustainability of hydropower projects, said the dam was likely to cost $7.58bn once financing and other costs were taken into account, rising to $9.85bn on account of cost overruns associated with such projects. His study was published by OECD Watch, a worldwide network of civil society organisations with more than 130 members in over 50 countries. [Download: Economic feasibility of the Stiegler’s Gorge Hydropower Project]

Batoka Gorge Hydroelectric Scheme: a macroeconomic assessment of public investment options (World Bank)

This paper aims to improve the tools available to facilitate the assessment of the macroeconomic implications of large infrastructure projects and enhance the capacity for management of public investment decisions. The macroeconomic assessment of public investment options (MAPIO) model was applied to the Batoka Gorge hydroelectric scheme to provide an analysis of impacts on key macroeconomic variables. The MAPIO model shows the project provides a robust financial and economic investment option with a net positive impact on the national economies in both Zambia and Zimbabwe. The estimates are considered conservative and the returns remain robust when subjecting the model to extreme assumptions to test the sensitivity of the results.

Ethiopia to privatize mobile telecom, aviation, energy sectors (Quartz Africa)

As part of the transition, observers say privatization of the operator must also come with full liberalization of the telecoms sector to trigger full and fairly-regulated competition. Interchanging a state-controlled sector with the private monopoly “would be the worst possible ownership model,” says Henok Assefa, managing partner at Addis Ababa-based consultancy Precise. Both the telecom segment and Ethiopia’s receptiveness to economic liberalization will also likely depend on achieving political pluralism, ensuring peace and security, and dealing with the vested interests in the ruling party who might be wary of decentralization. And while the introduction of these reforms is propitious, Ndhlovu says “it also incumbent among businesses and investors to understand Ethiopia’s disposition and remain pragmatic in their approach to the country.”

Today’s Quick Links:

The current state of fruit and vegetable agro-processing in South Africa (pdf)

More than just growth: accelerating poverty reduction in Kenya

Creating opportunities for a new forestry economy in Mozambique

Mozambique, DRC sign deals with World Bank to cut carbon emissions, reduce deforestation

Does automation in rich countries hurt developing ones? Evidence from the US and Mexico

China January trade surplus with US narrows to $27.3bn

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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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