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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: CMA CGM

21 Feb 2019

Diarise: SADC Council of Ministers meeting (15-16 March, Windhoek). Ministers will consider a number of strategic documents, receive reports on the implementation of the priority areas of the revised RISDP 2015-2020, review implementation of the 38th SADC Summit, approve the SADC Secretariat’s budget for the year 2019/2020.

Underway in Arusha: 8th AUC/RECs Sub Committee Meeting on Customs Cooperation. The three-day meeting will also provide updates with regards to the adoption of the AU-wide Trade Facilitation Strategy, identify areas of cooperation and the form of cooperation and, where possible, consider undertaking joint activities.

Contemporary Issues in African Trade and Trade Finance (Volume 4, Number 1, December 2018, Afreximbank). Profiled contribution, by David Luke and Lily Sommer: The AfCFTA – opportunities for industrialization in the digital age (pdf)

Recent estimates for the United States in the period 2010–2016 suggest that for every company that reshores production, 126 African jobs are lost. Until now, reshoring has occurred only on a small scale, but it has been more than offset by new offshoring activities. Some leading firms such as Adidas, Phillips, Fort, and Caterpillar have, however, begun to reshore traditionally labor-intensive manufacturing closer to the home market, and incentives to reshore are expected to increase as the cost of automation falls. This may potentially exclude African countries from participating in GVCs, constraining their options for productive employment, learning and skills development, technology transfer, and industrial upgrading. Although African countries still have time to adapt to the digital future, they have a window of opportunity to expand production in activities where digital technology innovation and/or installation has been slow. The digital economy offers significant opportunities for MSMEs in Africa to innovate. It offers new options for accessing finance, labor, inputs and production services, customer service, sales channels, and marketing locally and at low cost. Multinational companies typically locate their research and development centers in advanced economies and adapt innovations to developing country contexts.

The next phase of AfCFTA negotiations, which will focus on investment, competition policy, and intellectual property rights, should address digital technology. Competition in digital markets is more complex than in traditional markets, since the sector typically includes platform-based business models, multi-sided markets, network effects, and significant economies of scale. Digital markets are also characterized by relatively higher rates of investment and innovation, which lead to rapid technological progress and disruptive innovation. African authorities concerned with competitiveness should strengthen their expertise in intellectual property-intensive and high-tech industries. Although the digital economy creates global markets for content and rights holders, it also creates a threat of increased piracy. A framework that protects intellectual property rights will need to be designed to protect African-grown innovations, while also building in sufficient flexibility to facilitate the transfer of digital technologies from outside the continent.

Digitizing Egypt: update from Minister of Communications and Information Technology, Amr Talaat (Egypt Today)

ICT performance in 2018. In 2018, Egypt’s exports reached $2.5bn in one year, growing 38% in investments in the sector, from LE 15 billion to LE 21.28 billion according to Talaat, who noted that the rate is high, but the number is still small. On a job creation basis, the minister announced plans to create 100,000 more jobs until 2022 in the ICT’s export business, stating that the number of employees in the sector has risen 13% y-o-y to about 175,000. ICT strategy. “Our plan is to grow 55% of Egypt’s export and to have centers or free licenses in the state that export outside the country,” the minister stated, adding that the number of free licenses is expanding and that the ministry is trying to expand and strength them further. “We have 25% that we need to bring in investments of international companies to set up centers in Egypt, depending on Egypt’s market potential.” To bring these investments to Egypt, the ministry put a strategy that stands on two main pillars; one is human development and the second is a digital transformation for creating a digital economy in Egypt.

Moroccan exporters: Free trade with US did not profit Morocco (Morocco World News)

The Moroccan Exporters Association (ASMEX) recently met US Department of Commerce Foreign Commercial Service Officer Nathalie Scharf in Casablanca. The meeting discussed possible future collaborations from a shared profitability perspective, according to Maghreb Arab Press. “The free trade agreement between Morocco and the US has not been beneficial to Moroccan exporters, given the size of the US market and the complex procedures yet unfamiliar to Moroccan companies,” said ASMEX President Hassan Sentissi El Idrissi. “This agreement should be reviewed in such a way as to consider the reality of Moroccan [small and medium-sized enterprises].” Both sides proposed ideas to boost Moroccan exports to the US market. One option involves setting up a program to support and refer Moroccan exporters to major US clients. The two parties also jointly proposed signing a tripartite memorandum of understanding between ASMEX, the Moroccan Investment and Export Development Agency (AMDIE), and the US diplomatic representation for the Select USA program.

Export to grow – Nigeria’s opportunity (Stears Nigeria)

Nigeria’s weak connection to the global economy creeps up in many areas; one of these is government revenues. South Africa collected $83bn in taxes in 2018, and Nigeria collected under $20bn even with three times the population. Part of the problem is the absence of a sophisticated private sector that creates jobs, expands growth, and provides taxable income. With nearly identical GDP’s, South Africa’s stock market capitalisation is over $1 trillion. Nigeria’s? About $31bn. There is no magic to why Nigeria currently has the highest number of poor people in the world. How will we collect taxes when wealth isn’t available? How will wealth be available when people aren’t plugging into the global economy? We understood this in the 1960s when regions had commodity boards that connected Nigerian farmers to the global supply chain. Of course, we lost all this once we discovered oil. We have a large population that is disconnected from the global economy. They don’t do agriculture, cut flowers, sew dresses, mine copper, or assemble phones. Our plug to the world is mainly oil, an industry that cannot produce jobs en masse. The question lingers: How can our large population benefit us and the world? [The author: Seun Onigbinde]

Tanzania rebases economy, 2015 GDP now 3.8% larger – stats office (Reuters)

Tanzania has changed the base year it uses to calculate economic output to 2015, and data from the National Bureau of Statistics showed its economy was 3.8% larger in that year. The bureau said in a document seen by Reuters on Wednesday it had changed the base year from 2007 previously, and calculated the economy’s size in 2015 at 94.3 trillion shillings ($40.56bn) at current prices, up from 90.8 trillion shillings ($39.05bn) using 2007 as the base year. Tanzania last rebased its economy in 2014. [ pdf Revised National Accounts Statistics Base Year 2015: Summary report (432 KB) ]

Tanzania, Barrick agree on plan to settle Acacia dispute (The East African)

Tanzanian authorities and Canadian miner Barrick Gold say they have worked out a plan to settle the disputes between the government and Acacia Mining Plc. The announcement followed a meeting between President John Magufuli and Barrick’s chief operating officer for Africa and Middle East Mr Willem Jacobs at State House Dar es Salaam on Wednesday. “Everything is all set, we are now ready to move on,” Tanzania’s Legal Affairs minister Mr Palamagamba Kabudi said, adding that the implementation is set to begin before end of March. “Significant amounts of real value have been destroyed by this dispute and, in Barrick’s view, this proposal will allow the business to focus on rebuilding its mining operations in partnership with their respective stakeholders,” Barrick said in a statement.

Tanzania U-turns on latest sugar imports ban (The East African)

Tanzania has now backtracked on its decision to ban sugar importation, a week after freezing the issuance of permits. The Minister for Agriculture, Mr Japhet Hasunga, told journalists on Wednesday that the government was now content with the plans by local manufacturers to produce more sugar. “We are now satisfied with the companies’ strategic plans to increase sugar production and that is why we have decided to allow them to supply and import sugar for domestic consumption.” Last week, Mr Hasunga had accused the factories of importing “sugar very fast, overlooking their role of producing,” adding that a freeze on the issuance of permits would force them to concentrate on production. Mr Hasunga said the country has enough stock until May, and that permits would be issued to non-sugar producing companies from June to bridge the gap. The country produces about 320,000 tonnes of sugar against a national annual demand of 670,000 tonnes.

New currency for Zimbabwe as foreign currency crisis deepens (Times Live)

Reserve Bank of Zimbabwe governor John Mangudya has introduced a new local currency - “RTGS dollars” - as the country’s severe foreign currency crisis persists. The announcement was made on Wednesday. Mangudya also announced that the country had ditched the 1:1 ratio between Zimbabwe bond notes and US dollars, a rate maintained by the central bank for nearly three years. Mangudya, who presented the monetary statement after several weeks of delay, also opened up an interbank system where the RTGS dollars would be traded for foreign currency by local banks on “a willing buyer and willing seller basis”. Some of the other highlights of the pdf Monetary Policy Statement (1.27 MB)  include:

Effective 25 February, depositors will be able to move US dollars locally between banks under the interbank system; Essential imports such as fuel and electricity will continue to have forex allocated by the Forex Allocation Committee; Gold producers will keep 55% of their earnings in foreign currency; Tobacco and cotton growers will receive 30% of their earnings from crop sales in foreign currency; Tobacco merchants will have 80% of their earnings in foreign currency; All forex holdings will be liquidated within 30 days at the market rate for the day; and a legal instrument will be gazetted that allows for the use of RTGS dollars and all entities, including government and individuals, will recognise the new currency. [Reactions canvassed by NewsDay]

UK to invest up to £30m through partnership with African Union (Dfid)

The UK is set to inject up to £30m into prosperity and security projects across Africa as it steps up its investment in the continent, Minister of State for Africa Harriett Baldwin has announced today. The funding boost comes as Britain signs a new strategic partnership with the African Union, strengthening the engagement between the continent and the UK Government. The funding, which forms part of the partnership agreement, and will be spread over three years, will be used to train peacekeepers in Kenya, assist free and fair elections, and support the next phase of negotiations for the African Continental Free Trade Area.

Beyond the Gap: how countries can afford the infrastructure they need while protecting the planet (World Bank)

“Beyond the Gap” aims to shift the debate regarding investment needs away from a simple focus on spending more and toward a focus on spending better on the right objectives using relevant metrics. It does so by offering a careful and systematic approach to estimating the funding needs (capital and operations and maintenance) to close the service gaps in water and sanitation, transportation, electricity, irrigation, and flood protection. The main innovations of this work relative to other investment needs estimates are the following:

Today’s Quick Links:

Morocco, Ethiopia to foster trade and investment partnerships

Turkana oil: 18 firms in list of Kenya’s early oil bidders

Rwanda border open to imports from Uganda amid trade wars in EAC

4th Pan African Forum on Migration (19-21 November 2018):  pdf final report (1.13 MB)

Africa must invest in the new ‘high seas’ treaty

Egypt, Russia agree to establish company to operate $7bn Russian industrial zone

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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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