tralac’s Daily News Selection
Marking two years since the TFA entered into force: An Update on the WTO Trade Facilitation Agreement and African countries
This tralac Trade Brief gives an account of the current ratification and implementation status of the TFA by African countries, and highlights potential benefits to African countries if they fully implement the TFA. [Author: Talkmore Chidede]
Note: The incoming Chair of the African Group at the WTO is Benin’s Ambassador Eloi Laourou
The WTO’s Dispute Settlement Body meets on Monday: the agenda items (pdf)
Air Cargo Africa: More integration and air cargo cooperation needed for intra-Africa trade to succeed (The Load Star)
Dick Murianki, general manager of cargo for Kenya Airways, told The Loadstar on the sidelines of Air Cargo Africa that one of his biggest frustrations was the lack of regional trade, which accounted for just 4% of the carrier’s revenues. “We send freighters within Africa, leaving Nairobi full, and they come back empty; we have to fill them with ballast. Nothing is coming back. It makes it very expensive to operate when we have to cost-in the return journey.” Chief executive of Kenya Airways Jan de Vegt pointed out: “The EU, US and China are big land masses with little or no Customs. Here, there are 54 countries all with different rules. It makes it very difficult.” These differing rules have hampered nations’ abilities to trade with each other, said Mr Murianki. “It makes regional trade almost impossible.” [Related Engineering News reports: Single air transport market essential for African air cargo sector, UAVs, e-commerce, set to transform air cargo]
Some members of the Global Financial Action Task Force have condemned the EU’s decision to blacklist Nigeria and 22 other countries in an expanded list of countries released last week. The EU Commission said the blacklist would affect countries who have failed to take steps to strengthen their anti-money laundering and terrorism financing regimes. Insiders at the ongoing meeting of the powerful global body told Premium Times that non-EU states took turns to lampoon the decision, with the U.S. describing it as “out of order and confusing”. FATF’s president, Billingslea Marshall, announced the US government’s directive to all US banks to ignore the EU listing of the 23 countries. Countries like Japan, Argentina and others from Africa and the Middle-East agreed with the US’s position on the blacklist. Most members at the meeting faulted the EU’s position which, they said, was taken outside the known global mechanism for tackling illegal monies such as the FATF, Egmont Group and the UNODC.
South Africa: Brazilian chicken ban call ‘opportunistic’ (IOL)
The South African Poultry Association has called for a ban on Brazilian chicken imports following a salmonella scare that led to a recall of 500 tons of product globally. Broiler organisation SA Poultry Association’s general manager Izaak Breitenbach has written to the Minister of Agriculture Forestry and Fisheries Senzeni Zokwana, on behalf of the local poultry industry “requesting action” against Brazilian imports. However, consumer groups and meat importers have lambasted the move as an “opportunistic” bid to protect the interests of local producers. Association of Meat Importers and Exporters’ Paul Matthews said the call for the ban was not necessary and came at a convenient time for Sapa, which had just filed a request with the International Trade Administration Commission for an increase in duty on Brazilian and US chicken imports of 82%. [South Africa: Foot-and-mouth disease hampers hide and skin exports]
South Korea’s Hyundai Motor Co opened a 10,000-a-year vehicle capacity assembly plant in the Ethiopian capital Addis Ababa on Thursday, its first factory in East Africa. While second-hand vehicles dominate sales in the Horn of Africa country, Hyundai hopes locally-assembled cars could prove attractive given the cost of imports due to high taxes. Some of the cars will be exported to the region, Haile Gebrselassie said. “This plant is big enough (to assemble) for Kenya, Ethiopia, Somalia, Djibouti, Eritrea and Sudan,” he said. Ethiopia produces around 10,000 commercial and other vehicles a year for its home market. It imported more than 40,000 cars in 2017, automobile traders say. [VW South Africa targets record output despite headwinds]
“The fact that officials finally came to their senses and ditched the notion that Zimbabwe’s quasi currency was at par with the US dollar, is comforting,” said Jee-A Van Der Linde, analyst at NKC African Economics. “With consumer prices soaring, significant amounts of multilateral debt arrears, virtually no foreign reserves, and confidence at rock-bottom, Zimbabwe’s problems are still far from over – nor is the road ahead any clearer.” [Related updates: US$ remains the base currency for trading - Zimcodd; Bloomberg: Zim says exchange rate to strengthen, thanks to ‘new currency’; Reuters: Zimbabwe’s new currency expected to trade at 2.5 vs U.S. dollar – cbank]
In the three months following the introduction of the levy in July 2018, there was a noted decline in the number of internet users, total revenues collected, as well as mobile money transactions. In a series of tweets, the Uganda Communications Commission noted internet subscription declined by more than 2.5 million users, while the sum of taxpayers from over-the-top media services decreased by more than 1.2 million users. The value of mobile money transactions also fell by 4.5 trillion Ugandan shillings ($1.2m). “The decline in the amount of business could partly be explained by the introduction of mobile money tax,” the regulator said. [Perseus Mlambo: Africa’s Digital Generation Gap]
Nigeria has ordered foreign oil and gas companies to pay nearly $20bn in taxes it says are owed to local states, industry and government sources said, in a move that could deter investment in Africa’s largest economy. In a letter sent to the companies earlier this year via a debt-collection arm of the government, Nigerian National Petroleum Corp cited what it called outstanding royalties and taxes for oil and gas production. Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor were each asked to pay the central government between $2.5bn and $5bn, said the sources, who saw or were briefed on the letters.
Côte d’Ivoire Economic Outlook: Understanding the challenges of urbanization in height charts (World Bank)
For the seventh consecutive year, economic growth in Côte d’Ivoire was projected to exceed 7% and reach 7.4% in 2018, despite the country’s vulnerability to external shocks and political uncertainty in the run up to the presidential elections in 2020. This was the verdict of the Eighth Economic Update for Côte d’Ivoire published by the World Bank. The country, therefore, continues to have one of the most dynamic economies in the world, boasting the highest growth rates in the West African Economic and Monetary Union, despite a slight drop of 0.3% in relation to its performance in 2017 (7.7%).
Given that by 2050, nearly two out of three Ivorians will be living in an urban center, over 10 million of whom will settle in Abidjan, urban mobility challenges will intensify if no action is taken, and solutions will become increasingly difficult to implement. The report analyzes the daily mobility constraints faced by commuters and proposes several avenues for improving urban transport and ensuring the success of the Greater Abidjan project adopted in 2016. “There are approximately 10 million trips taken every day in Abidjan and each household spends close to CFAF 1075 (about $1.80) and loses over three hours a day in commuting time,” explains Anne Cecile Souhaid, Senior Transport Specialist and co-author of the report. “That is equivalent to nearly 5% of the national GDP in 2017. However, a 20% improvement in urban mobility in Abidjan could generate gains of almost 1% of annual GDP growth.” [Jacques Morisset: The challenge of urban mobility in Abidjan]
Carlos Lopes: How African countries can ‘leapfrog’ the fossil-fuel based growth strategies of developed countries (Global Commission on the Economy and Climate)
Over the next 10-15 years we expect to invest about $90 trillion in infrastructure (more than the total current stock) and the global South will account for roughly two-thirds of this. To add to the urgency, these investment decisions will be taken in the next 2-3 years. Whether or not this infrastructure is sustainable will be a critical determinant of future growth and prosperity. We must act quickly and the following three pillars for action can guide next steps in Africa: green industrialisation, smart urban development and sustainable agriculture.
Will the African Union let climate change derail its development plans? Or will member states seize the opportunities that the low-carbon, climate resilient revolution offers for more inclusive and sustainable economies? African countries are already helping to lead this revolution. In 2016, Uganda published a comprehensive agenda for green growth, incorporating climate action into the country’s five-year national development plan. To those heads of state seeking strategies to ensure their countries’ growth and sustainable development well into the future, I encourage you to act on climate change today.
Nigerian government to screen foreigners for work permit (Premium Times)
The Federal Government will soon begin the enforcement of available immigration laws that allow only foreigners with the requisite residency and work permits to live and work in the country. The Minster of Power, Works and Housing, Babatunde Fashola, disclosed this in Lagos on Thursday in a special event, “BRF GABFEST” organised in his honour. The Minister said the government is currently undertaking the audit of foreigners working at various work sites and businesses across the country to determine the population of foreigners working in the without a valid work permit. “Every foreigner who has the work permit to come to Nigeria legally is welcome. But, if you don’t have the relevant papers, we will take you out,” Mr Fashola said.
Former President, Chief Olusegun Obasanjo and 18 global experts in population on Tuesday, met to fashion out how to make Africa’s population an asset rather than a liability. At the Africa Progress Group (APG) organized international round table session, held at the Olusegun Obasanjo Presidential Library, the experts, with South African philanthropist and businessman, Jonathan Oppenheimer as special guest, presented diverse papers on population issues, which they noted is a course for concern. “To ensure that Africa’s population is an asset to development, after careful consideration of successful practices in managing populations across the world, participants recommended to African leaders as follows:...”
A failure to deliver a deal on the UK’s withdrawal from the EU will add more barriers to global trade and risk thousands of UK jobs, said the Secretary General of the world’s largest business organisation. Noting the UK’s historic role as a champion for global trade, ICC Secretary General John W.H. Denton warned that a “no-deal” Brexit will dangerously add additional barriers to trade and investment at a time when protectionist measures worldwide are already approaching alarming levels. With regard to Brexit, ICC has continually called on the UK to seek the closest possible trading relationship with the EU to keep cross-border trade as frictionless as possible. [UK Department of International Trade: update on existing trade agreements if UK leaves EU without a deal; Ngaire Woods: Brexit’s Lost World]
Mohamed A. El-Erian: The dialectic of global trade policy (Project Syndicate)
It is often said that with risk comes opportunity. What initially was viewed as an unfortunate US shift to protectionism may in fact have opened a window to improve the functioning of the global economy and world trade. The next few months will be critical.
Today’s Quick Links:
WTO trade indicator points to slower trade growth into first quarter of 2019
Ivory Coast hosts third regional trade policy course
Brexit a hot topic for SA fruit exporters
CBL Gov. Patray stresses collaboration among ECOWAS central banks
ITC guide to Chinese private investment in Africa: insights from SME competitiveness surveys (in Chinese)