tralac’s Daily News Selection
The WTO’s General Council meets in Geneva. Kenya, Cuba, Bolivia and Laos have associated themselves with the submission by China, India, South Africa and Venezuela on The continued relevance of S&DT in favour of Developing Members, one of the agenda items for discussion.
Diarise: Inaugural Pan African Amcham Summit (9-11 June, Johannesburg)
Alec Erwin: Opportunity for SA to drive car manufacturing industry in Africa (IOL)
If South Africa were to see the rest of Africa only as a buyer of the country’s vehicles - the prospect of a Continental Free Trade Agreement suggests that this might be an enticing prospect - it would be making a costly strategic mistake. In the first place, we would be competing with much larger exporting countries across the world, which are unlikely to let us dominate such a market. But, more fundamentally, this is not a sustainable situation for the larger African economies. For Africa’s larger industrialising economies, the absence of auto manufacturing means all vehicle needs would have to be imported. This has two fundamentally adverse effects.
The first is that it destabilises the balance of payments and, secondly, they lose the key industrialisation advantages that the auto sector provides. In fact, they would be attempting to grow with an inefficient transport sector. It is by no means a coincidence that the global auto industry’s development is characterised by various forms of the partnership arrangement between producer countries. As pointed out at the beginning of this discussion, there are structural features of the auto-manufacturing process - related in the main to economies of scale - that are conducive to a global manufacturing system characterised by high levels of intra- sectoral trade.
In Africa, at present, there is favourable conjunction of events that need to be seized as a strategic opportunity. Firstly, economies such as Nigeria, Ghana, Kenya and Ethiopia are seeking to implement auto programmes. Secondly, South Africa, working with its global OEM (original equipment manufacturer) partners are firm of the view that an African auto partnership of some form is in the best interests of the African economies. Auto policies are complex and multifaceted industrial policies and need great attention to detail and accommodation to the structural realities of this global industry. However, the ingredients are there for Africa to take a very meaningful step towards its industrialisation.
South Africa: January 2019 trade balance deficit of R13bn (pdf, SARS)
The South African Revenue Service today released trade statistics for January 2019, recording a trade deficit of R13.08bn. The trade deficit is attributable to exports of R88.68bn and imports of R101.76bn. Exports decreased from December 2018 to January 2019 by R13.63bn (13.3%) while imports increased by R16.15bn (18.9%). Profiled month-on-month export movements: Vehicles and transport equipment (-51%); Prepared foodstuff (-20%); Precious metals and stones (-12%); Machinery and electronics (-16%); Mineral products (+4%). Profiled month-on-month import movements: Machinery and electronics (+31%); Original equipment components (+79%); Base metals (+74%); Textiles (+74%); Plastics and rubber (+37%).
South Africa: Sugar tax threatens to shrink sugar sector (Xinhua)
South Africa’s sugar industry has lost profit and jobs after the implementation of sugar tax which is threatening to shrink the sector’s stability, said experts on Wednesday. Priya Seetal, Nutrition Manager at South African Sugar Association, told Xinhua that sugar tax’s impact is huge: “It has resulted in a 30% decrease in the amount of sugar that we’ve been selling to the beverage sector. Because of the problems with imports, we have inefficient tariffs protection, it’s difficult to export sugar into the world market because the world market sugar prices are low.” Since the Health Promotion Levy, known as sugar tax, came into effect in 2018, volumes of refined sugar sales have declined, reducing the industry’s revenue by R1bn.
Uganda’s gold exports overtake coffee earnings (The Standard)
Updates from Nigeria
About 40 miles east of Lagos, on more than 6,700 acres of former swampland bound by a lagoon and the Atlantic Ocean, contractors are putting the finishing touches on a fertilizer plant valued at $5bn. Next to it, construction of a vast oil refinery—a $12bn project—is under way. If all goes according to plan, the complex will immortalize the 61-year-old Nigerian businessman as Africa’s most prominent industrialist, vaulting Dangote Industries’ annual revenue from $4bn to about $30bn, roughly 8% of Nigeria’s gross domestic product. Oil industry experts such as London-based CITAC have questioned the project’s timeline, citing logistical and financial challenges. But Dangote insists the refinery, which will be Africa’s largest, is on track. “By 2020 I will finally dispatch oil,” he says during a January interview at his Lagos home. Despite controlling the world’s 10th-largest oil reserves, Nigeria has only four aging, inefficient state-owned refineries, leaving it almost wholly reliant on imports for its fuel needs. Dangote says his massive refinery could end that dependency and lift electricity generation in a nation plagued by blackouts: “It will change the entire economy of Nigeria.”
Dangote Cement exports 0.8Mt of cement (Leadership)
Dangote Cement, has maintained its dominance of the Nigerian market, accounting for 65% of the total volume sold in the domestic cement sector in 2018. The company also exported 800,000 metric tones of cement to West African countries, strengthening Nigeria’s position as a cement exporting country, creating jobs in the economy, and earning foreign exchange. According to the details of Dangote Cement’s audited results for the year ended 31 December 2018, released yesterday on the Nigerian Stock Exchange, it sold a total of 23.54 MT of cement across Africa indicating an increase of 7.4 over 21.92 MT sold in 2017. Nigerian operations accounted for 14.18 MT representing an increase of 11.4% over the volume of 12.72 metric tonnes sold during the preceding year. [Download: FY 2018 Results Statement, pdf]
Aviation Africa Summit: updates
Remarks by President Paul Kagame. Sixteen countries in Africa are landlocked, including Rwanda. That is almost one-third of Africa. But every country is “air-linked”. So geography should not be seen as an excuse for underdevelopment. This highlights the importance of regional integration, where there have been some notable achievements over the last year. It is therefore important to attract more countries to join the Single African Air Transport Market and to fully implement its provisions. Protectionism among ourselves is a short-sighted policy, which only serves to keep our continental market fragmented, inefficient, and expensive, thereby reducing opportunities for African firms. Removing barriers on the movement of goods and people means there will be steadily increasing demand for commercial air services in the years ahead. One industry analysis has calculated the requirement for new aircraft in Africa over the coming generation at more than 1,000 planes, with a value exceeding $150bn.
Qatar Airways Akbar Al Bakar: Small fragmented African airlines will continue making losses. In 2018, approximately 220,000 passengers were carried to, from and within Africa, generating almost $34bnin revenue. Some 55% of these passengers originated or ended their journey outside Africa, and interestingly accounted for 74% of the total revenues. This means that intra-African air services currently only contribute to 26% of the total industry revenue. IATA statistics show that currently, 10 airlines operating to and from a total of 7 hubs on the continent have captured over 80% of the African market, both in terms of passenger movement and revenues. This among other things shows the negative impact of the dominance of a few players. With an estimated 320 international airports in Africa, 10 airports in 7 countries account for 49% of total seat capacity and 50% of the total revenues of the entire aviation market to and from Africa. [Ethiopia, China aim at greater heights in aviation cooperation]
- International Civil Aviation Organization compliance key to African air connectivity. On behalf of the President of the ICAO Council, Dr Olumuyiwa Benard Aliu, ICAO’s Regional Director for Eastern and Southern Africa, Mr Barry Kashambo delivered the encouraging remarks to the attending aviation ministers and CEOs in a keynote address. “While many African States have now established effective safety and security oversight capacities in their territories, and no fatal accidents were recorded in either 2016 or 2017 here in Africa, ICAO audits of government oversight in these areas continue to reveal that a number of States are faced with challenges when it comes to assuring their ICAO compliance. In order to address these shortfalls in a collective and sustainable manner, political and government commitments coupled with a cohesive and focused approach involving all stakeholders are key prerequisites.” In addition to cooperation through multilateral bodies, ICAO also encouraged delegates to take note of the importance of the regional coordination mechanisms which permit groups of States to pool and share their resources to prepare for growth.
Equatorial Guinean UNSC Presidency open debate: Silencing the guns in Africa (UN)
The Security Council, Wednesday, adopted a resolution that outlines steps leading towards the goal of ending conflict in Africa through enhanced international cooperation and partnership as well as robust support for peace operations led by the African Union. By that text, the Council also acknowledged that the task of building a conflict-free Africa essentially rests upon the African Union, its 54 member States, their people and their institutions. It also expressed support for initiatives seeking African solutions to African problems, while recognizing at the same time the need for international cooperation and partnership to help speed progress towards realizing that continental objective.