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tralac’s Daily News Selection

tralac’s Daily News Selection

28 Feb 2019

15 minute read

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)

Uganda’s gold exports jumped 23% last year compared to 2017, for the first time overtaking coffee as the East African country’s top foreign exchange earner, data from the central bank showed on Tuesday. The central Bank of Uganda said the country exported gold worth $514m last year, compared to $418m earned in 2017. Traditionally Uganda’s biggest export has been coffee. In 2018, coffee earnings stood at $436m, down 21% from the previous year. Shipments of gold had been negligible for the country which ranks as Africa’s number one coffee exporter, but started to rise sharply in 2015, after the commissioning of a major refiner. A decade ago Uganda’s gold shipments stood at under $10m. [Foodstuffs dominate Uganda’s exports to East African markets]


Updates from Nigeria

Africa’s richest man makes a $17bn bid for immortality (Bloomberg)

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]

Importers’ task force intercept 10 containers bearing substandard products (Premium Times)

The Importers Association of Nigeria special task force says it has intercepted 10 containers of substandard goods, including contrabands, at Lagos seaports. Prosper Okolo, the Chief Operating Officer, IMAN Special Task Force, South West Zone, said during a press conference Thursday that they have also cracked down on some companies producing fake and substandard drugs in Lagos.


Aviation Africa Summit: updates

  1. 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.

  2. 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]

  3. 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.

Ramtane Lamamra, the African Union’s High Representative for the “Silencing the Guns by 2020” initiative, acknowledged the many major challenges remaining with the approach of the December 2020 deadline for ending war. However, he underlined the urgent need to build a robust culture of preventing crises while fostering peace and tolerance at a time when several countries remain trapped in a vicious cycle of violent conflict and its deadly consequences. He went on to emphasize that “Silencing the Guns in Africa by 2020” is not a mere slogan. Instead, it is meant to establish a conflict-free region and make peace a reality for all its peoples. Striking a darker note, Vasu Gounden, founder and Executive Director of the African Centre for the Constructive Resolution of Disputes, emphasized that the question is not if, but whether the guns will be silenced by 2020. “The answer is a resounding ‘no’,” he declared. “Many parts of Africa are reaching a dangerous tipping point and we are currently in a race against time.”
 

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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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