Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Shutterstock.com

The 2019 Economic Report on Africa will be launched tomorrow in Marrakech (pdf)

The IMF’s forthcoming World Economic Outlook includes two analytical chapters on trade policy

Today’s featured tweets:

@jattamensah: Which AU member state will make history as the 22nd country to ratify the agreement so that AfCFTA will enter into force? Africa youth can’t wait longer. They need jobs to be gained from the implementation.

@eolander: Data dump. China’s MOFCOM reports 2018 China-Africa trade totaled $204bn, up 19.7% from 2017. CN exported $104.9bn to Africa (+10.8% YoY) and imported $99.3bn from Africa (+31% YoY). But...just 10 African countries accounted for 70.3% of 2018 China-Africa trade.

tradebarriers.orgProject tackles non-tariff barriers in Africa

Zambian traders bringing molasses into Botswana on the Kazungula Ferry on 1 December 2016 were surprised when border officials asked for a fumigation certificate. The import permit didn’t list such a certificate, the Zambians said. But the officials held their ground. Facing delays, additional costs and the risk of their product going bad, the traders logged the incident via tradebarriers.org, an online tool for private sector operators in 21 countries to report trade barriers they encounter in southern and eastern Africa. Thanks to the tool, run by the Tripartite RECs, and supported by UNCTAD, the issue was flagged to authorities and resolved in May 2017. It turns out the Zambian exporters were right.

As part of the AfCFTA Protocol on Trade in Goods, regional leaders agreed to establish an African-wide mechanism for reporting, monitoring and eliminating non-tariff barriers. This mandate and the success of tradebarriers.org spurred a new project to improve and scale up the portal to cover the entire continent. The AUC, the African RECs and UNCTAD will join forces on the endeavour. With the AfCFTA just one ratification away from entering into force – and creating a $2 trillion market of 1.2 billion people – it’s time to get to work. The project, funded by the German government, recently kicked off with a workshop (12-14 February, Nairobi) bringing together officials from the project partners to assess the strengths and weaknesses of all the online tools like tradebarriers.org currently in use across the continent. The technical proposal for the implementation of the continental tool is now being considered by the regular AfCFTA negotiating structures.

Committee of Experts of the ECA Conference of African Ministers of Finance, Planning and Economic Development: selected updates

  1. Vera Songwe: African countries can do better with improved fiscal policy. A typical economy on the continent, she said, collects just about 16% of GDP in taxes, with the exception of countries like Morocco which collect at least 25%. “Africa could boost revenues by 3% of GDP by addressing its capacity tax constraints. In addition, by better aligning tax rates and revenues with business cycles, countries can boost government revenue by 5%,” Ms. Songwe said, adding the medium-term growth outlook of between 3 – 4 per cent for Africa was insufficient to stimulate quality investments that will generate jobs and accelerate inclusive growth.

  2. Experts tease out kingpin role of digitization for Africa’s revenue harvest. “Digitalization has the greatest potential to influence trade and productivity in Africa,” asserted Adam Elhiraika, Head of ECA’s Macroeconomics and Governance Division, who buttressed his points with examples from Rwanda and South Africa, using evidence from the soon-to-be-launched 2019 Economic Report on Africa. While Rwanda has increased its tax collection by a commendable 6% of GDP thanks to digital strategies, South Africa has reduced the cost of revenue collection for both the State and taxpayers by 20% by going virtual with the process.

  3. Adam Elhiraika: Africa needs policies to protect its economies from vulnerabilities. The ECA Director said the AfCFTA is expected to enhance intra-African trade and growth with marginal losses in revenues. “Africa has made good progress in social outcomes, but inclusion especially in areas of health and education remains elusive,” he told the meeting of experts that opened ahead of the Conference of African Ministers of Finance, Planning and Economic Development. He said socio-economic conditions were improving though at a slow pace. He reported that under-five mortality ratio fell by 42% between 1990 and 2017; income inequality has declined though still relatively high (at 0.44 – Gini coef.); the number of working poor declined 52.8% in 2000 to 33.5% in 2015 and projected to further decline to 30.4% in 2019; with steady progress being recorded towards gender parity.

  4. The 2019 Annual Adebayo Adedeji Lecture will be delivered on Monday. The theme: Digital transformation of Africa – hype or reality? A full listing of the conference side events, which begin tomorrow, can be accessed here.

Profiting from parity: unlocking the potential of women’s business in Africa (World Bank Group)

The report draws on new, high-quality, household and firm level data to present the clearest evidence to date about the barriers to growth and profitability faced by women entrepreneurs. Extract from executive summary: Female entrepreneurs build larger and more profitable companies when they operate in male-dominated sectors. While female entrepreneurs tend to cluster in sectors dominated by other women, such as retail and hospitality, evidence suggests a potential dividend to “crossing over” into male-dominated sectors. Female-owned enterprises operating in male-dominated industries are as large and just as profitable as their male-owned counterparts. They are also larger than those in female-dominated sectors. Studies in specific settings suggest that a female entrepreneur’s decision to work in higher-return sectors is not driven by differential access to education or finance but by social factors, particularly the influence of male role models and exposure to the sector by family and friends. Female entrepreneurs in Africa have systematically lower levels of business capital – including equipment, inventory and property – relative to their male peers. Drawing on data from 14 impact-evaluation datasets from 10 countries in Africa, the typical male-owned firm has over six times the capital investment of female-owned enterprises.

South African formal businesses, 2010-14: firm dynamics, job outcomes, and productivity (World Bank)

The formal private sector has a key role to play in fostering growth and reducing unemployment in South Africa - strengthening its performance is therefore critical. This paper looks at firm behaviour, firm entry and exit, job outcomes, and productivity dynamics using firm-level administrative data for South Africa. It is the first paper to benchmark employment and productivity dynamics against various comparator countries for which similar analysis has been undertaken. The paper finds that South Africa has an aged private sector with low firm dynamism and characterized by large firms that hold a large share of employment and revenue, although they are not as productive as micro firms and pay lower wages on average. The paper also finds that job creation is concentrated predominantly in incumbent firms, which are old and large, and job creation from entry and exit is negligible. [World Bank: Are management practices failing or aiding the private sector in South America?]

Zimbabwe, SA set timelines for deals implementation (Bulawayo24)

Minutes of the third session of this week’s BNC indicate that the two countries set themselves strict deadlines for the completion of specific tasks ahead of the Pretoria meeting. Under the agreement, senior government technocrats from the two countries were tasked with coming up with agreeable areas of cooperation by the end of this month, which will then lead to the development of the MoU for cooperation and a draft implementation plan which will be annexed to the MoU by 30 April 2019. This would then trigger internal processes in terms of ratification of the MoU, according to the two countries’ respective legal requirements. It also means the MoU would have to be ratified by both Zimbabwean and South African parliaments in line with international law.

The two countries also agreed to engage over Zimbabwe’s application for a special dispensation derogation under the SADC protocol in which it was seeking an arrangement whereby its citizens could be allowed to work in other SADC countries without being subjected to rigorous vetting processes. Should an agreement be reached, South Africa will help lobby the SADC bloc to accept Zimbabwe’s application at the SADC summit for heads of state in September this year. The application was initially made in 2017, but was not followed through after SADC member states requested to consult Zimbabwe bilaterally. Zimbabwe also wants derogation on trade in an unspecified number of products.

US Africa strategy speech: address by Deputy Secretary of State, John J. Sullivan (State Department)

We see great opportunity in Angola’s economic diversification policy that will bring new US products and services to Angola. US companies, as global leaders in many sectors, can contribute greatly to Angola’s development by providing high-quality goods and services through transparent processes. In that vein, the United States joined with other nations to vote affirmatively for the International Monetary Fund’s $3.7bn credit line for Angola in December to support the country and the administration’s economic reforms. But based on my discussions with business leaders over the past several days I know the picture isn’t perfect. Companies, US companies in particular, do face barriers to trade in Angola. To remedy this, some time ago, 10 years ago we signed a trade and investment framework agreement to promote greater economic cooperation between our two countries. We are pursuing negotiations to strengthen this trade relationship and reduce trade barriers to the mutual benefit of our citizens.

It’s been a failing, I think, of both of our sides, the United States and Angola that we haven’t pursued these negotiations under the TIFA framework more aggressively, but we’re committed to doing that. President Lourenço’s commitment to combatting corruption is another significant positive signal to foreign investors. The creation of a transparent business environment will generate even greater US private sector interest in trade and investment in Angola. Likewise, parliament’s passage of the new private investment law and relaxed visa requirements will make it easier for private foreign investors to pursue opportunities in Angola. [Kagame concludes two-day visit to Angola]

Egypt and the African Union: selected commentaries from the Egyptian press

  1. Geography, history, future: umbrella for Arab-African integration. President Abdel-Fattah Al-Sisi pointed out that Arab-African rapprochement is not a new idea. Arab-African summits were convened in Egypt in 1977, in Sirte, Libya in 2010, in Kuwait in 2013 and in Malabo in 2016, and a summit is scheduled in Saudi Arabia later this year. What the summits have revealed, added Al-Sisi, is that common factors binding Arab and African states outweigh the factors that divide. Al-Sisi concluded by saying Arab-African integration needs diligent work from all parties and requires improvements to infrastructure, including establishing a network of land and railway links. He recommended that papers be prepared for the next Arab-African summit in Riyadh focusing on creating a common Arab-African market, ways to provide funds for start-up projects and the best ways to establish transport links and link electric grids.

  2. Belal Manzour: The African Union in the G20. On the other hand, the AU ranks 11th in the world in terms of its total GDP, which also qualifies the Union for membership of the G20. These two factors underline the importance of benefitting from Egypt’s chairmanship of the AU and its international weight to launch the first official African initiative for the AU to join the G20 as a member. Despite the fact that the agenda of the G20 summit in Osaka has not been announced, a number of indicators appeared in Japanese Prime Minister Shinzo Abe’s speech at the closing session of the previous G20 summit held in Buenos Aires in Argentina in 2018 and reflecting Japan’s interest in certain crucial issues. Events over the past decade have proven that the AU has the chance to earn full membership of the G20. However, in order to do so, the African discourse will need to focus on bridging the gap between the two organisations of the AU and the G20. The AU needs to concentrate less on the inequality between Africa and the G20, even as African countries continue to suffer from poor infrastructure, high unemployment and slow regional integration. Most of the G20’s interaction with Africa also still takes place through development working groups that focus only on the bases of development, such as the elimination of poverty.

  3. The more Africa’s discourse concentrates only on what the continent can receive from the G20, the less the group will look to Africa as a potential or equal partner. Another issue concerns Africa’s participation mechanisms and engagement in policy-making and the outcomes of the upcoming Osaka meeting. Shinzo’s speech suggested that the AU could adopt a number of alternative approaches to make a concrete contribution here. Environmental and energy issues, as well as the aging of many societies, are at the forefront of the Japanese human-centred strategy. This is particularly significant, since in addition to the vast natural resources of the continent, Africa’s capital lies in its being the world’s most youthful continent.

  4. The Arab-African Youth Platform: new horizons. The conference ended with a raft of recommendations to improve young people’s access to knowledge, education and health. Topping the recommendations was opening up the Egyptian Knowledge Bank to African and Arab researchers. The platform also saw the launch of an initiative to treat one million African patients with hepatitis C, capitalising on Egypt’s success in combating the virus. Other recommendations included establishing a committee of young Arabs and Africans to explore opportunities for integration and setting up a working group to examine ways to tackle extremism and counter-terrorism.

  5. Laila Takla: An organisation for African women


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