tralac’s Daily News Selection
Tunisia has formally ratified its membership of COMESA – becoming its 20th member
Diarise: Transforming Mauritius – policies to foster industrialisation and development. The workshop, 11-12 April, will be organised by UNCTAD, in collaboration with the Ministry of Foreign Affairs, Regional Integration and International Trade, and the Ministry of Industry, Commerce and Consumer Protection.
The 52nd session of the Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development ended on Tuesday with governments urged to move with speed to embrace digital transformation to spur economic growth. The Ministers said if Africa does not move with speed to adapt modern technologies and ensure everyone has broadband internet access at least by 2022, then the continent will not be able to leapfrog development challenges in the near future. The Ministers also discussed threats and challenges posed by digitization and the need to have measures in place to protect citizens and governments. “Limited Internet access in Africa continues to impede the development of digitization in economic and social sectors, including e-commerce, e-health and e-government, which are constrained by high transaction costs, the spatial distribution of information exchanges, and limited access to international markets,” the Ministers said in their statement. Progress was noted in regional integration efforts on the continent with the ministers committing to taking measures and steps to enhance the incorporation of regional integration agreements and treaties, including the African Continental Free Trade Agreement, into domestic law and implementation. The Ministers said it was worrying that Africa continued to lag behind other regions in terms of infrastructure development.
SA-EU Bilateral Trade Overview, 2018 (SADC-EU EPA South Africa Outreach initiative)
According to DTI figures, the EU remains South Africa’s main trading partner accounting for 26.4% of all trade in 2018; more concretely, the EU accounts for 24% of SA’s exports and 29% of its imports. The EU is also the country’s most stable post-apartheid partner with exports to the EU systematically above 19% of South Africa’s total exports. SA exports have grown 5.3% in 2018 despite recessive economic environment while exports to the EU have grown at a faster pace, 12.5%. This shows that the recent SADC EU Economic Partnership Agreement, which entered into force in 2016 guarantees a strong reliable framework for doing business and engaging on issues of mutual concern.
The deficit in favour of the EU has also been shrinking as South Africa has been developing its industrial base, now at R58bn down from R88bn in 2016. According to EUROSTAT figures, SA has a surplus with the EU of €162m (aprox R2.6bn). A significant part of the discrepancy in statistics has been attributed to a discrepancy in gold exports. At a sectoral level, and according to EUROSTAT figures, SA has a surplus balance with the EU in agriculture of €1.5bn, and of €867m in the automotive sector.
SA exports to the EU are also much more diversified than to other partners, with raw materials accounting for less than half of the total. According to EUROSTAT figures, the automotive sector alone accounts for 21.5% of SA’s exports to the EU, followed by agriculture at 12.4% and machinery at 6%. In the agricultural sector, and according to DTI figures, 37% of SA’s fruits and vegetables go to the EU, followed by 30% of its animal products exports and 20% of its prepared foodstuff including wines. [See: Table 1 – Overview of South Africa’s trade with the world; Table 2 – Bilateral trade SA-EU, pdf]
Namibia: Annual trade statistics 2018 (pdf, Namibia Statistics Agency)
The year 2018 recorded a trade deficit amounting to N$17.38bn, a remarkable reduction of 31% when compared to N$25.18bn observed in the preceding year. The current deficit was mostly attributed to the importation by Namibia of high valued manufactured commodities and machineries, while exporting mostly low value primary goods. Overall exports grew by 45% from N$63.87bn in 2017 to N$92.84bn, while imports recorded a 19% growth from N$89.04bn in 2017 to N$110.22bn. Exports were mostly destined to China which absorbed N$16.41bn (18%) of total exports overtaking South Africa that occupied the same spot in 2017 with N$15.06bn (24%) of total exports. This was mainly due to precious stones and metals destined to South Africa in 2017.
The growth in exports to China was mainly led by minerals such as copper (N$9.766bn) and ores (N$5.956bn). South Africa ranked second with N$14.89bn (16%), followed by Belgium N$9.30bn (10%), Botswana N$9.25bn (10%) and UK N$6.17bn (7%). Imports on the other hand, were mainly sourced from South Africa (N$49.13bn), Zambia (N$15.59bn), China (N$6.25bn), Bahamas (N$5.73bn) and Botswana (N$4.51bn). In terms of economic blocs, SACU was the major market for Namibia’s exports (N$23.44bn) mainly due to export of precious stones and metals to South Africa and Botswana.
Three years since the implementation of the fiscal stabilization measures, we can together account tangible progress points: Public expenditure is aligned to revenue. Over the past three years, revenue grew by 3.8%, relative to 0.4% growth in expenditure. Expenditure as a proportion of GDP reduced from 42% to 34.9% in FY2018/19. The budget deficit narrowed from 8.1% in 2015/16 to 4.0% in FY2018/19, narrowing it by half over the last three years. Growth in the public debt stock slowed to an annual average of 11.2% in the past two years, compared to an average of 30.1% in the previous three years. The current account deficit narrowed significantly, from 14.1% of GDP in 2016 to 2.1% in 2018/19. The international reserves stock has strengthened from 2.1 months of import cover in 2016 to 4.2 months by February this year. The intensity of the recession has eased from -0.9% in 2017, to an estimate of between -0.5 to -0.2% in 2018. This would indicate that the recession has almost bottomed out and points to the economy recovering to positive GDP growth territory this year and over the MTEF. [Delivered by Minister of Finance Calle Schlettwein]
IMF – Africa updates:
Mozambique: Despite the likely adverse macroeconomic effects of Cyclone Idai in 2019, which are still being analyzed, the outlook is for a recovery in economic activity over the medium-term, with more significant expansion with the start of LNG production expected in 2023. The fiscal policy effort was significant in 2017-18. Subsidies on fuel and wheat prices were eliminated, an automatic fuel price adjustment mechanism was adopted, and electricity and public transportation tariffs were adjusted, bringing those prices close to cost recovery levels. Despite these efforts, the overall fiscal deficit in 2018 remained relatively high. Medium-term fiscal consolidation will be essential to ensure that public debt-to-GDP ratios remain on a clear downward path and, given that public debt is in distress, budget financing should rely to the maximum extent possible on grants and highly concessional loans.
Côte d’Ivoire. Inflation is expected to remain well below the regional norm. The fiscal deficit should reach 3% of GDP in 2019, WAEMU’s regional convergence norm, in accordance with program objectives. Performance under the IMF-supported program was satisfactory in 2018. All performance criteria and all but one indicative quantitative targets for end-December 2018 were met. Almost all structural benchmarks were also implemented. The budget deficit reached 4.0% of GDP, meeting the program ceiling despite weaker than expected revenues which were offset by a slight reduction in public investment.
Cabo Verde. Cabo Verde’s external position strengthened in 2018 with the current account deficit narrowing to 4.5% of GDP (6.6% of GDP in 2017) owing to strong export performance, increased remittances, and deceleration in imports demand. The signing of an agreement between Cabo Verde and the EU for fish exports is a welcome development in this context. Gross international reserves increased and reached 5.1 months of prospective imports at end-December 2018. In the fiscal area, the overall deficit narrowed, mostly because of strong revenue performance, consistent with sustained economic activity and implementation of revenue administration measures. The overall deficit declined from 3% of GDP in 2017 to an estimated 2.8% of GDP in 2018. However, financing needs rose from 3.4% of GDP to 3.9% of GDP as budget support to financially-strained state-owned enterprises increased.
IFPRI’s 2019 Global Food Policy Report: Urban middle class may offer lifeline to rural Africa (Reuters)
The rise of an urban middle class across much of Africa is stoking demand for food that could curb hunger and cut poverty in rural outposts, a US-based think tank said on Wednesday. The International Food Policy Research Institute said rural communities were in “a state of crisis”, with high poverty rates and poor services driving hunger and malnutrition. One in five people, or more than 256 million, are hungry in Africa, according to the latest figures from the United Nations Food and Agriculture Organization. But there are opportunities too, the IFPRI said in its annual report.
Revisiting the Georgetown Agreement: comparative region-building in Africa, the Caribbean, and the Pacific (ACP)
The two-day event (26-27 March) will be also an opportunity for reflections by public officials and practitioners of international affairs from the global South. Exchanges will be made on the origins, changing context and geo-political dynamics in which the ACP Group of States is crafting amendments to its 1975 Constitutive Act, the Georgetown Agreement. Extract from speech by Sandra Husbands (pdf) (Minister in the Ministry of Foreign Affairs and Foreign Trade, Barbados): One way of ensuring this sustainable growth and development strategy is through a comprehensive review of our trade. For example, our statistics reveal that Barbados’ trade with some of our ACP partners is virtually non-existent. If you will indulge me for just a while, I will elucidate on this fact for a few select countries. For the 2018 period for example, Barbados’ import and export trade with Ghana was BDS$243,078 and BDS$ 14,638, respectively. Our import and export trade with Nigeria was BDS$ 31,330 and BDS$ 2,844 and with Tuvalu it was BDS$ 27,767 in respect of imports and BDS$ 0 for exports. These are but a few countries within the ACP with which Barbados trades. The statistics are not encouraging. Given the length of time which our grouping has been together, I put it to you that our trade should have been more expansive. As I have said before, these are but a few of the countries with which Barbados trades but I suspect these trade figures are representative of Barbados’ trade with both African and Pacific countries. Further studies must be conducted, thereby allowing us to determine the main hindrances to trade among ACP members. [ACP Parliamentary Assembly: speech by Dr Patrick Gomes, Secretary-General of the ACP Group]
Today’s Quick Links:
NAFTA to USMCA: what is gained?
Declaration of the SADC Solidarity Conference with Western Sahara
IGAD Kampala workshop: Livelihoods and self-reliance for refugees, returnees and host communities
Anne-Marie Slaughter, Fadi Chehadé: How to govern a digitally networked world
Africa Information Highway: AfDB EOI for technical experts to support field work in Lusophones
Call for papers for the 7th IMF Statistical Forum (14-15 November, Washington): Measuring the informal economy