Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Simone D. McCourtie | World Bank

A suite of AfCFTA updates:

  1. Professor Benedict Oramah, Afreximbank President: 2019 Bullion Lecture, delivered earlier this week in Lagos on  pdf Leveraging the AfCFTA to Boost Nigeria’s Economic Development (1.18 MB) . Nigeria will need to overcome a number of constraints and concerns in order to be able to reap the benefits the AfCFTA offers. The good news is that as we shall see hereunder these constraints need not be deal-breakers. I highlight the major concerns and the remedies here under:

    Current macroeconomic policies may need to be tweaked towards supporting increased regional trade. An environment of low tariffs, and significant reduction in non-tariff barriers envisaged under the AfCFTA, will require maintaining the real exchange rate of the Naira at an appropriate level. This will mean appropriate management of the nominal exchange rate of the Naira, implementation of policies that promote improved productivity, appropriate monetary policies and so on.

    At the sectoral level, there will be a need to introduce policies that encourage FDI flows to sectors that have the highest potential for regional trade, namely light manufacturing and agriculture. The Government needs to investigate why most FDIs that come into Nigeria flow to the oil and gas sector and do something to expand the recipient sectors. The interventions could include introducing more friendly investment policies that will reduce investment risks; strengthening the Investment Promotion Agency so that it is able to provide useful information to investors; and strengthening Nigerian Export Promotion Council so that it can contribute effectively to reducing the cost of exporting to near markets.

    Some complain that government officials negotiate international trade treaties and make trade and investment policies without consulting those (the private sector) whom those treaties and policies are supposed to serve. Because this concern is Africa-wide and explains why there is usually limited support for trade policies negotiated by African Governments, compared to other regions, Afreximbank and the AU have launched the Pan-African Trade and Investment Policy Committee to serve as a platform for engaging the African private sector in trade policy formulation and trade negotiations.

    Some Nigerian manufacturers worry that the AfCFTA will create an opportunity for certain goods produced outside of Africa to enter the Nigerian market from smaller African countries. While this is a valid concern, it does not present an insurmountable problem for various reasons, particularly because: stringent rule of origin is an important component of the AfCFTA and is currently under negotiation; the AfCFTA is expected to have a strong dispute settlement mechanism that will allow any grievances to be settled; and Nigerian companies must also realize that to compete effectively in Africa, they must be ready to compete globally. This will involve retooling their factories to convert them from import substitution to export promotion.

  2. Francis Mangeni, COMESA’s Director of Trade and Customs: The African Continental Free Trade Area to enter into force. The African Continental Free Trade Area is here and will formally be launched at the next summit of the AU this July in Niamey in Niger. This is one of the biggest achievements and landmarks of all time to come out of Africa.

    Another sine qua non for AfCFTA to become functional, is that the countries must add in their Tariff Books, the customs duty rates that will be charged on goods originating from other Tripartite countries. For countries that wish to maintain and extend to others, subject of course to reciprocity, their current trading terms under the full FTAs they belong to, for instance COMESA, EAC, ECOWAS and SADC, modification of the Tariff Books will be very easy, a clerical exercise of a mere hours. Also, countries that have eliminated or significantly reduced their general or Most Favoured Nation duties, such as Libya, Mauritius, and Seychelles, should not face challenges in making tariff modifications for AFTA. However, a bit of work and further negotiations will be required among those who will limit their trade liberalisation in line with the AfCFTA modalities. Ninety percent of product lines will be liberalized over transition periods of 5, 10, 13 or 15 years. Seven percent will be sensitive products, and three percent will be excluded from AFTA altogether. Sorting out which products to put under these various categories, as a pre-requisite exercise, can end up being a pitfall, if proactive hands-on technical and financial support is not quickly rolled out throughout the continent.

    A third pre-requisite for trade to happen under the AfCFTA is the necessary customs, standards and trade facilitation documents. These need to be quickly produced by the governments and availed to economic operators for use. Without them, trade cannot happen on AfCFTA terms. There is need for an AfCFTA Customs Declaration, an AfCFTA Certificate of Origin, AfCFTA transit documents, in addition to the five universal documents as well as product specific requirements especially in the agricultural sector. Should all these pre-requisites begin to pose challenges, an easy way forward to put the AfCFTA face to trade on the continent, would be to scale up the on-going Trade Facilitation Programs, such as building one-stop-border-posts, digitisation of customs and other regulatory processes, orientation of existing surface and air corridors into development corridors, adoption of continent-wide payment systems, operationalisation of market-intelligence facilities, and establishment of online and SMS-based mechanisms for addressing non-tariff barriers and some other trade disputes. These are low hanging fruits, so to speak.

  3. Carlos Ahenkorah, Ghana’s Deputy Minister for Trade and Industry: Adhere to standardized goods, services to facilitate AfCFTA. Ghana’s Deputy Minister for Trade and Industry, Carlos Ahenkorah, has called on ECOWAS countries to adhere to the outlined standards for goods and services to facilitate speedy implementation of the African Continental Free Trade Area. According to him, the African Continental Free Trade Area could be derailed if the issue of standardization of goods and services are not addressed in all countries. “If trade between African countries will work out, standardization comes into play. I say this because if Ghana or any other country should hike up their standards and other countries are unable to keep pace then the process will be hindered. If this is not looked at then the ACFTA might not work properly. We might encounter serious challenges.”

  4. NANTS backs Buhari over trade agreement. The National Association of Nigerian Traders has thrown its weight behind President Muhammadu Buhari’s refusal to sign and ratify the AfCFTA. President of the NANTS, Mr Ken Ukaoha, disclosed this on Thursday in Abuja at the national validation workshop on the study on Nigeria’s agricultural trade strategies for the AfCFTA negotiations. “There is no doubt that the AfCFTA has potentials to handhold Africans and particularly, MSMEs in our constituency out of the poverty bracket. Economic pundits have noted that with 1.2 billion inhabitants and a GDP of about $3trn, the AfCFTA has the capacity to increase access to markets that are larger than the colonially imposed national boundaries and demarcations,” Ukaoha said. He added: “However good and attractive as all of these pontifications of potentials may sound, this good news cannot come the way of any country at all without the effective, adequate and strategic preparations for the negotiations. Negotiators of AfCFTA must therefore be prepared to navigate into the country’s future only through evidence-based instruments.”

  5. Assessing inclusion and human rights implications of digital trade. Mr David Luke, ATPC Coordinator, said the AfCFTA offers a platform for African countries to collaborate on the digital economy, which could also help to inform a common African position on e-commerce at the multilateral level. In this regard, ECA has recently established a Digital Identity, Trade and Economy Centre of Excellence which pools various types of expertise, including trade, statistics, technology, project management, policy, and investment, dedicated to working on Africa’s digital agenda.

Gender considerations in trade agreements: perspectives from yesterday’s WTO discussion

Trade and trade agreements can be a useful mechanism to support women’s economic empowerment and thus boost economic growth and poverty reduction around the world, DG Roberto Azevêdo said during the workshop on gender considerations in trade agreements. ”Since 2016, a new trend has emerged with the inclusion of stand-alone chapters on trade and gender in the RTAs negotiated by Canada and Chile. Several others, including the EU and New Zealand, have indicated their intention to address more explicitly the role of women in their new trade agreements. Of course, these efforts are bolstered by the Buenos Aires declaration. But it is not an easy task to mainstream gender into trade policies and into development projects. It is one thing to set an objective in favour of women’s empowerment, it is another to design concrete policies and programmes to implement that objective. We are seeing a range of steps being taken. Some countries have launched processes to translate their gender equality objectives into concrete trade policies and programmes. Some are evaluating the impact of their Aid for Trade strategies to better reach women. Others are organising national consultations to better understand how to integrate gender into their trade policies. And some are thinking about how to design new types of trade agreements, building on the work that has been done so far. We are all still somewhere on the learning curve.”

Isabelle Durant, Deputy Secretary-General of UNCTAD: “Although trade policies should be used to help empower women, this is not a panacea because policy makers cannot address all gender issues through trade. This brings us back to the importance of national policies that must be undertaken with regards to education, women and girls’ access to education, digitization, information, economic opportunities and so forth.”

Sefatlhego Matebekwane, Agricultural Attachée of Botswana: “We need events such as this seminar today to deepen our understanding, share experiences and lessons learned in terms of women’s empowerment. We know that there is not a one-size-fits-all solution. Therefore, we have to come up with policies that affect different societies differently. The seminar today allows us to analyze the steps taken so far and to ensure that we have enough knowledge and data to design inclusive trade policies that leave no one behind.” [50 Million African Women Speak digital platform: training for users as launch nears]

South Africa’s trade statistics for February 2019 (SARS)

SARS has, today, released trade statistics for February 2019 recording a trade surplus of R3.99bn. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia. The year-to-date (1 January - 28 February 2019) trade deficit of R9.08bn is an improvement on the deficit for the comparable period in 2018 of R27.97bn. Exports year-on-year increased by 9.3% whilst imports for the same period showed an increase of 3.9%.

Pinelopi Goldberg: Moonshot Africa and jobs (World Bank)

Concerns about robots and algorithms replacing human labor increasingly dominate the public debate not only in advanced economies, but also in emerging and developing economies. Against this background, it is natural to ask how these two views are compatible. To be more specific: How will Moonshot Africa create jobs on a continent where job creation is needed more than anywhere else in the world with Africa’s working-age population projected to rise by 70% in the next twenty years? To date, there has been little work on this question. But, a recent paper by Jonas Hjort and Jonas Poulsen, “The arrival of fast internet and employment in Africa,” published in the American Economic Review in March 2019, takes up this exact question and gives technology optimists reason for hope. In the 2000s, consortia consisting of private investors, African governments and multilateral organizations gradually built, over the course of several years, ten submarine fiber optic internet cables connecting landing-point cities along Africa’s coast with other continents. These cables greatly increased data transmission speeds and capacity on African internet networks and reduced the cost to individuals and firms to access the internet. Hjort and Poulsen use this gradual improvement in connectivity to assess how faster internet access affected jobs in Africa. Using household survey data from 12 African countries with a combined population of roughly half a billion people, the authors document a large positive effect on employment - an increase of 3.1% in South Africa and 6.9 - 13.2% in other countries in the samples – that is primarily driven by increased employment in higher-skill occupations. [Related commentary, by Akihiko Nishio: The jobs challenge is bigger than ever in the poorest countries]

Germany’s new Africa policy (DW)

“The [new] guidelines signal the growing significance of Africa and the increasing engagement of Germany,” says Foreign Minister Heiko Maas. Discussions between various German ministries took a year. Now the cabinet has approved a new Africa plan which should put an end to the chaos. Previously, rather than working with each other, the departments responsible for Africa policy worked alongside each other: the finance ministry with the Compact with Africa, the development ministry with the Marshall Plan for Africa and the economics ministry with Pro!Afrika. These are just the most important plans. “In the last three years, eight papers were put forward by various ministries,” says Robert Kappel, a development economist at the University of Leipzig. Even the education ministry now has its own Africa strategy. “What was missing was a common conceptual umbrella and a clear set of priorities,” according to Foreign Minister Maas. Does the new strategy paper make a quantum leap? “We need to develop our policy coherently. One of the goals of the guidelines is to establish this coherence,” says Robert Dölger, the Africa representative at the foreign ministry. On the surface at least, the paper helps by bundling German engagement into five key areas: peacebuilding, development, migration, working with African partners, more cooperation with civil society.


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