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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Simon Dawson | Bloomberg

04 Apr 2019

15 minute read

The AfDB’s Regional Economic Outlook: the West Africa, Central Africa, Southern Africa and East Africa regional reports have been launched

The IMF has posted the Analytical Chapters to the April 2019 World Economic Outlook. Profiled chapter: Economic forces, not tariffs, drive changes in trade balances. Bilateral trade balances (the difference in the value of exports and imports between two countries) have come under scrutiny recently. Some policymakers are concerned that their large and rising size are the result of uneven measures that distort international trade. But is a focus on bilateral trade balances the right one? The short answer is no. Our research in Chapter 4 of the April 2019 World Economic Outlook finds that a tariff-induced change in a specific trade balance between two countries tends to be offset by changes in bilateral balances with other partners through trade diversion, with little or no impact on the aggregate trade balance (the sum of all the bilateral trade balances). [The authors: Johannes Eugster, Florence Jaumotte, Margaux MacDonald, and Roberto Piazza]

Africa’s aviation sector: IATA’s February 2019 releases

Air freight: African carriers saw freight demand decrease by 8.5% in February 2019, compared to the same month in 2018. Seasonally-adjusted international freight volumes are lower than their peak in mid-2017; despite this, they are still 25% higher than their most recent trough in late-2015. Capacity grew 6.8% year-on-year. Passenger demand: African airlines experienced a 2.5% rise in traffic for the month compared to the year-ago period, down from 5.1% growth in January. Concerns over conditions in the largest economies are contributing to the slowdown. Capacity rose 0.3%, and load factor climbed 1.5 percentage points to 69.7%.

UNCTAD’s eCommerce Week

  1.  Network to connect women e-commerce leaders launched. “A systematic effort to collect, nurture and enhance the experiences of women involved in e-commerce is needed,” said UNCTAD Deputy Secretary-General Isabelle Durant. Raising the profile of successful women leaders in e-commerce and the digital economy is an important first step to maximizing new opportunities for women in developing countries. The new eTrade for Women Network, which will complement the current work of the groundbreaking eTrade for all initiative, was announced by Ms. Durant alongside a hotshot panel on changing the narrative of women in e-commerce led by top and emerging women in the sector. Ms Durant said UNCTAD would leverage its existing relationships with partners involved in the eTrade for all initiative to champion the network. The network aims to support women involved in e-commerce in developing countries y collecting, nurturing and showcasing the experiences of successful women leaders. It will also provide them with opportunities to make their voices heard in policy processes both domestically and internationally.

  2. UNCTAD Rapid eTrade Readiness Assessments of LDCs: policy impact and way forward. Launched in 2016, UNCTAD’s Rapid eTrade Readiness Assessments of Least Developed Countries have set the standard for examining how such nations can seize the opportunities of digitalization. The assessments, made at the countries’ request, aim to help them take stock of their e-commerce capabilities and formulate related recommendations to grow digital trade. To date, 17 such assessments have been completed, and more are on the way. A new policy impact note, released on 3 April during UNCTAD’s annual eCommerce Week, takes a step back and examines the overall findings (pdf). “My hope is that this note will enable LDCs to better understand the policies that should be devised to prepare for a digital future and expand e-commerce effectively along with inclusive patterns of development,” said Shamika N. Sirimanne, who directs UNCTAD’s technology and logistics division. There are currently 47 LDCs, a UN category created in 1971 for nations are deemed highly disadvantaged in their development process, for structural, historical and also geographical reasons.

Blockchain – Africa Rising: Sela Labs, Wala, Cardano, StudEx Wildlife, CryptoSavannah (Forbes)

Now, as the western world debates the potential costs of overhauling our legacy systems in favor of a digital and decentralized future, Africa asks no such questions. It has embraced the future, ready to adapt without regret. Looking at a blank canvas, its leaders can ask the question Westerners would never dare to - If you could rebuild your society, with the aim of a more sustainable and equitable future, how would you do it? [The author: Tatiana Koffman]

What does the rise of the robots mean for trade? (World Bank Blogs)

In spite of anecdotal evidence that some firms are moving production back home (reshoring), the available data tells a different story. Analysis of the impact of robotization on bilateral trade flows over the past two decades suggests that, if anything, automation and 3D printing are boosting trade. A 10 percentage point increase in robots in advanced economies is associated with an 8.6 percentage point increase in imports of semi-finished products – what trade economists call ‘intermediates’ - from developing countries, and a 4.9 percentage point increase in imports of other goods from those countries. The strong impact of automation on imports, particularly of intermediates, proves the importance of GVCs. Advancements in 3D printing also seem to have stimulated trade. Trade in hearing aids shot up by 60% after production shifted almost entirely to 3D printing. But not everybody wins from technological change.

Kenya: President Uhuru Kenyatta’s State of the Nation address

The Path to Prosperity for individual African States lies in promoting Intra-African Trade, Integration and building bridges between our Communities and Nations that recognize that we have far more in common than we have as differences. Mr Speaker, Kenya’s prosperity, security and fraternity lies in ever closer unity with our Partners in the EAC at the first level, and thereafter wider regional and continental alignments. My Administration remains committed to maximizing the benefits for Kenya by mutually deepening economic and eventual political integration of the EAC. In line with the spirit of Pan Africanism, I wish to extend our gratitude to the African Union for appointing one of our own to spearhead infrastructural connectivity across the Continent. This is key to actualizing the shared prosperity of the African people through promoting trade between our brothers and sisters and further strengthening our bond of unity in the great Continent.

In manufacturing, my Administration is prioritizing local motor vehicle assembly and manufacturing of spare parts. This initiative has witnessed Peugeot and Volkswagen assembly lines set up in Kenya. Since their revival, the two companies have jointly assembled 627 motor vehicles; and by the end of 2019, they will have assembled at least 1,500 vehicles. This is a positive beginning for the sector that is expected to rapidly expand and make Kenya the regional Motor Vehicle Assembly hub. To address the perennial challenges in the sugar and maize sub-Sectors, my Administration commits to decisively act on the recommendations of the two sectoral taskforces that are slated to report their findings later on this month. I expect that the teams will propose bold and transformative interventions to revive and sustainably grow these important sub-sectors. Additionally, my Administration has prioritized reforms in the coffee sub-sector, and implemented numerous interventions emanating from the recommendations of the Coffee Taskforce. These include the ambitious rehabilitation of 500 pulping stations (factories) in 31 coffee-growing Counties.

Chicken debate: See Brazil as ‘a partner, not an enemy’ (Daily Maverick)

The SA Poultry Association has lobbied the International Trade Commission of South Africa to increase import tariffs on chicken from Brazil from 37% and 12% to a staggering 82%. SAPA’s rationale, however, is rooted in misinformation and untruths that, if not urgently addressed, could further consolidate the local market and drive up the price of chicken, thereby imperilling South African consumers who are already under significant financial pressure. The Brazilian Animal Protein Association strongly rejects the arguments by the SA Poultry Association and would like to set the record straight.

In this war of disinformation and protectionism, the biggest loser will be the South African consumer. We are not opposed to tariffs in principle, but they need to be reasonable. Increasing the tariffs to 82% from the current 37% and 12% will close the market to imports, as it will render most imports unfeasible. Most critically, an 82% tariff will allow the local chicken industry, already dominated by a few large conglomerates, to further consolidate the domestic market, thereby decreasing competition and leading to further price increases. Brazil is not dumping chicken in South Africa, it is supplying quality, unbrined chicken that is sold at a price comparable to that of South Africa, and helping to meet local demand. This ensures that healthy competition is maintained to the benefit of South African consumers. Once chicken imports have been shut out of the market, it will be very difficult for South Africa to fill the current gap between demand and supply. This is a 30% share that will be impacted. Filling this gap is a long and time consuming process, especially if the local supply is subject to further Bird Flu epidemics, rising input costs arising from droughts and the impact of further load shedding. [The author, Ricardo Santin, is the CEO of the Brazilian Animal Protein Association]

A commentary by South Africa’s trade and industry minister, Rob Davies: How Brexit will affect SA-UK trade relations

Tanzania in plan to establish more mineral trading hubs to fight tax evasion (The East African)

Tanzania’s mineral-rich regions are at advanced stage of establishing government-controlled mineral trading hubs to curb tax evasion and illegal exports of the country’s mineral wealth. Simon Msanjila, Permanent Secretary in the Ministry of Minerals, said the hubs will be ready by the end of June, adding that almost all regions have started procedures for the establishment of mineral markets. This, he said, include allocation of sites and buildings to be used for trade. The trading centres are meant to enable miners to conduct business with banks, retailers, brokers, jewellers and other traders in a well-regulated environment. According to the Federation of Miners Association of Tanzania, there are over six million small-scale miners in the country. Players say with mineral-buying centres in place, the country will collect more levies from artisanal miners, control illegal mining, and achieve better overall regulation of the industry across the value chain. In February, parliament passed a law designed to relieve small-scale miners of the burden of paying a 5% withholding tax and 18% value added tax, leaving the holders of primary mining licences with a tax obligation of just 7%.

Zimbabwe: Mnangagwa’s cabinet approves construction of Beira railway line (Bulawayo 24)

Cabinet on Tuesday approved the proposal for the construction of a railway line and wharf at Beira port to facilitate the transportation of minerals. This follows the country’s endeavour to create a cobweb of railway lines to move freight and passengers to many places at ease. At the same time with Zimbabwe being landlocked — Beira is the shortest gateway to the sea for both imports and exports for the southern country. Information minister Monica Mutsvangwa said Balmoral Corporation Investments has been given the green light to undertake the construction of the railway line.

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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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