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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Mobisol

09 Apr 2019

Featured tweet, @EgyptAbaba: Few minutes ago, I officially deposited Egypt AfCFTA ratification instrument. Egypt is 18th depositor of the free trade area and four more to go to entry into force. A dream becoming a reality. AfCFTA is priority of Egypt AU Chair agenda.

tralac’s AfCFTA Ratification barometer: update

African trade and infrastructure events to diarise:

EABC-UNECA sensitization workshop on the African Continental Free Trade Area (25 April, Arusha)

PIDA Data collection and validation for SADC, COMESA and specialized institutions (29-30 April, Cape Town)


Dr Francis Mangeni: The African Continental Free Trade Area – more hills to climb (Monitor)

One systemic lesson Africa has learnt is that clear political leadership and proactive engagement of peers at the highest level can dramatically achieve results. The Pan-Africanist energy and activism at the highest political level that has achieved the ratification of AFTA in just over a year, should now be equally deployed to ensure due completion of all key outstanding matters, so that AFTA is operationalised. It is time for Africa to get cracking yet again. [The author is Director of Trade and Customs at the Comesa Secretariat; Albert Zeufack (Chief Economist, Africa World Bank): AfCFTA’s execution will bring down trade volatility]

Africa’s Pulse (World Bank)

The growth story in Sub-Saharan Africa in the past few years has been one of faltering recovery from the worst economic crisis of the past two decades. This remains the case according to the April 2019, 19th edition of Africa’s Pulse, which estimates GDP growth in 2018 at a lower-than-expected 2.3%, with a forecast to 2.8% in 2019. “Three years past the crisis period, we should be seeing a more widespread pickup in growth; instead we have downgraded our estimates again for 2018,” said Gerard Kambou, World Bank Senior Economist for Africa. “Leaders in Sub-Saharan Africa have the opportunity to build stronger domestic policies to withstand global volatility - and now is the time to act.” The report notes that the three largest African economies - Nigeria, Angola and South Africa - play a big role in the region’s growth. While Nigeria grew faster in 2018 than in 2017, thanks to a modest pick-up in the non-oil economy, growth remained below 2%. Angola continued its recession, with growth falling sharply as oil production stayed weak. South Africa came out of recession in the third quarter of 2018, but growth was subdued mostly due to policy uncertainty weakening investor confidence. The report also outlines issues which continue to hold back growth across the region - debt and fragility. [ pdf Africa’s Pulse, April 2019 (2.86 MB) ]

Kenya Economic Update: Unbundling the Slack in Private Investment (World Bank)

The rebound in exports made a modest contribution to the recovery in GDP growth. A more favorable external environment boosted export revenue from tea, horticulture, and tourism. The special Focus Topic shows that agriculture is responsible for most of the country’s exports, accounting for up to 65% of Kenya’s merchandise exports in 2017. Meanwhile, import growth has moderated on account of slowing private investment but also due to a base effect, as food imports have slowed significantly following a bumper harvest of Kenya’s staple food (maize) (Figure 12). On balance, net exports exerted less of a drag on GDP growth in 2018 than in 2017 (Figure 10). In 2019, strong growth in Kenya’s subregional markets is expected to support manufacturing exports, while limited increases in oil prices are expected to reduce the drag from net exports. [ pdf Kenya Economic Update, April 2019 (2.03 MB) ]

The share of value addition compared to agricultural production is relatively low in Kenya. As shown in Figure 42, only 16% of Kenya’s agricultural exports are processed, compared with 57% for imports. Likewise, Kenya exports only $11 of processed agricultural products per capita, compared with $83 in South Africa and $77 in Côte D’Ivoire. This is partly a result of the fact that many of Kenya’s major cash crops either do not require processing (for example, cut flowers) or require only primary processing prior to export (for example, coffee, tea). Of processed exports, only pineapples ($100m per year) and beans ($50m per year) have achieved any significant scale. [Bloomberg: Kenya, World Bank diverge further on 2019 economic outlook; Business Daily: World Bank pushes for e-trade platform]

Kenya: February trade gap widens to Sh192bn as export earnings fall (Business Daily)

The gap between Kenya’s imports and exports widened in the first two months of the year to Sh192 billion from Sh175 billion in the same period last year, official records show. Latest Central Bank of Kenya data indicates export earnings dropped from Sh110.7 billion to Sh104 billion blamed on poor earnings from tea. By comparison, import bills grew slightly by 3.4% to a record Sh296 billion, highlighting growing appetite for foreign goods. This comes as Pakistan ceded its first position as the biggest destination of Kenyan goods to Uganda and Netherlands, which took the first and second spots respectively in the two-month period. [CBK: 2019 FinAccess Household Survey Report]

Nigeria: Dangote Sugar to become global force with backward integration goal (Leadership)

Dangote Sugar Refinery (DSR) Plc is set to become a global force in sugar production by producing 1.5M MT/PA of refined sugar from locally grown sugar cane for the domestic and export markets in 10 years through its backward integration goal. Sugar, a commodity that has received increased attention in recent years, provides an avenue for Nigeria to improve its diversification strategy. According to study, Nigeria’s sugar output barely accounts for 7% of its demand. Grown in states such as Katsina, Taraba, Kano, and Adamawa, the commodity fetches Nigeria a miserly $24.88 million in revenue and the demand gap is approximately 900,000 metric tons. This has resulted in an annual sugar import bill of approximately $100 million, the largest import bill for the commodity in sub-Saharan Africa.

Financial safety nets and bank resolution frameworks in Southern Africa: key issues and challenges (World Bank)

This report provides an assessment of the current state of development of financial safety nets and bank resolution frameworks in eight countries in southern Africa (Botswana, Eswatini, Lesotho, Mozambique, Namibia, South Africa, Zambia, Zimbabwe). It has been prepared to inform ongoing and planned technical assistance projects in the southern Africa region and to provide a basis for engagement with the authorities in each of the countries covered by the study. This summary draws from more detailed material contained in a comprehensive study.

Migration and Development Brief #31: Sub-Saharan Africa (World Bank)

Remittances to Sub-Saharan Africa grew almost 10% to $46bn in 2018, supported by strong economic conditions in high-income economies. Looking at remittances as a share of gross domestic product, Comoros has the largest share, followed by the Gambia, Lesotho, Senegal, Cabo Verde, Liberia, Senegal, Zimbabwe, Togo, Ghana, and Nigeria. The Bank estimates that officially recorded annual remittance flows to low- and middle-income countries reached $529bn in 2018, an increase of 9.6% over the previous record high of $483bn in 2017. Global remittances, which include flows to high-income countries, reached $689bn in 2018, up from $633bn in 2017. Regionally, growth in remittance inflows ranged from almost 7% in East Asia and the Pacific to 12% in South Asia. The overall increase was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from some Gulf Cooperation Council countries and the Russian Federation. [Dilip Ratha blog on the report]

Global trade turmoil: implications for LDCs, Small States and Sub-Saharan Africa (Commonwealth Secretariat)

The analysis highlights that, although the tariff war involving China and the USA draws intense focus, world trade is also going through some structural changes, complicating the situation further. Since the global financial crisis of 2008, LDCs, small states and sub-Saharan Africa have witnessed a lost decade of gains from trade in the sense that each of these country groups’ combined trade hardly expanded. Extracts:

A strong recovery in 2017 led SSA’s exports to rise by $50bn over the previous year to reach $373bn. The comparable increases for LDCs and small states were $25bn and $1bn respectively. But still, these country groups’ total exports in 2017 were just about at the same level as in 2008 (Figure 7). During 2000–08, LDC exports grew nearly five-fold, from $43bn to about $200bn, which is just about the same size as in 2017. For the group of African, Caribbean and Pacific countries, including SSA and small states, their combined exports of goods and services during 2000–08 rose by more than three times, from $146bn to $482bn as against their corresponding exports of $448bn in 2017. From this perspective, the period 2008–2017 can be seen as a lost decade of gains from trade for the world’s poorest, smallest and most vulnerable countries.

Considering international trade performance, 36 Commonwealth LDCs, small states and SSA economies (out of a total of 45; more than 80%) suffered lower export growth during 2013–17 than during the pre-crisis period (2000–08), as Figure 10 shows. For nine countries, export growth was not affected by the global financial crisis. The analysis presented in this paper has also revealed a rather dramatic declining export orientation (i.e. export–GDP ratios) for these groups of countries. [The authors: Mohammad A. Razzaque, Syed Mortuza Ehsan]

The Chinese are here: an analysis of import penetration and firm performance in Sub-Saharan Africa (The IGC)

Our findings show compelling evidence of the positive effects of Chinese imports on productivity. Increased Chinese penetration enables surviving firms to increase their share of skilled workers by almost 4%, thereby allowing firms to shift production from low-skill to high-skill-intense products. The effect is not homogenous across SSA firms. Firms located further away from ports benefit more from Chinese imports, highlighting the importance of transport infrastructure in SSA countries. These findings suggest that Chinese imports have triggered a pro-competitive effect for firms with lower access to ports and have resulted in a catch-up in performance for less productive and less trade-exposed surviving firms. [The authors: Christian Darko, Giovanni Occhiali, Enrico Vanino]

Beitbridge Border Post: Border delays rile transporters (The Herald)

Transporters and customs clearing agents have expressed concern over the delays in the movement of cargo at Beitbridge Border Post, which is SADC’s busiest inland port. They said they had been experiencing delays in the last three weeks after the Zimbabwe Revenue Authority introduced a new way of confirming payments for several levies and duties on commercial cargo. The agents said payments used to reflect under 30 minutes in the Automated System for Customs Data, but it was now taking 24 hours or more. In addition, they said the introduction of duty top-ups emanating from the fluctuating rates between the RTGS and Unites States dollar had worsened the situation.

Namibia commits to Rand peg as economy limps out of slump (Bloomberg)

Namibia is ruling out dropping its currency peg with the South African rand “unless something very drastic happens,” given the close trade links to its larger neighbor and the drive by the world’s biggest producer of marine diamonds to recover from a two-year recession. “We have to consider all the options, but after having considered that we still think that backing one-on-one with the rand is the best option,” Namibian President Hage Geingob said in an interview in Cascais, Portugal, where he attended the Horasis Global Meeting. [Note: The summit briefing prepared by Oxford Analytica can be accessed here, pdf]

Today’s Quick Links:

African pharma: a prescription for success

SADC absorbs 93% of Zimbabwe’s exports

Malawi 2018/19 maize output up 24%, minimal effect from cyclone Idai

The DRC and China’s Sicomines: why future deals should be different

Sales of Western Sahara “conflict minerals” rise: but trade is getting harder for Morocco to maintain

Second ECOWAS Best Practices Forum in Health opens in Accra

An overview of the 2nd Ethiopia-Brazil Trade and Investment Forum (28 March, Sao Paulo)

Ghana signs $180m agreement with Exim Bank of India

Ashlin Perumall: Blockchain and cryptocurrency regulation in Africa

Development bank climate funds seek new dollars, as competition heats up

To meet development goals, FAO ‘cannot only focus on tackling hunger anymore’

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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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