tralac’s Daily News Selection
Joint AfDB, AUC, UNECA, Afreximbank expert group meeting on informal cross-border trade (16-17 April, Abidjan)
Informal cross-border trade has remained a dilemma for the African continent. It is a pervasive phenomenon around Africa’s internal borders. Although it accounts for a significant amount of trade on the continent, it also remains a moving target, whose data has continually defied capture in national, regional and continental trade and accounting statistics. Sources indicate that between 20 and 40% of trade is informal. The recent ratification of the African Continental Free Trade Area adds impetus to the need to understand this sector. The Expert Group has been put together to address the challenge of capturing data. A key task of the project, among others, is the design of a data gathering and collation methodology and launch of a pilot study on the active Abidjan-Lagos Highway corridor.
Four years after forming the Association of African Automotive Manufacturers (AAAM) their efforts are starting to bear fruit. Carmakers that set up local assembly plants could get tax holidays of up to 10 years and duty exemptions in Nigeria, Kenya and Ghana, according to government plans seen by Reuters. Thomas Schaefer, who heads Volkswagen’s Africa business, said there is a potential market in sub-Saharan Africa for 3 to 4 million new cars, up from just 420,000 in 2017. But that will require addressing the well-entrenched interests of second-hand car dealers, smugglers and lowering the price of new cars. “It will largely depend on how successful the African governments are in limiting the amounts of second-hand imports and how price-competitive new vehicles can be with their tariffs,” said Craig Parker, Africa research director at Frost & Sullivan, a U.S.-based market research firm. [The authors: Joe Bavier, Emma Rumney, Duncan Miriri]
Alec Erwin: Africa cooperation pacts key to new-vehicle manufacturing (Engineering News)
The key to manufacturing more new vehicles in South Africa and on the continent lies in restructuring the African market around a cooperation agreement in key assembly economies such as Ghana, Nigeria, Kenya and Ethiopia, says advisory and investment holding company UBU Investment Holdings chairperson Alec Erwin. [Related: Supportive policy held up as key to unlocking Africa’s auto ambitions]
Namibia State of Logistics 2018 report (pdf, Walvis Bay Group)
The Port of Walvis Bay, the leading commercial port in Namibia handled 93.1% of total cargo (gross tonnage) transiting to and from the neighbouring countries in 2017. Of the eight or so countries that use the Port of Walvis Bay for imports and exports, Zambia, Angola, DRC, Botswana and Zimbabwe are the main markets for transit cargo by volume. Zambia is the dominant market for transit cargo among these countries, which accounted for 51.8% of all inbound transit cargo via the Port of Walvis Bay in 2017, up from 47.9% in 2016. This represents a 50.9% increase in the volume of imports to Zambia. Similarly, Zambian exports comprising mostly copper and wooden products accounted for 85.7% of total outbound transit cargo by volume (metric tons), up from 72.5% in 2016.
Corridor/border performance: The comparative time it takes (in median hours) to complete border handling, customs clearance and inspection procedures for shipment (both import and transit) to cross border points is shown in Figure 9. On average, it takes 4.9 hours to cross the Namibia-Zambia (Katima/Mulilo) border crossing point (BCP) compared to 1.9 hours at Buitepos/Mamuno on the .Namibia-Botswana BCP, and 1.6 hours at Noordoewer/Vioolsdrif BCP on the Namibia-South African border. Further levels of efficiencies associated with border management is shown (Figure 10) in terms of median (hours) crossing time (and Standard Deviation) at BCP along corridors (Walvis Bay-Ndola-Lubumbashi, Trans-Kalahari and Trans-Oranje) covering the last 12 months (Dec 2017-Nov 2018). During the last 12 months, on average, December 2017 and April/May 2018 had relatively longer border crossing times of above 15 hours compared to the other months of the year.
Developing the West African private sector: AfDB EOI
WBG/IMF Spring Meetings: selected updates
The World Bank’s Africa Human Capital Plan. Hafez Ghanem (World Bank Vice President, Africa): The Plan is conceived as a means to support countries as they facilitate a people-driven development relying on the potential of African people, especially its women and youth. Through this plan, we will channel our resources and energy into helping governments create an enabling environment in which children enter school well-nourished and ready to learn, where students acquire real learning in the classroom, and workers participate in the job market primed for productivity. Africa’s human capital indicators are undeniably in a dire state, yet we have seen countries turn things around. Twenty-three African countries, covering over 60% of the region’s population, have joined a coalition of nearly 60 countries to join the Human Capital Project, committing to a set of accelerated investments in their human capital.
Extract (pdf): The World Bank Africa region is going to increase the portion of its investments in human capital that incorporate technological solutions and other innovations, starting with 20 projects in FY20 and reaching 40% of all its human capital operations by 2023. By putting people at their center and by prioritizing work-enhancing technologies, the projects will follow certain guiding principles and innovations to mitigate the potentially negative impact of some technologies. Examples of technologies that work to improve human capital include: [Deep Dives (pdf); WB invites Zambia to become a pilot location for the Human Capital Project]
Intergovernmental Group of Twenty Four on International Monetary Affairs and Development. We call for a collective response to resolve ongoing trade tensions within a rules‑based multilateral trading system. International trade has delivered enormous benefits globally and has been an important engine of growth among G‑24 countries and EMDEs more generally. We stand ready to work with other members of the global community to foster a modern, open, rules‑based, non‑discriminatory and equitable multilateral trading system.
We call on the IMF to intensify its ongoing integrated surveillance efforts to assess the spillovers of domestic policies of systemically important countries on EMDEs, and stress the importance of responsible policies in this area. Within the Institutional View, we reiterate our call for a balanced and context‑based assessment by the IMF of the appropriateness of the mix of measures used by countries in dealing with capital volatility to ensure financial stability. In this regard, we welcome the Fund’s work on an Integrated Policy Framework.
We believe that intensifying the fight against corruption and increasing transparency are essential for achieving a more efficient allocation of resources. We also call for strong international cooperation to combat illicit financial flows and develop an international platform, along the lines of the Stolen Asset Recovery (StAR) initiative of the WBG and the UN, to recover and return stolen assets and repatriate and prosecute fugitive offenders. Accelerating the Fund’s ongoing work on the measurement of illicit financial flows will be helpful in this regard. Further, we welcome the harmonization of anti‑money laundering and counter‑terrorism financing rules and regulations across jurisdictions. In addition, strengthening the rule of law and fostering fair competition are also important to the fight against corruption.
David Malpass (WBG President): transcript of opening press conference. To your third point, as far as China, and as far as the buildup of debt, let me take a second - a few moments on that. Debt is something that helps economies grow, but if it’s not done in a transparent way, with good outcome from the build-up of debt, then you end up having it be a drag on economies. And history is full of those situations where too much debt dragged down economies. So what we are trying to do - and the World Bank is a key part of the Debt Transparency Project and the collection of data that has been encouraged by the G20 - and so this is a project that we are working hard on. I’ll be reporting to the G20 on the progress during our meetings coming up this week, and the keys are to have transparent disclosure of the debt as it is being created, and also then have the focus be on good outcomes in terms of quality projects. This is critical for poor countries as they try to move forward to have the projects associated with good quality programs and full disclosure of the debt. So I think this is an area that bilateral donors can do much better on and it is something that the world can press on and say, look, this is the way to help countries get ahead in terms of their growth. So it is something the World Bank will be working hard on and it is very important to those countries, to many countries. I’ve got a statistic here: 17 African countries are already at high risk of debt distress, and that number is just growing as the new contracts come in and aren’t sufficiently transparent.
I’m looking forward to a constructive relationship with China. It is one that is evolving and, so you mentioned, the history going back many decades. China has changed greatly over these decades. In economic terms, very much stronger. And so I think that we can think of it as, it’s role evolving from one where it was a major borrower from the World Bank, and I hope benefitted from the loans from the World Bank, to one where now it will be much smaller borrower. In the capital increase that was agreed to by shareholders a year ago, it was agreed that the borrowing by China would fall below a billion dollars by the end of the country program that the World Bank does with China. And so that’s it has already been underway for some time now, the borrowing by China has been going down. That is part of the evolution of the relationship. At the same time, China is becoming more of a donor to the World Bank, and a shareholder in the World Bank, and so we value that constructive relationship.
Christine Lagarde’s opening press conference: transcript. I would suggest not a single policy but multiple policies, because it will have to be country‑specific, and there is no one‑size‑fits‑all. But we certainly would recommend two key principles. One is, do no harm. Second, do the right thing. So do no harm. The key is to avoid the wrong policies, and this is especially the case for trade. We know that, for many decades, trade integration has helped boost productivity, innovation, growth, employment, and has reduced the cost of living, particularly for the low‑income people. At the same time, we know that the engine of growth needs to be fixed. We need to better address dislocations caused by trade and by technological innovation, however intertwined they are. And we need to do more for those who are left behind. We need to better address unfair trade practices and distortions in the system, including through a WTO system reform. And we need to avoid self‑inflicted wounds, including tariffs and other barriers. So that was for the do no harm. Do the right thing. I would mention a few: [Related: Joint Responsibility Shared Rewards - the managing director’s Global Policy Agenda]
AfDB’s Akinwumi Adesina makes strong case for increased US investment in Africa. “It is time to turn around the declining investments of the U.S. in Africa. As the world’s private sector leader, the United States has a unique role to play in increasing investments in Africa and expanding opportunities for the US private sector”.
Cyclone Idai: World Bank statement on high-level meeting on humanitarian and recovery efforts. Discussions underscored the need for a regional approach to longer term reconstruction and development, given the likely ripple effects of the cyclone on the entire region. The cyclone damaged the infrastructure corridor connecting the Mozambican port of Beira with Malawi, Zambia and Zimbabwe, disrupting regional trade and supplies of fuel, wheat and other goods. While the damage and recovery needs assessment is ongoing, early estimates point to over $2bn in recovery costs for the infrastructure and livelihood impacts of Cyclone Idai on Malawi, Mozambique and Zimbabwe. To date, about three million people have been affected, with near total damage in the worst affected areas. [IOM update]
Beyond uncertainty: leveraging trade to reduce poverty (a joint WTO-IMF-World Bank event).