tralac’s Daily News Selection
AfCFTA ratification update
The AfCFTA Agreement will enter into force on 30 May: update from AUC
The Chairperson of the AU Commission, Moussa Faki Mahamat, flanked by the AU Commissioner for Trade and Industry, Albert Muchanga, received two deposits of instruments of ratification of the AfCFTA Agreement (29 April). The instruments were from Dr Brima Patrick Kapuwa, Permanent Representative of Sierra Leone to the AU (representing the 21st member state to do so) and Lamin Baali, Permanent Representative of the Saharawi Republic to the AU (representing the 22nd ratification). All that is now left is for the AU and African Ministers of Trade to finalize work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extraordinary Heads of State and Government Summit on 7 July 2019. The supporting instruments are: rules of origin; schedules of tariff concessions on trade in goods; online non-tariff barriers monitoring and elimination mechanism; digital payments and settlement platform; African Trade Observatory Portal. The African Ministers of Trade are scheduled to meet in Kampala in the first week of June this year to review work on these supporting instruments ahead of the Extraordinary Summit on the AfCFTA.
tralac Working Paper: Ratification of the AfCFTA Agreement – What happens next?
What happens once the required number of ratifications have been deposited? Is it true, as some tweets proclaim, that the “world’s largest trading bloc” then factually exists? Or, as one correspondent recently asked: After the agreement enters into force, does that mean that the African continent is a free trade area? In order to answer these and other frequently asked questions about the AfCFTA, and to clarify the bigger picture, this working paper discusses and explains certain aspects of this new trade arrangement by consulting the legal instruments which are being adopted as part of the process of establishing the AfCFTA. [The author: Gerhard Erasmus]
The 8th Joint Retreat of the Permanent Representatives’ Committee and the AUC began yesterday in Tunis. The AUC Chairperson said the upcoming Coordination Meeting, to be held in Niamey, is a key element to reinforce greater operational synergy between the AU and the RECs to ensure a clearer distribution and differentiation of roles between the regional bodies and the continental organisation.
The WTO’s Regional Trade Policy Course began yesterday in Mauritius. The course, being run until 21 June, is offered by the WTO in collaboration with the University of Mauritius. It is being attended by some 30 participants from African countries as well as local participants from the Ministry of Foreign Affairs, Regional Integration and International Trade.
South Africa’s March trade statistics: a surplus of R5bn (SARS)
The South African Revenue Service has released trade statistics for March 2019 recording a trade surplus of R5.00bn. The year-to-date (1 January - 31 March 2019) trade deficit of R3.83bn is an improvement on the deficit for the comparable period in 2018 of R18.66bn. Exports year-on-year increased by 7.6% whilst imports for the same period showed an increase of 13.1%. The R5bn trade surplus for March 2019 is attributable to exports of R105.4bn and imports of R100.4bn. Exports increased from February 2019 to March 2019 by R7.33bn (7.5%) while imports increased from February 2019 to March 2019 by R6.19bn (6.6%).
South Africa experiences significant losses in excise revenue due to a global increase in the manufacturing, supply and sale of illicit excisable products. In response to this challenge, SARS has embarked on a process to mitigate such illicit and non-compliant activities by means of improved policy, enhanced processes and the use of advanced technology to uniquely mark products, in order to strengthen the enforcement environment and ensure overall control of the supply chain. SARS is looking to introduce the track-and-trace marker technology in the cigarette industry, which will enable the organisation to monitor the journey from cigarette manufacturing plants to points of sale and/or import or export trades. This non-intrusive technological innovation is expected to boost the monitoring and control of duties and taxes in this industry significantly. A tender for the provision of a Production Management and a Track and Trace solution for cigarettes has been published on the SARS Website.
Nigeria: Illegal mining worries Federal Government (ThisDay)
The Ministry of Mines and Steel Development has announced plans to establish a mining surveillance task force to checkmate illegal mining activities in the country. The Minister of State, Ministry of Solid Minerals and Steel Development, Bwari Abubakar, explained that the task force would be made up of all security agencies in each state, to comb the entire country and identify those in the business of illegal mining. The Minister who was represented by his Special Assistant, Davies Olapade, at the Nigeria Mining business investment summit organised by the Lagos Chamber of Commerce and Industry (LCCI), said the ministry was doing a lot to block revenue leakages, stressing that it recently collaborated with the Nigeria Customs Service and Ministry of Internal Affairs to ensure that the minerals are not smuggled out of the country. [SON solicits Nigerians support to tackle sub-standard goods]
There are still significant barriers preventing local manufacturers from taking on the manufacturing of essential medicines. Speaking to Devex, Mazi Sam Ohuabunwa, president of the Pharmaceutical Society of Nigeria, listed the challenges, explained how they can be overcome, and what the development community can be doing to eliminate medicines that hinder rather than help improve global health.
State House chief of staff, Nzioka Waita, said in a statement: “It is important to note that the question of funding for the extension of the Standard Guage Railway from Naivasha to Kisumu was not on the agenda of the meeting between the two President’s.” Mr Nzioka said the agenda of the bilateral meeting between President Kenyatta and China President Xi Jinping, which he termed “extremely successful”, covered the following areas: The signing of a trade agreement for the export of frozen avocados from Kenya to China which followed the signing of an MoU on Sanitary and Phytosanitary Standards late last year for the export to China from Kenya of various horticultural products; The signing of a Framework Agreement between the Kenya National Highways Authority and the China Road and Bridge Cooperation for the construction of Kenya’s first expressway from Jomo Kenyatta International Airport to Westlands; The signing of a financing agreement valued at Sh17 billion between Kenya and China EXIM Bank for the construction of the Konza Technopolis Data Center and IT infrastructure. Mr Nzioka noted that the SGR is a regional project involving several countries and negotiation for its funding could take years. [Uganda: Fears over blocking Naivasha dry port]
Kenya’s current account deficit (CAD) has narrowed, but remains high. Better export performance, along with lower capital imports and lower global oil prices, reduced Kenya’s trade deficit to 11% of GDP in 2018 from an average of 16% over 2008 to 2017 and tourist earnings and remittances have also increased. Fitch estimates the 2018 CAD at 5.2% of GDP and forecasts it to remain at around 5% in 2019 and 2020. Low levels of FDI increase Kenya’s reliance on external debt flows to finance the CAD. At 31% of GDP, net external debt is well above the peer median of 15%. Kenya’s reserve position eases some of the vulnerability from high external debt. International reserves were USD8.2 billion as of January 2019 (approximately four months of CXP) and Fitch forecasts reserves to increase to USD8.9 billion by end-2019. The Kenyan shilling experienced a slight depreciation in 4Q18 but bounced back in January 2019 and remained stable through 1Q19.
Permanent Secretaries from Tanzania and Uganda on Tuesday met in the country’s northwestern region of Kagera to discuss border-related challenges. Faraji Mnyepe, Permanent Secretary in Tanzania’s Ministry for Foreign Affairs and East African Cooperation, said among the key issues to be discussed include ways of reinforcing international borders between the two states as well as sustainable development of Kagera River Basin-a river that drains into Lake Victoria.
No hostility between Tanzania and Malawi: Tanzanian president (Xinhua)
“During my administration Tanzania and Malawi will always remain best neighboring friends,” Magufuli told a public rally broadcast live by state-owned Tanzania Broadcasting Corporation in the southern highlands district of Kyela on the shore of Lake Nyasa in Mbeya region. Magufuli made the remarks against the background of reports that Tanzania and Malawi were mired in a long-standing conflict over boundaries on Lake Nyasa. Last week, the Tanzanian and Malawian leaders directed relevant ministers to urgently sort out challenges that were slowing down trade between the two countries. A statement said the leaders had directed the ministers to accelerate construction of a one-stop border post at Kasumulu on the two countries’ border post to facilitate trade between the neighbors. Addressing a joint news conference, Magufuli said trade between Tanzania and Malawi was still low where 2018 records indicated a trade volume amounting to a paltry $64m.
Nigeria: Senate directs trade minister to return N14.3bn diverted fund (Daily Trust)
Mauritius and the IMF:
Staff Report for the 2019 Article IV Consultation. Discussions during the 2019 Article IV consultation focused on preserving fiscal sustainability, regaining external competitiveness, and maintaining financial integrity and stability. Main policy recommendations: Pursue fiscal consolidation from the forthcoming budget FY2019/20 to build fiscal credibility and set public debt firmly on a declining path into the medium term; The current monetary policy stance is broadly appropriate, but vigilance is warranted against any emerging inflationary pressures; The declining external competitiveness needs to be addressed through concerted efforts to boost productivity, labor market efficiency, and economic diversification; Measures introduced to improve the business climate and support small-scale entrepreneurs, youth skill development, and female labor force participation are welcome, but efforts should focus on enhancing their effectiveness; The recommendations of the FATF-style regional body to strengthen the AML/CFT framework should be expeditiously implemented. [ pdf Staff report (1.30 MB) ]
- pdf Selected Issues report. (856 KB) Extract on export structure: Mauritius has much room to improve the sophistication of its export basket. Mauritius’ goods export complexity has been consistently below that of other major GFCs (see figure 11). This gap is driven by the high ubiquity (or low uniqueness) of Mauritius’ exports (see Box 1). Mauritius’ export basket also lacks diversification relative to its global competitors, as indicated by the inverse Herfindahl-Hirschman Index (HHI) in Figure 12.18. The complexity of its services exports has also lagged that of other global competitors. Calculating the average complexity of service export categories, Mauritius fares much lower than other GFCs. Mauritius’ dependence on tourism (with a low complexity score) and a relatively narrow base in high complexity sectors such as finance are the key reasons for this gap. In 2014, for example, finance comprised only 3% of Mauritius’ services exports, while the average for other GFCs was 14%. By contrast, travel constituted 45% of Mauritius’ services exports in 2014, which is over four times the average for its comparators (11%). Why does Mauritius lag in export complexity?
Uganda and the World Bank: An 11-member delegation of the WBG Executive Directors visited Uganda (23-26 April) to get a first hand view of the Bank’s support to the country’s development priorities. The delegation represents 92 countries and nearly 51% of the Bank shareholding. The WBG has a strong partnership with Uganda, with a cumulative investment of more than $10bn since 1963.
Entrepreneurship funds in Africa: distinguishing the good from the bad (The Conversation)
The challenge for countries is how to support the growth of SMEs. Various African governments have experimented with ways to help address the $140bn funding gap for startups and SMEs. For example, one approach has been to set up entrepreneurship funds. Based on my experience of watching their performance over the past 18 years, I would issue some words of caution. Some entrepreneurship support models work better than others. And how they are set up – particularly the governance structures put in place to manage them – is key to their success, or failure. Tackling Africa’s job creation challenge requires innovative thinking and initiatives that support private sector-led growth. Looking to the model of Small Enterprise Assistance Funds and enterprise funds, African governments can spur local ecosystems and drive new private capital to regions today seen as unfriendly or too risky to outside investors. Properly structured investments today could yield much larger dividends tomorrow. [The author, Aubrey Hruby, is a Senior Fellow, Africa Center, Georgetown University]
Toumert AI: E-payment platforms necessary for Africa’s economic development (Global Times)