tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: EAC

02 May 2019

Diarise: Horn of Africa AfCFTA Regional Trade Forum (23-24 May, Addis Ababa)

Extract from the  pdf concept note (570 KB) : While engagement with the private sector is a theme that cuts across all Trade Forums, each Forum also identifies issues that are particularly relevant, if not unique, to the specific context of its region. In that context, the Horn of Africa sub-region (here understood to include Somalia, Djibouti, Eritrea, Ethiopia, Sudan, South Sudan) is entirely made up of least developed countries, with two of them, Ethiopia and South Sudan, being landlocked. As a result, imports and exports from virtually all these countries often suffer from disproportionately high transaction costs due to either challenges of sheer geographical distance from markets and dependence on the infrastructure and institutions of transit countries (especially for the landlocked but also for others) or inadequate essential infrastructure within their own territories, underdeveloped logistics services, bureaucratic red tape, and the like.

In many cases, the solutions to these challenges lie in the proper management and effective implementation of region-specific agreements on transport and communication infrastructure. The AfCFTA not only reduces or eliminates barriers to trade and harmonises standards, it also provides an overarching framework within which regions can address their peculiar challenges in a specific manner. This way, the AfCFTA will help Africa trade more, and do so more competitively, with itself and with the rest of the world, which is even more true for the least-developed and landlocked countries in this region.

And a related AfCFTA Forum in Johannesburg, on a date to be announced. @Yadeyemi: Happening now. Leading a UNECA mission to DIRCO in Pretoria to finalize discussions on the @AfCfta Trade Forum planned for Johannesburg after the elections in South Africa.

Phyllis Wakiaga: Opportunities for EAC in African free trade area (Business Daily)

Our challenges in integration are also hampered by political and social differences, which manifest in seemingly endless non-tariff barriers that threaten to weaken our overall contribution to global trade. For instance, EAC global trade decreased in 2017 to a meagre 0.2% from 0.3% the previous year. The trade deficit also increased by 63.1% to $17.4bn. Our exports to the world also decreased, and of these, only 29.2% were destined for COMESA and other intra-regional markets. The latter numbers can be boosted within the AfCFTA through increased collaboration and goodwill to make use of existing instruments and well-designed policies that will enhance trade and get rid of long-standing barriers.

Going forward, it is important to give priority to collaboration that will see supply chains strengthened across borders and governments laying the ground work for the ease of movement of goods and people. This will help in realising the full potential of intra-regional market. Additionally, we need to put into action a robust EAC export promotion strategy for products in other regions and minimise intra-regional rivalry. It will, similarly, define the role of incentives in trading with future EAC trading partners. Indeed, the EAC is uniquely poised to be a leading regional bloc in the next few years. We ought not to let what’s in store for us be derailed in the short-term. [The author is CEO of Kenya Association of Manufacturers]

Related: EABC-UNECA workshop on AfCFTA: summary of key recommendations

West Africa: Accessibility and infrastructure in border cities (OECD)

This report, part of the “Cities” collection, analyses road accessibility, transport corridors and checkpoints set up in border towns in West Africa. An innovative model shows that the population base of border towns could be 14% greater if there were no delays at border crossings. The existence of roadside checks decreases the size of this population base from 12 to 50%. A study of 59 jointly planned or operated border posts in sub-Saharan Africa shows that trade facilitation runs up against the special interests of public servants and private-sector actors making a living from regional integration frictions.

Extract from the chapter: Road accessibility of West African border cities. The wait times observed at border crossings, the checks conducted on transport routes and the advanced deterioration of large portions of the road network constitute three major obstacles to market integration and the flow of people within the region. These obstacles, which have been quantified at the local and regional levels for the first time using an innovative accessibility model, call for differentiated political solutions. Border delays and “administrative hassles” are the products of corrupt practices and clientelistic arrangements negotiated between state employees and private-sector actors. Their resiliency testifies to the financial interests at play in the flow of goods and people within the region.

Extract from the chapter: Border cities, transport corridor and border posts. West Africa is the continental region with the highest percentage of non-operational OSBPs. Why are there problems with setting up these structures that are intended to facilitate trade and reduce corruption? This question is an important one, not only for the African states and regional organisations that backed the construction of six border posts that were non-operational in 2017, but also for nine other planned posts. Kraké-Sémé, Ayorou-Labézanga, Makalondi-Kantchari, Malanville-Gaya, Noépé-Akanu and Pétel Kolé all indicate that the problems encountered by non-operational border posts are linked as much to the harmonisation of customs procedures (Box 2.2) as they are to the special interests of those who make a living from border trade. OSBPs shed light on the limits of institutional integration and call into question the financial interests linked to the informal flows of people and merchandise crossing borders. While under construction, coalitions of public- and private-sector actors were formed to delay the effective operational date of border posts, in some cases for a number of years.

Egypt: WBG to extend current strategy (World Bank)

With Egypt’s economic reforms showing early signs of success, the World Bank Group has announced a two-year year extension to its 2015-2019 Country Partnership Framework. The decision was announced following a formal review of the results of the current framework by the World Bank Group’s Board of Executive Directors. Almost 77% of the original CPF objectives have already been achieved or are on track to be achieved by the end of the original framework period. Important legislation to support the business-enabling environment has been enacted, and automated government processes have reduced the bureaucratic hurdles to doing business. As such, Egypt’s ease of doing business ranking climbed from 131st out of 189 economies in 2016 to 120th out of 190 economies in 2018.

UK-Nigeria First Economic Development Forum: highlights (This Day)

Nigeria and the United Kingdom have agreed to fast-track key regulation to deepen the insurance market, expand the digital economy and explore Naira-denominated financial instruments in collaboration with the City of London. Both countries are also to endeavour to accelerate progress on franchise regulation to facilitate British brands positioning and investments that deliver sustainable new jobs in Nigeria. These are part of the communique signed at the First Economic Development Forum of both countries in Abuja on Tuesday by the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, and Foreign Secretary, Jeremy Hunt, who led the UK delegation. The joint delegation also stressed the need for opportunities to showcase high-quality Nigerian and British goods and services in their respective markets, and for more Nigerian exports to comply with global standards for better bilateral trade and investment. Towards this end, senior ministers shall meet in London before the end of 2019 for the second meeting of the EDF as an important step towards an Africa Investment Summit to create the conditions for more British investment in Nigeria, including in manufacturing and services.

Kenya to lower fiscal deficit to 5.6% in 2019/20 fiscal year (Reuters)

Kenya will cut its budget deficit to 5.6% of GDP in its 2019/20 (July-June) fiscal year from a revised 6.1% of GDP in this fiscal year, the Treasury said in a draft budget summary sent to parliament this week. The East African nation will borrow 324.3 billion shillings ($3.21bn), equivalent to 3.0% of GDP, from abroad during the fiscal year and 289.2 bln shillings, or 2.7% of GDP, from the local market, the document showed. The government aims to reduce the overall budget deficit to 3.8% of GDP in the 2022/23 fiscal year, the Treasury said. [Zambia’s 2018 fiscal deficit above forecast at 7.5% of GDP]

Ghana: Relief for importers as Ghana Trade Hub mobile app goes live (GNA)

The free-to-download Ghana Trade Hub Mobile App is available on both Google Play store for Android users and on IOS- App store. The Ghana Trade Hub Mobile App is easy to operate and the processes have been broken down into specifics – depending on whether one wants trade information on general goods, used vehicles, or whether one simply wants to track a consignment. For example, the App has four simple steps to follow so as to obtain duty information on general goods:

Ivory Coast 2019/20 cotton exports to hit record high: USDA attache (Reuters)

Ivory Coast, Africa’s fourth-largest cotton producer, is expected to export record amounts of cotton in the 2019/20 season, according to a report by a US Department of Agriculture attache published on Wednesday. Ivorian cotton exports in 2019/20 are forecast at 875,000 bales, a new record, as yields improve and the area dedicated to cotton production expands. Overall production for 2019/20 is forecast at 925,000 bales. “Assuming normal conditions, the country appears poised to solidify its status as one of Africa’s major exporters behind only Mali, Benin, and Burkina Faso,” the report said. [Benin’s agriculture has a good season, but it wasn’t easy]

South African trade updates: SARS pencils in an extra R10bn in tobacco excise revenue after clamping down on illicit industry (Daily Maverick); Nearly R5bn in trade deals for Cape Town, Western Cape declared in 2018/19 (IOL); SA’s trade deficit narrows, but storm clouds remain on horizon (IOL)

Bakang Ntshingane: The future is Asian, and Africa’s hinterland is there (Daily Maverick)

Our relations with China must not be a substitute for relations with the rest of Asia. The region is a vast landscape that stretches far and wide. We must also seek to expand our services and products into the rest of Asian markets to exploit the region’s integrated linkages that connect five-billion people through trade, finance and infrastructure networks. South East Asia remains an economic and strategic hub of the world, teeming with young, urban entrepreneurial youth. We must start to build networks in the rest of the region. African states must strive to establish more diplomatic presence in Asia, not just when China opens a cheque book. Asia is the world’s intermediate goods production and export hub and the lessons to be learnt are beyond valuable. Africa will continue to grow, and African leaders will need to be more pragmatic in their diplomacy to engage and collaborate with Asia. [The author is a graduate student at Chonbuk National University’s Department of International Trade in South Korea]

The effects of pollution and business environment on firm productivity in Africa (World Bank)

This paper explores the links between city competitiveness and air pollution and the business environment. Because competitive cities not only attract more productive firms, but also facilitate their business, the paper look at firm performance as a proxy for city competitiveness. It focuses on African firms, because this region is developing fast and experiencing increasing pollution levels and the effects of agglomeration economies. The analysis finds two interesting results.