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tralac's Daily News Selection

tralac's Daily News Selection
Photo credit: Reuters

24 May 2019

Diarise: Investment to support competitiveness and inclusive growth in South Africa (27 May, Johannesburg). One of the speakers at this Tutwa CG seminar will be David Bridgman (outgoing WBG manager of Trade and Competitiveness – Sub-Saharan Africa)

Selected AfCFTA updates:  Zambia, Kenya, Zimbabwe, Cameroon

(i)   Zambia's National AfCFTA Consultative Forum concludes todayThe Forum included presentations by the AUC and the SADC and COMESA Secretariats; a ministerial session and presentations by business associations.  Extracts from the keynote address by UNECA's Said Adejumobi:

It is important to note that the AfCFTA Agreement is not self-executing; it requires Zambia to deploy deliberate strategies towards ensuring that the private sector, as key stakeholder in production and trade, is primed to exploit a larger market and product opportunities offered by the AfCFTA, with reduced tariff and non-tariff barriers. It is imperative to, among others, address supply-side constraints limiting the productive capacity of industry to stimulate competitiveness. Coherence between the National Industry Policy and trade promotion initiatives is critical. Furthermore, the effective exploitation of the AfCFTA will require consensus among all stakeholders – the private sector, government, academics, civil society, women and youth organisations; hence the imperative to establish a well-resourced national AfCFTA Committee as part of the framework to entrench and facilitate the required consultative processes in the implementation of the agreement.

Without pre-emptying discussions during this forum, I believe other key reforms required to ensure that industrialisation, investment and trade generate optimum benefits for Zambia under a larger market include the areas of trade facilitation, infrastructure development, doing business reforms to create a conducive environment for the private sector, product quality and standards and the general policy environment, its consistency, clarity and stability to facilitate evolution of a competitive industrial sector able to capture opportunities arising from a borderless trade continent. Zambia is assured of the technical support of the UNECA working with the African Union Commission in assisting Zambia to develop the national AfCFTA Strategy and Action Plan that will complement existing industrialisation, investment and trade policies in promoting overall national development aspirations. [The author is the director of the UNECA's Southern Africa Office, in Lusaka]

(ii)  Kenya offers five office buildings in bid to host AfCFTA Secretariat. Foreign Affairs Principal Secretary Amb Macharia Kamau said Kenya’s bid was anchored on key selling points including geographical centrality in the continent, improved infrastructure, and freedom of the press. “We’re availing many buildings in Upper Hill, Westlands, Gigiri, and Central Business District and we’ve already spoken to managers of some of the buildings who’re available to offer some of the buildings,” the PS stated adding the government would facilitate the furnishing of the buildings should Kenya win the bid to host the AfCFTA Secretariat. Kamua said the hosting of the AfCFTA Secretariat in Nairobi will open up opportunities for the capital and foster the country’s position as a multilateral hub. Kenya is up against Senegal, Egypt, Ethiopia, eSwatini, Ghana, and Madagascar.

(iii) Zimbabwe deposits its instrument of ratification: @AmbMuchanga.  “More good news! African Continental Free Trade Area State Parties increasing! Zimbabwe today deposited Instrument of Ratification, becoming 23rd. More expected before 7th July, 2019.”

(iv)  Cameroon will develop its national AfCFTA implementation strategy: starting in June, ending in October

(v)  Professor Faizel Ismail's Nigerian Institute of Advanced Legal Studies lecture: Inclusivity and the transformational potentials of the AFCFTA for African countries

Selected updates, commentaries on the WTO:

(i)  Escalating trade war to impact South Africa – Minister Rob Davies.  South Africa was getting the short end of the stick in the escalating global trade war, which might have a major impact on the country's future industrial, tariff and trade policies, Trade and Industry Minister Rob Davies said yesterday.  Davies attended a meeting of the WTO in France on Thursday, where he discussed the growing plight of developing countries such as South Africa. “The WTO is facing an existential crisis arising from the US’s refusal to agree to appoint the appellate body of the dispute mechanism of the WTO. If this continues until the end of the year the future of the enforcement of tariffs and duties on trade rules is uncertain,” said Davies. He said the US was also increasingly acting in a way where its trade policies appeared to be taken on arguments of national security, but there was no jurisprudence in the WTO for national security interests.

(ii)  South Africa part of collateral damage from US-China trade war.  South Africa may be almost 12 000 kilometres from Beijing and even further away from Washington DC, but the mass producer of fruit and wine is still affected by the US-China trade war. The country is “a small, open economy which grows by selling into the global demand,” central bank Governor Lesetja Kganyago told reporters in Pretoria on Thursday. That’s no different to other emerging economies, which will also be held back, he said.  Ultimately, “there are no winners,” Kganyago said as the SARB held the key interest rate at 6.75% while cutting the full-year economic growth forecast. “Trade wars are silly, you want to control your market, but you still want access to other markets so it’s illogical.”

(iii)  IMF Blog: The impact of US-China trade tensions.   Consumers in the US and China are unequivocally the losers from trade tensions.  Research by Cavallo, Gopinath, Neiman and Tang, using price data from the Bureau of Labor Statistics on imports from China, finds that tariff revenue collected has been borne almost entirely by US importers. There was almost no change in the (ex-tariff) border prices of imports from China, and a sharp jump in the post-tariff import prices matching the magnitude of the tariff. Some of these tariffs have been passed on to US consumers, like those on washing machines, while others have been absorbed by importing firms through lower profit margins. A further increase in tariffs will likely be similarly passed through to consumers. While the direct effect on inflation may be small, it could lead to broader effects through an increase in the prices of domestic competitors.  [The authors: Eugenio Cerutti, Gita Gopinath, Adil Mohommad]

(iv)  WTO DG Roberto Azevêdo's speech yesterday to the OECD Ministerial Council: E-commerce must be a force for inclusion.  As of this month, 77 WTO members accounting for 90% of global trade have commenced negotiations on trade-related aspects of e‑commerce. A first substantive round of meetings was held last week. I understand that delegations discussed proposals on a wide range of issues, such as: facilitating electronic transactions, consumer protection, transparency, and non-discrimination and liability. Further discussions will be held next month. E-commerce issues range widely in their level of complexity and ambition. Time will tell what members can achieve. Ensuring that these discussions remain open to all members is important – but proponents should also be seeking to ensure that poorer countries that want to participate are helped to do so. Ultimately, the test of our success in responding to this revolution will be the extent to which we use it as a force for greater inclusion.

 (v)  The Ottawa Group and WTO reform: summary of Ottawa Group Meeting yesterday in Paris.  Recognizing its importance to the future functioning of the organization, we discussed how best to pursue the development dimension in the context of WTO rule-making. Ministers appreciate Norway’s leadership, including its discussion paper, which lays out the context on development concerns and serves as a useful basis for continued dialogue at the WTO. We agreed that further outreach to the broader membership is required. In addition, ministers were grateful for Brazil’s impressions of the recent ministerial meeting for developing countries hosted by India. The Ottawa Group discussed ongoing work including on the Joint Statement Initiatives, in particular e-commerce, transparency and notification obligations, and industrial subsidies. We welcomed Chile’s update on the recent successful APEC trade ministers’ meeting. We further discussed Japan’s plans for considerations on WTO reform under its G20 presidency.  [Canada: Disagreements over how to overhaul WTO could paralyse institution]

China's Ambassador to Namibia, Zhang Yiming: “As the ‘Grey Rhino’ of China-US trade war rampages, many people are worried that the ‘Black Swan’ of global economic crisis might come in the aftermath."

59 WTO Members yesterday adopted a Joint Statement on Services Domestic Regulation: this paves the way for a successful outcome on this issue at the next WTO Ministerial Conference in June 2020

EU, China, Thailand seek to join WTO consultation over India’s ICT products tariff

The implications of Korea’s experience for developing agriculture value chains in Africa (AfDB)

This report was prepared for the African Development Bank by a multidisciplinary team of consultants under the Korea Institute for International Economic Policy.  Extract from Chapter VI: Conclusions (pdf). The aforementioned changes that have taken place in Africa suggest that the role of the AfDB, as a vanguard of Africa’s economic development and social progress, has to be enhanced. And this study is intended to provide assistance to such determined efforts of the Bank by cataloguing Korea’s experiences.  One of the conclusions that can be drawn from cataloguing Korea’s experiences is that Africa needs to produce more rice to develop robust value chain activities. In doing so, challenges and success can be applied to other grains and agricultural products delineated in the AfDB’s Feed Africa Strategy report. To this end, Korea’s success with increased rice production can offer useful policy references to the Bank. As the gravity of control of the agro-value chains shifted to the market in the post rice self-sufficiency period, the concomitant policy changes can also be more relevant sources of reference that may well be in sync with the realities of Africa’s agriculture today.  [Download the summary version hereGlobal value chains and development paths: a conversation with Caroline Freund]

Malawi records Q1 drop in mobile money activity (ITWebAfrica) 

Despite an increase in subscribers to mobile money services, Malawi recorded low activity in this space in the first quarter of 2019, according to the latest report by the Reserve Bank of Malawi. The National Payment System 2019 First Quarter report stated that only 39.7% of the 6.5 million mobile money subscribers used the service, compared to the 41.1% recorded during the last quarter of 2018. It added that the number of registered mobile money agents rose by 10.1% to a total of 43, 406 in March 2019, but said there was a drop in the number of active agents with only 59.3% recorded as being active during the quarter under review. [Related:  First e-commerce day celebrations held in Nairobi; Western African Digital Pool: updateSA Post Office expects big things from ecommerce platform

Tracking SDG 7: The Energy Progress Report 2019

Sub-Saharan Africa remains the region with the largest access deficit: here, 573 million people - more than one in two - lack access to electricity. The region is also home to the 20 countries with the lowest electrification rates (see figure ES3). Burundi, Chad, Malawi, the DRC, and Niger were the four countries with the lowest electrification rates in 2017. If the rate of progress in expanding access to electricity remained at the same level as that between 2015 and 2017, universal access could be reached by 2030. However, connecting the last of the unserved populations may be more challenging than past electrification efforts, since many such populations live in remote locales or over-burdened cities. A projected 650 million people are likely to remain without access to electricity in 2030, and 9 out of 10 such people will be in Sub-Saharan Africa. Key strategies for closing this gap will include data-based decision-making and advanced policy-planning frameworks, private sector financing, versatile solutions that include decentralized renewables, and efforts to both extend rural electrification and cope with urban densification. [Sanea: South African Energy Risk Report 2019, pdf] 

Today's Quick Links:

Zambia's Ethiopia embassy partners with Addis Ababa Chamber of Commerce

Southern African Science Service Centre for Climate Change and Adaptive Land Management: Research call (pdf)

Central Bank of Nigeria: communiqué from MPC meeting, 20-21 May

Africa CEO Network debuts in Nigeria

Afreximbank releases first quarter financial statements: shows 59% growth in revenue, to $240.71m

AfDB's Independent Review Mechanism: Annual Report 2018

Eritrea: IMF staff completes 2019 Article IV Mission

Inaugural UK-West Africa Agritech Summit

UNSC's debate on Somalia: lengthy summary of the statements