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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo Credit: Asia Society

31 May 2019

Diarise: 

(i)  G20 Ministerial Meeting on Trade and Digital Economy (8-9 June, Tsukuba, Japan). Tsukuba, the ministerial meeting’s host city, is known as Japan’s leading city of research and academia, producing scores of cutting-edge technologies. Roughly 9,400 researchers, students and the like from about 140 countries also live in this international city.

(ii)  Ethiopia’s transport sector: measuring its value chains and exploiting its potential (12-13 June, Addis Ababa).  This seminar is part of the UNCTAD – Ethiopia project on services trade in Africa (pdf). The project aims at unlocking the potential of services trade of partner countries by increasing capacity to measure the contribution of services to regional value chains and to explore the value added by domestic and foreign firms. In Ethiopia, the focus is on transport services owing to its catalyzing capacity and strategic relevance for the economy.

(iii)  Russia-Africa Summit (22-24 October, Sochi). The summit will be co-chaired by Russian President Vladimir Putin and Egyptian President Abdel Fattah el-Sisi.  On 23 October, the leaders of Russia and Egypt will open an economic forum attended by Russian and African officials and representatives of major businesses.

Perspectives on the AfCFTA:

(i)  Landry Signé, Colette van der Ven:  Keys to success for the AfCFTA negotiations (Brookings). The extent to which the AfCFTA will reduce barriers to intra-African trade is largely linked to the ongoing negotiations. This piece explores the implications of those negotiations, with a particular focus on market access for goods and services and rules of origin. It also briefly touches upon the outstanding regulatory issues. Extract from the Recommendations (pdf):  With respect to RoO, it is important that they are sufficiently flexible, with a view to enabling SMEs in least developed AfCFTA State Parties to take advantage of AfCFTA preferential tariffs. Complicated and stringent RoO could risk straining the institutional capacities of African countries ill-equipped to manage complicated RoO, especially in the context of porous borders. Moreover, while the acquis and the existing RoO make full RoO harmonization impossible, negotiators should ensure, at a minimum, that the RoO are built upon existing regimes.

In the context of the Phase II negotiations, a number of key questions regarding scope and objective must be clarified. Given the vast disparity between the development of different African countries, questions regarding capacity building for Phase II are especially critical. The AU, RECs, and international organizations should come to an agreement about who is going to foot the bill for the additional resources that will be required to make the regulatory protocols workable for all African countries, especially LDCs.  Finally, the negotiators must clarify the numerous ambiguities currently present in the AfCFTA Agreement. They could do so by creating a roadmap of the remaining unknowns: for example, who is negotiating what with whom, how reciprocal MFN is being approached, what will happen to customs unions if not all members have ratified/signed on to the AfCFTA, and how conflicts will be resolved. These additional clarifications will be critical for the AfCFTA’s successful implementation going forward.

(ii)  Joseph Atta-Mensah (Macroeconomics and Governance Division, UNECA): “Economic pan-Africanism has come of age. We have been blessed with a crop of pan-Africanists who have negotiated this Agreement, in a record period of just two years, and have ensured it has come into force in just over one year of its signing.”

(iii)  Nana Osei Bonsu (Private Enterprise Federation, Ghana):  “It borders on government revenue, the elimination of tariffs is going to affect government revenue. And if the revenue is not there, the government is going to look at the domestic private sector. We need to identify the items with a 90 percent liberalization with a low impact on government’s revenue. This will reduce the burden of increasing taxes."

(iv)  Related:  Brahima Coulibaly and Ngozi Okonjo-Iweala:  Making globalization work for Africa;  Wesgro welcomes coming into force of Africa trade agreement;  Turkish investors see boon in pan-African trade pact;  Brookings Figures of the week: With AfCFTA officially in force, Africa is now the largest free trade area

Mozambique:  Two new World Bank working papers

(i)  The cassava value chain in Mozambique. Cassava is the principal starch in  Mozambique, at 30% of calories. It can be stored unharvested up to 30 months, but fresh cassava lasts only three days once harvested. Most processing in Mozambique is artisanal, to eliminate cyanogenic glycosides in the 90% of production from pest resistant bitter varieties. Only 6% of production in 2011 was used commercially for non-food, two-thirds for feed and one-third for starch. Low levels of productivity for cassava compared to elsewhere and poor transportation are the main barriers to the development of a processing industry.  To support industrializing the cassava value chain, the main priority should be to increase farm productivity and reduce post-harvest losses. Beyond that, the Government should (inter alia, pdf): Adopt a specific "Master Plan to Develop Cassava Value Chains" similar to Nigeria, Ghana, and some Asian countries with higher-level development of cassava; Set up a Platform and means to coordinate, monitor, and evaluate implementation of the Master Plan over time;  Allocate resources and develop and adopt policies to enable new businesses in the cassava value chain—such as those related to food safety still to be introduced in Mozambique—and regulate and further legislate biofuel production to support development of the cassava value chain.

(ii) The plantation forestry sector in Mozambique: community involvement and jobs.  Mozambique had 60,000 hectares of large-scale commercial planted forest in 2009, supporting about 3,000 full-time-equivalent jobs. Very little growth in large-scale commercial planted area has occurred since 2009, unlike what would be required to meet predictions at the time of 1,000,000 hectares planted by 2030. Labor costs are three to four times lower in plantation forestry in Mozambique than in Brazil, South Africa, and Uganda. Yet, unit costs per cubic meter of eucalyptus timber produced in Mozambique are higher due to lower tree volume growth rates, skills gaps, and employee absenteeism up to 50 percent. Yet, deforestation and imports of high-end wood products are rekindling interest in plantation forestry, with recognition of the need for community involvement. Integration of smaller-scale forestry into community land use patterns is taking off. Recommended actions include:

Ghana: Government to monitor operations of horticulture value-chain (Business Ghana)

Dr Owusu Afriyie Akoto, Minister of Food and Agriculture, said as part of the measures regulatory bodies would strictly monitor all the farming processes from acquisition of seedlings, field practices, harvesting, storage, packaging, and to the point of exit. Dr Akoto explained that new measures had been introduced as a result of consistent rejection of vegetables earmarked for exports at the local exits due to non-compliance to production protocol. Giving details of issues that had resulted in the indefinite suspension of export of vegetable,s namely Capsicum, Solanum, Luffa and Leafy Vegetables, the Minister said in the first five months of 2019, there were 120 rejects of vegetables earmarked for export at the local level while 20 rejects were recorded at the European market.

South Africa: New competition legislation could undermine manufacturing competitiveness  (Engineering News)

The German Wirtschaftswunder in the 1950s was largely SMME driven, relying on a deconcentrated base of small family owned businesses with access to a high skills base. South Africa does not have this infrastructure, and therefore will struggle to create investment at a scale sufficient to drive large scale job creation. In the absence of such a base, the Far Eastern model of large enterprise-led growth is apposite: the chaebol in Korea and the keiretsu in Japan led to the creation of large, globally competitive enterprises that in turn created a supplier base of SMMEs. Given South Africa’s current established industrial base, the Manufacturing Circle believes that industrial policy should be focused on leveraging off manufacturing at large scale.  This will arrest de-industrialisation and job losses, and act as the engine for the growth of a vibrant SMME sector. Herein lies significant opportunity:  [The author: Manufacturing Circle's Philippa Rodseth]  

Tanzania: Tancoal salutes JPM for barring coal imports (IPPmedia)

President John Magufuli’s decision [in 2015] to bar importation of coal from South Africa has seen Tancoal Energy Limited increase production to meet demand of local manufacturers mostly cement industries hence contributing to rapid industrialization the 5th Phase Government. In a presentation at a mining industry conference and exhibition held in Dodoma last week, the company’s CEO, James Shedd said President Magufuli’s order also helped save the country from using foreign currency unnecessarily. “The President’s decision has led to an increase in the number of industries which are now purchasing coal since 2015 because since then, the number of new customers have emerged in both, Tanzanian market and external market, especially in Uganda and Rwanda,” Shedd revealed. [Tanzania:  Cashew nuts exports interruption impacts on Mtwara Port performance]

Today's Quick Links:

Ghana Trade Hub Mobile App: Ghana Revenue Authority registers more than 10,000 importers

African Union:  Prioritizing food safety in Africa emphasized as implementation of Malabo Commitments gather momentum

South Africa bans livestock imports from Lesotho after anthrax outbreak

Ghana: Agriculture stakeholders ask govt to check sale of fake seeds

Kenya launches Irish potato regulations to improve standards

Consortium launches initiative to scale up agribusiness in Kenya, Ghana, Zambia

AFP:  Ravages of time on an African cocoa plantation

 

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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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