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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Transnet

03 Jun 2019

Diarise:

  1. The Tripartite Sectoral Ministerial Committee (6 June, Addis Ababa)

  2. African Ministers of Trade (AMOT) meeting (7-8 June, Addis Ababa)

Underway in Kigali: African trade unions to discuss improved migration governance (Leadership)

Participants will converge under the auspices of the African Trade Union Migration Network, which is the migration platform of African trade unions that coordinates trade unions and facilitates migration engagement concerning Africa and Africans at the national, regional and continental levels. The event, which starts today, is backed by the IOM, ILO, and the Belgian Trade Union Cooperation Institute, and the Friedrich Ebert Stiftung, seeks to improve Africa’s integration agenda, projects and ensure better practice of migration governance. The conference also seeks to discuss how Workers’ organisations can contribute tangible outcomes in pursuit of the African Union’s theme for 2019 concerning Refugees, Internally Displaced Persons and Returnees.

The AfCFTA one year later: The road travelled and the road towards the launch of the operational phase (AU)

The Assembly of AU Heads of State and Government shall, at the Niamey Extra-ordinary Summit, also make a decision on the location of the secretariat of the AfCFTA, which will have the principal function of implementing the Agreement through a focused work programme. Seven member states - Egypt, Eswatini, Ethiopia, Kenya, Ghana, Madagascar, Senegal - submitted bids by the deadline of 20 March this year. An assessment mission visiting these countries during May, on the basis of which a report will be prepared for consideration by the AU Ministers of Trade and the Extra-Ordinary Summit. It is the results of the assessment mission which will guide the Extra-Ordinary Summit on deciding the host of the permanent AfCFTA Secretariat. The work for the interim and permanent secretariats of the AfCFTA is already being cut out for them. A post launch AfCFTA implementation plan is under preparation and will be submitted to the African Union Ministers of Trade in the first week of June this year, who, if satisfied with it, will convey it to the Extra-Ordinary Summit for its consideration and adoption in July this year. [The author: Ambassador Albert M Muchanga]

African unions want an inclusive free trade agreement

The AfCFTA was discussed at the annual global unions’ forum, supported by the Friedrich Ebert Stiftung, on 13-15 May in Johannesburg. “Unions should collectively demand commitment from the African Union to create opportunities for them to participate and influence trade policies and programmes at the national level and beyond. A transformative AfCFTA can only be achieved if negotiations are inclusive and represent relevant stakeholders, is transparent in its approach, and has the overall aim to achieve a trade agenda that is beyond the narrow interests of state parties but people-to-people centred. Such a transformative trade agenda cannot happen without the strategic and consistent involvement of civil society organizations,” said Hilma Mote from ITUC Africa. “There is an urgent need for social dialogue on the AfCFTA. With high youth unemployment the agreement can create jobs, but these must be decent and sustainable. Social protection is also important. Further ways to monitor the agreement must be put in place,” said Paule France-Ndessomin, IndustriALL regional secretary for Sub Saharan Africa. [Download: Report of the 2019 Africa International Labour Conference, 20-22 March 2019, Kigali]

The AfCFTA and TFTA: differences, progress, potential impact, and why East African businesses need to engage (Botho Emerging Markets Group)

By contrast, the more gradual ratification progress for TFTA has resulted in significantly less media attention and analysis, meaning numerous East African companies which would be directly affected by TFTA are unaware even of its existence, let alone its progress and possible impact. The result is a widespread lack of awareness across the East African private sector – and beyond – of the current state of negotiations and the potential consequences of AfCFTA and TFTA. This knowledge gap represents a critical problem, since businesses should have advance understanding of likely changes, both to engage with their governments for ongoing trade negotiations, and to prepare for the opportunities and risks these agreements might bring.

This brief seeks to address the evident need for sensitisation on the most fundamental AfCFTA and TFTA issues, giving clarity on what each agreement might entail, when, and a snapshot of progress as of the end of May 2019. While drawing attention to a level of uncertainty surrounding AfCFTA which is not currently being acknowledged by its political proponents and the media, it also points to the need for both increased engagement by the East African private sector in ongoing negotiations and industry-by-country analyses following final tariff agreements; importantly, these studies should address not only the more eminent AfCFTA, but also TFTA. [The author: Archie Matheson]


Zimbabwe and the IMF:

  1. IMF Managing Director approves a staff-monitored programme, covering 15 May 2019 to 15 March 2020. The SMP is designed to support the authorities’ reform agenda. The SMP will be monitored on a quarterly basis, and is intended to assist the authorities in building a track record of implementation of a coherent set of economic and social policies that can facilitate a return to macroeconomic stability and assist in reengagement with the international community. Economic policies under the SMP emphasize the restoration of macroeconomic and financial sector stability through:

  2. Staff-Monitored Programme: press release, staff report. Risks to the outlook remain tilted to the downside and include factors both within and outside the authorities’ control. Policy slippages, or interference by vested interests, could impede ongoing efforts to have market-determined exchange and interest rates. Similarly, spending pressures, particularly on wages, social support, subsidies to SOEs and agriculture, and financial sector bailouts could jeopardize fiscal goals. The envisaged deep fiscal adjustment needs to be carefully implemented to avoid a too heavy toll on vulnerable portions of the population. However back tracking on the fiscal adjustment by resorting to central bank financing of the deficit could precipitate a vicious wage-price spiral. Factors beyond the authorities’ control include a worse-than-envisaged agricultural season, exacerbating risks of poverty and social discontent, and a slow recovery in confidence that delays a resumption of economic activity, particularly in export industries like mining. The outlook also does not factor in a significant macroeconomic impact from Cyclone Idai or the drought. On the other hand, there are also potential upside risks if confidence is quickly restored.

South Africa: April trade balance (pdf, SARS)

The SARS trade statistics for April 2019 recorded a trade deficit of R3.43bn. The R3.43 billion trade deficit for April 2019 is attributable to exports of R103.75bn and imports of R107.18bn. Exports decreased from March 2019 to April 2019 by R1.34bn (1.3%) and imports increased from March 2019 to April 2019 by R6.79bn (6.8%). The year-to-date (1 January to 30 April) trade deficit of R7.55bn is an improvement from the R16.82bn deficit for the comparable period in 2018. Exports increased by 17.3% year-on-year, whilst imports for the same period showed an increase of 23.8%. Top 5 countries for exports: China (10.8%), Germany (8.0%), United States (6.9%), United Kingdom (5.7%), India (5.6%). Top 5 countries for imports: China (17.8%), Germany (9.8%), United States (6.5%), Nigeria (6.2%), India (4.8%

Uganda’s external sector: April trade figures (pdf, MoF)

Uganda’s merchandise trade deficit narrowed on a monthly basis to $108.8m in March 2019 from $203.8m in February 2019. Similarly, on an annual basis, it narrowed to $108.8m in March 2019 from $182.7m in March 2018. Export receipts grew by 102% to $606.0m in March 2019 from $300.4m in February 2019, largely driven by higher coffee and gold exports. The value of merchandise imports was $714.8m in March 2019, up from $504.2m registered in February 2019, largely driven by higher private sector imports. In March 2019, Uganda’s largest merchandise trade deficit of $185m was with Asia. However, Uganda traded at a surplus with the Rest of Europe, EAC, Middle East and the Rest of Africa. [Uganda: Debt sustainability analysis report 2017/18]

Custom experts deliberate on termination of pre-shipment inspection (AU)

The AU Technical Customs Working Group on Pre-Shipment Inspections recently concluded a meeting in Soroni, Seychelles, deliberating on the termination of contracts with inspection companies. Mr Aly Iboura Moussa, Head of Customs Cooperation Division, Department of Trade and Industry of the AUC, while acknowledging the complexities of termination of Contracts of Inspection due to contractual agreements, underscored the need for a thorough approach to ensure the capacity of the administrations is strengthen in the process of terminating the inspections. “The use of pre-shipment inspections undoubtedly has a negative impact on the countries that still use them, particularly, with regard to customs capacity building”. Recommendations from the meeting will be submitted to the 11th meeting of Directors General of Customs of the African Union scheduled to be held in Uganda, in September 2019.

Nigeria targets $1.2bn revenue from solid minerals exports (Leadership)

The Nigeria Export Import Bank has signed a tripartite MoU with the National Inland Waterways Authority and Sealink Investment Limited to develop a Sealink project aimed at enhancing non-oil revenue for the country. According to managing director of NEXIM Bank, Abba Bello, the project is expected to generate annual revenue of between $500m and $1.2bn from bulk solid minerals exports from the country. He added that the partnership is intended to bridge infrastructure gap that will promote and enhance trade connectivity as well as spur Nigeria’s regional and global trade competitiveness. Mr Bello said the project would be catalytic to the realization of one of the priority projects under the ECOWAS Community Development Programmes. He said NEXIM’s decision was largely informed by the huge logistics challenges and non-tariff measures along the ECOWAS trade corridor. This, coupled with the desire to both enhance Nigeria’s export to ECOWAS that has muted over the years at about 15% and to encourage formal trade.

Challenges for resolution of banks in Sub-Saharan Africa (World Bank)

While the recent global financial crisis has affected many developed countries, it has had less impact in Africa. Nevertheless, the lessons learned from this crisis are relevant for African countries, especially because banking groups with a head office in Africa have grown rapidly and these groups are systemically present in many of their African host countries. As macroeconomic conditions have deteriorated in many Sub-Saharan African countries in the last two years, the question arises whether the regulatory framework for the financial systems of these countries is strong enough to face a serious financial crisis in the future. This paper highlights the twelve essential characteristics of effective resolution regimes for financial institutions, as provided by the Key Attributes. [The author: Jan Barend Jansen]

Can forests and smallholders live in harmony in Africa? (CIFOR)

To tackle these complex challenges, the Center for International Forestry Research has launched a new initiative: the Governing multifunctional landscapes in Sub-Saharan Africa: Managing trade-offs between social and ecological Impacts. The project will pilot an integrated territorial approach fitting to the particular African realities in – yet to be selected – until 2021. In preparation, CIFOR scientists visited six African countries to conduct rapid assessments on the drivers of smallholder-linked deforestation, and to evaluate suitability of the landscapes for the project. The target countries were: Ghana, Liberia, Uganda, Tanzania, Zambia and Mozambique. Here are our three reflections from the assessments, which we hope will enrich understanding and inspire exchanges on how to set the path forward for integrated territorial approaches in Africa.

Today’s Quick Links:

Full text: China’s White Paper on US economic and trade talks

Burundi fails to meet conditions needed to become SADC member

Realigning the SADC regional energy agenda

Stakeholders call for better collaboration to ensure success of ECOWAS Brown Card Scheme

Do interest rate controls work? Evidence from Kenya

Ghana: Government names new team to head Revenue Authority

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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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