Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo Credit: Stock photo

World Bank's June 2019 Global Economic Prospects: Global growth to weaken to 2.6% in 2019

Growth among advanced economies as a group is anticipated to slow in 2019, especially in the Euro Area, due to weaker exports and investment. US growth is forecast to ease to 2.5% this year and decelerate to 1.7% in 2020. Euro Area growth is projected to hover around 1.4% in 2020-21, with softness in trade and domestic demand weighing on activity despite continued support from monetary policy. Growth among emerging market and developing economies is projected to fall to a four-year low of 4% in 2019 before recovering to 4.6% in 2020. Sub-Saharan Africa outlook:  Regional growth is expected to accelerate to 3.3% in 2020, assuming that investor sentiment toward some of the large economies of the region improves, that oil production will recover in large exporters, and that robust growth in non-resource-intensive economies will be underpinned by continued strong agricultural production and sustained public investment. While per capita GDP is expected to rise in the region, it will nevertheless be insufficient to significantly reduce poverty. In 2020, growth in South Africa is anticipated to rise to 1.5%; growth in Angola is anticipated to pick up to 2.9%; and growth in Nigeria is anticipated to edge up to 2.2% in 2020. The outlook is subject to several downside risks. On the external front, a sharper-than-expected deceleration in activity in key trading partners, including China, the Euro Area, and the United States, could weigh on growth.

World Bank's Global Trade Watch 2018: Trade amid tensions. The early evidence for 2018 and the first quarter of 2019 points to some useful lessons: Trade tensions and tariff increases hurt the countries directly involved the most, although they could have long-term consequences for all countries because of the increase in uncertainty; other countries would do well to stay out of the fight, and continue with trade deals that preserve and improve open markets; and a managed trade deal between the two countries involved, especially one involving promises to increase bilateral purchases, is likely to divert trade away from other countries. It is in the long-term interest of industrial and developing countries for trade tensions to be resolved through a multilateral approach and WTO reforms. [Latin American growth: a trade perspective]

India, SA ask WTO to review moratorium on e-commerce customs duties (Business Standard)

India and South Africa have asked the WTO to revisit the issues related with moratorium on customs duties on e-commerce trade, which is expiring in December this year. In a joint communication submitted to the WTO on Tuesday, both the countries have stated that the "General Council needs to revisit" all the issues on the e-commerce moratorium with the "utmost urgency and in its entirety". The communication said the potential tariff revenue loss to developing countries is estimated at $10bn. It said the moratorium will negatively impact the efforts of many developing countries, which are laggards as far as digital industrialisation is concerned, to industrialise digitally. It could also undermine existing industries and tariffs play an important role in protecting infant domestic industries from more established overseas competitors until they have attained competitiveness and economies of scale.  [India to oppose global rules on e-commerce at this weekend's G20 trade ministerial]

The WTO's 2019 Annual Report was published yesterday: downloads, by chapter

Digital Economy for Africa (DE4A): Senegal Country Diagnostic (World Bank)

The digital economy, which encompasses a wide range of new applications of information technology in business models and products, can spur economic growth, productivity and employment and, with appropriate policies to mitigate inherent risks, has a potential to support inclusive outcomes. In this global context, digital transformation of the economy has become a major objective for the government of Senegal.  This report provides a snapshot of the state of DE in Senegal and uses several World Bank tools and international best practices to provide actionable recommendations to the GoS. The report is the first in the series of DE4A Country Diagnostics.  On Digital Entrepreneurship (pdf):

Senegal has one of the most dynamic digital entrepreneurship ecosystems in francophone West Africa. Three drivers help this nascent startup nation to rise including a relatively widespread use of technologies in West Africa with 36% smart phone adoption rate; a high entrepreneurial activity rate with 39% of the population aged 18 to 64 is either setting up or heading a new company; and availability of diverse co-working spaces including 15 incubators and accelerators, serving the needs of a community of over 2,500 startups and entrepreneurs. To foster a promising digital entrepreneurship ecosystem in Senegal, the government can improve the current regulatory framework. Recommendations include adding different forms of tax incentives, direct financial support (i.e., operationalizing the Digital Development Fund), and access to public markets through innovative public procurement approaches. The report also proposed three high-impact projects to accelerate the growth of Senegal’s Digital Economy including:   [Kenya's Digital Economy Blueprint: can we walk the talk?]

"Why Nigeria’s import, export procedures failed" (The Guardian)

Nigeria’s import, export, regulatory and transit procedures are encumbered by lengthy procedures associated with unnecessary delays, high transaction cost, and increase of cargo dwell time, which make the local ports among the most expensive in the globe. These are the major factors that have bedeviled the successful regulation and smooth trade practices in Nigerian seaports, according to the National Council of Managing Directors of Customs Agents. National President, Lucky Amiwero, in a letter to President Muhammadu Buhari, said all these factors contribute to the inefficiencies in the port system coupled with low draught level of the Nigerian ports. He described these as the main reasons the country lost the transhipment hub status to other West African countries. He identified Cotonou, Lome, Ghana, and Cameroun as countries, which have either completed their deep sea projects or near completion, noting that while Nigerian ports draught is between 8 and 13 meters, which cannot accommodate mega ships, the least draught in other ports is 15 meters.  [Apapa Port: 72-hour ultimatum on trucks should be legally sustained — Customs]

Kenya lifts 2-year ban on Uganda poultry products  (Daily Nation)

Kenya has lifted the ban on poultry products from Uganda following recent bilateral talks between the two heads of state that will also see the country resume beef exports to Kampala. Livestock PS Harry Kimutai says Ugandan firms are now free to bring in products after Kenya recently received official communication from Kampala highlighting measures put in place to control the viral influenza disease that led to the ban. Mr Kimutai also said beef exports to Uganda have resumed after Uganda lifted the decade-long ban. [Boost as Kenyan businessmen seek trade ties with Angola]

Kenya Industry and Entrepreneurship Project: update. Betty Maina, principal secretary for industrialization at the Ministry of Industry, Trade and Cooperatives:  “The project marks an important milestone towards the ongoing digitizing and transformation initiatives for Kenya’s global competitiveness that is expected to create additional jobs for the youths.” Maina revealed that the five billion shillingsproject that is co-funded by the World Bank will also create industry platform to link startups, traditional industries and international networks in select private sector firms for the next six years.

South Sudan and the IMF:

(i)  IMF Executive Board concludes Article IV Consultation. South Sudan is in a deep economic crisis. Economic conditions have deteriorated rapidly since the beginning of the civil conflict in late 2013. Real GDP is estimated to have declined by 2.4% in 2017/18 adding to a cumulated decline of about 24% in the last three years. Overall, real disposable income (adjusted for terms of trade) is estimated to have declined by about 70% since independence in 2011, contributing to an increase in poverty headcount ratio from 50% in 2012 to about 82% in 2016. The peace agreement signed in September 2018 has improved the prospects for lasting peace and economic recovery. The cessation of hostilities last year has already enabled the reopening of some damaged oil wells, which pushed up daily oil production (export) by about 20% in February 2019. Inflation has gradually declined to about 40% in December 2018 from a peak of 550% in September 2016, while the exchange rate depreciated substantially in the last 18 months.

(ii)  2019 Article IV Consultation. The current account balance has worsened in recent years largely due to the decline in oil exports. South Sudan is an oil dependent country, with oil exports accounting for about 97% of total exports of goods and services. The current account balance has deteriorated from 1.7% of GDP in 2015/16 to -4.5% of GDP in 2017/18. While imports have been partly financed by large inflows of donor grants, the deficit has also been burdened by large Transitional Financial Arrangement transfers to Sudan. While the current account deficit is expected to narrow in the coming years with higher oil exports, a structural change is envisaged with the completion of the TFA payments to Sudan, expected in 2021/22.

Related IMF-Africa reports

(i)  Mozambique: IMF Executive Board Concludes 2019 Article IV Consultation. Mozambique’s economic situation had been improving until Tropical Cyclones Idai and Kenneth hit the country in March and April, respectively. Economic growth was recovering gradually and becoming broader based, and inflation reached low single digits. Economic activity is expected to decelerate sharply in 2019 due to the supply shock to productive capacity, but it should rebound to pre-cyclone levels by 2020. Directors commended ongoing efforts to increase the country’s resilience to natural disasters including through the National Resilience Strategy with support from the World Bank and encouraged the authorities to integrate climate change resilience within their broader development agenda. Directors also called for further structural reforms to support inclusive growth, job creation and poverty reduction, including by fostering competition and improving the business climate. They also welcomed the authorities’ plans to establish a Sovereign Wealth Fund to support productivity‑enhancing investments as part of their natural resource management strategy.

(ii)  Namibia: IMF Staff completes 2019 Article IV Mission.  Undertaking reforms to strengthen productivity and competitiveness is a must to lift business confidence and the long-term growth potential of the economy. In parallel with fiscal adjustment policies, special emphasis should be placed on reducing policy uncertainty, streamlining business regulations, removing obstacles that contribute to high electricity and transportation costs (including reforming public enterprises operating in these sectors), and establishing a well-structured wage policy for the public sector to better align wage dynamics and productivity. Over time, it is important to remove obstacles to exports, address the shortage of well-educated and skilled workers, and foster the adoption of new technologies.

Africa’s industrialization under the Continental Free Trade Area: local strategies for global competitiveness (Brookings)

Overall, the stereotypical narrative that African countries are limited to producing and trading goods for external markets is not representative of the continent’s improving supply and demand statistics. Policymakers should now identify the gaps in their national agendas and implement policies that benefit local production and offer enticing opportunities to foreign investment. Investors, on the other hand, should consider where manufacturing inputs can be sourced locally to reduce costs related to transport, import tariffs, and exchange rate fluctuations.  [The author: Landry Signé] [Rwanda: Young Pan Africanists tipped on AfCFTA]

UNCTAD Fact Sheet on Investor-State Dispute Settlement Cases in 2018 (pdf)

At least Treaty-based Investor-state dispute settlement cases were initiated in 2018, all but one under old-generation treaties signed before 2012. The new ISDS cases were initiated against 41 countries. As in previous years, the majority of new cases were brought against developing countries and transition economies.  Developed-country investors brought most of the known 71 cases.

Today's Quick Links:

Ghana cancels rail MoU with China

53 African countries to participate in first China-Africa trade expo

South Africa: There’s no truth to importers’ threats about ‘expensive’ chicken

Kenya: Uhuru directive on cargo a huge relief for traders

UNCTAD, IIRC to help companies report performance on global goals

India: GFI report on potential revenue losses associated with trade misinvoicing


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