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tralac’s Daily News Selection

tralac’s Daily News Selection

10 Jun 2019

A selection of African trade and development events to diarise:

The 2019-2020 Mauritius Budget was presented to the National Assembly today. Download the full Budget Speech on the theme:  pdf Embracing a brighter future together as a nation (953 KB) . Additional documentation is available here.

Supporting Angola’s trade diversification: UNCTAD mission to develop transport, logistics infrastructure and services (10-14 June, Luanda)

15th CAADP Partnership Platform: Enhancing trade and market access for accelerated agriculture transformation (11-14 June, Nairobi)

AUC-IEA ministerial forum: The future of Africa’s energy (12 June, Addis Ababa)

Draft EAC Regional Framework on Trade on Trans-boundary Security: validation workshop (12-14 June, Dar es Salaam)

Launch of the World Investment Report 2019 (12 June, Geneva)

IORA conference: Modernising trade in the Indian Ocean Rim (17-18 June, Durban)


The African Continental Free Trade Agreement: Welfare gains estimates from a general equilibrium model (IMF)

Using a multi-country, multi-sector general equilibrium model based on Costinot and Rodriguez-Clare, we estimate the welfare effects of the AfCFTA for 45 countries in Africa. Three different model specifications - comprising both perfect competition and monopolistic competition - are used. Simulations include full elimination of import tariffs and partial but substantial reduction in non-tariff barriers. Results reveal significant potential welfare gains from trade liberalization in Africa. As intra-regional import tariffs in the continent are already low, the bulk of these gains come from lowering NTBs. Overall gains for the continent are broadly similar under the three model specifications used, with considerable variation of potential welfare gains across countries in all model structures. Extract:

We estimate income and welfare changes for 45 African countries and other world regions. The model simulations use a comprehensive database comprising output, trade flows, and import tariff and non-tariff barriers for 26 sectors in all countries considered. Simulations include full elimination of import tariffs and a 35% reduction in NTBs. We find that the welfare gains from combined tariff elimination and NTB reduction is about 2 to 4%, depending on the model structure used and the extent of NTB reduction considered. Because existing intra-African tariffs are already generally low, overall gains from tariff elimination in the continent are quite modest, with the bulk of gains stemming from the reduction in NTBs. [The authors: Lisandro Abrego, Maria Alejandra Amado, Tunc Gursoy, Garth P. Nicholls, Hector Perez-Saiz] [ pdf Download (3.64 MB) ]

EABC: This week’s budgets must focus on value chains (IPPMedia)

The East African Business Council has urged partner states to consider lowering the cost of doing business in the bloc in a bid to promote local manufacturing, regional value chains, and create employment opportunities. “As EAC partner states unveils their budgets for the 2019/2020 fiscal year, governments should consider improving transport infrastructures, energy and access to credit to ease doing business in the EAC,” said a statement by EABC signed by Peter Mathuki, the executive director. “The EAC partner states’ budgets for the financial year 2019/2020 should prioritize achieving the vision of the EAC industrialization strategy which includes being globally competitive, environment-friendly and ensure a sustainable industrial sector,” the statement intoned. The EABC suggested that partner states budgets for the coming fiscal year should address the challenges of EAC regional integration, such as the high costs of doing business and the cost of borrowing, allocate budget funds for implementation and monitoring of the Common Market and Customs Union protocols and increasing intra-EAC trade through the elimination of non-tariff barriers. The budgets should also focus on improving trade facilitation, fast track the finalization of the EAC Common External Tariff to avoid trade distortions, elimination of work permit fees and restrictions for East Africans and enhance public-private dialogues for trade and investment. [Kenya’s budget reading set for 13 June: a KPMG commentary]

Third time around, EAC states fail to agree on joint tax bands (The East African)

East African member states have failed for the third consecutive time to agree on a common tariff for goods entering the region, casting doubts on the proposed review of the Common External Tariff. At a recent meeting in Entebbe Uganda, countries maintained hardline positions on how they expect the three-band tariff structure to be amended. The dispute largely revolves around the number of tariff bands to be included in the new structure and the type of goods to be put in each new band. Kenya’s Principal Secretary in the department of Trade Chris Kiptoo told The EastAfrican that member states have now gone back for further consultations in their home countries and hope to resume talks in October.

Uganda plans to restore old railway at $205m (The East African)

Uganda will invest $205m in restoring an old railway line linking Kampala to Malaba on the Kenyan border following delays in securing funding for the standard gauge railway. The upgraded meter gauge railway line is expected to boost monthly freight capacity to 120,000 metric tonnes from the current 20,000 tonnes by 2026, Stanley Sendegeya, Uganda Railways Corporation’s chief financial officer, said in an interview. “We keep turning down customers because with the little money from government, amounting to $2m annually, we can’t handle much business,” he said. “Customers opt to use trucks.”

G20 Ministerial Statement on Trade and Digital Economy

pdf Extract from the lengthy statement (89 KB) : We, the G20 Trade Ministers, exchanged views on the current trade environment. We agree that expanding trade and investment will be important factors to promote future widespread economic prosperity and sustainable growth. We note that trade and investment growth slowed in 2018 and that this is contributing to a weaker global growth outlook for 2019-20 than previously projected. While growth is expected to increase in 2020, downside risks arising from the current trade environment could undermine this growth. We continued our dialogue to mitigate risks and enhance confidence among exporters and investors, as we committed to do in Mar del Plata last year. We affirmed the need to handle trade tensions and to foster mutually beneficial trade relations. We strive to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, to keep our markets open. International trade is important for productivity, innovation, job creation and development. We recognize the contributions that the WTO has made to this end. We agree that action is necessary to improve the functioning of the WTO. We recognize our business community’s call for the G20 to continue supporting the multilateral trading system.

South Africa and the G20: (i) South Africa calls for a developmental-oriented digital economy; (ii) A summary of Minister Ebrahim Patel’s input

G20 side event: Our Future in the Digital Age. Opening remarks by Christine Lagarde: “Our findings will be released in a new joint IMF-World Bank paper coming later this month and this afternoon I would like to share with you a few highlights. First, countries overwhelmingly see fintech as transformative for financial inclusion. They recognize that inclusion plays a key role in promoting growth, opening access for poor and rural communities through lower costs, and facilitating women’s participation in the formal economy. Indeed, as IMF research shows, fintech has helped to close the inclusion gender gap in some countries, but not everywhere. Gaps in access to technology are one explanation, but even when access is equal, there appears to be lower usage by women. For example, in Egypt, Ethiopia, and India, men are 20 percentage points more likely than women to have their own phone; in Bangladesh, men are 22 percentage points more likely than women to have a mobile money account. Women also tend to use digital services less than men, at least in some countries, possibly due to social norms, or issues related to affordability and financial literacy. That is why we believe increasing financial literacy can play a key role in generating higher gender participation in every economy. Second, countries are asking for greater international cooperation in fintech:

2X Challenge members launch business competition in Africa (EIN)

Leading development finance institutions including FinDev Canada, CDC Group of the UK, Proparco of France, and the Overseas Private Investment Corporation of the US, along with the Mastercard Foundation announced at the Women Deliver 2019 Conference that they are joining forces to sponsor the 2X Invest2Impact – Business Competition. While there is no shortage of business competitions on the African continent, and many women-focused entrepreneurial forums, programs, and initiatives, 2X Invest2Impact will stand out by focusing on growth stage women-owned businesses, poised for investment capital. 2X Invest2Impact will provide them with mentorships, business development services, visibility, and the opportunity for funding. “The credit gap for women-owned SMEs globally is estimated at $287bn. This means that 70% of women owned SMEs cannot access the financing they need to grow a business. This competition aims to directly address this,” said Paul Lamontagne, Managing Director of FinDev Canada. The goals of 2X Invest2Impact are to: [Nigeria: Dangote seeks law on gender equality; Aubrey Hruby: Congress must invest properly in the DFC]

Today’s Quick Links:

Anzetse Were: Africa should be proactive to cash in on US, China fallout

China’s trade surplus in May hits $41bn, double than expected

Eswatini, Afreximbank sign declaration for a credit facility of up to $140m

Sierra Leone’s tax reform: World Bank’s engagement note

Tanzania seeks EACO, SADC telecommunications uplift

Allianz Group: Nigeria ranks highest in piracy, vessel stowaways

IMF Blog: The rise of powerful companies

Google made $4.7bn from the news industry in 2018, study says

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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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