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tralac’s Daily News Selection

tralac’s Daily News Selection
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19 Jun 2019

Starting today, in Harare: Zimbabwe’s National Consultative Forum on the AfCFTA

AfCFTA negotiations: an important update from @TradeOfficeNG. In Abuja today (19 June) ECOWAS-15 regional stakeholders commence a technical meeting to finalize the Market Access Offer (Schedule) of Tariff Concessions for Trade in Goods for the operational launch of the AfCFTA in July. The Goods Market Access Offer (Schedule) shall establish the 90% level of ambition (non-sensitive) and sensitive lists, and staging periods, for the ECOWAS-15, in the AfCFTA. In the AfCFTA, the ECOWAS-15 is negotiating, collectively, as a Customs Union, with a common, undifferentiated Goods Schedule that shall preserve its integrity as a Customs Union.

SWIFT African Regional Conference (18-20 June, Accra): regional and country trends in messaging traffic

Data released at the conference shows that SWIFT FIN messaging traffic in Africa has grown by 4.4% in the year-to-date. Figures are even stronger in the West African Monetary Zone, where SWIFT traffic increased by 29.0%, far exceeding SWIFT global traffic growth of 6.7% for the same period. Ghana and Nigeria saw growth of 32.1% and 24.5% respectively. According to the latest SWIFT figures, total traffic growth in Africa has decelerated since this time last year, when it reached 16.7%. This is likely driven by slower economic growth in several African countries, including South Africa. SWIFT traffic growth in SADC dropped to 1.6% from 17.4% in the same period in 2018. Traffic growth in South Africa specifically has slowed to 2.9%, down from 14.4% at this time last year. The overall figure does not, however, reflect the strong results in many African markets. In addition to countries in West Africa seeing robust growth such as the Gambia at 18.9%, Liberia at 13.8% and Sierra Leone at 22.6%, several markets in East Africa also experienced strong traffic growth. Kenya and Rwanda saw an increase of 9.4% and 37.1% respectively, versus the same period in 2018. [SWIFT’s Chief Executive: Only favourable regulatory framework will boost intra-African trade; President Nana Addo Dankwa Akufo-Addo: summary of keynote address]

SWIFT’s RMB Tracker: June 2019 special edition

In April 2019, the RMB’s share of international payments currently sits at 1.88%. Looking at cross-border payments, and excluding intra-Eurozone payments, the figure falls even lower to 1.20%. Africa’s adoption of the RMB appears to be increasing. The total payments in all currencies from China to Africa increased by 67.05% in Q1 2019, compared with Q1 2016. But, the amount of RMB used increased by 53.48%. RMB payments from Africa into China have also grown. The total across all currencies shows a healthy increase of 27.76%. But, during the same period, the proportion of RMB used for payments increased by a staggering 123.01%.

Port development and competition in East and Southern Africa: prospects and challenges (World Bank)

Port Development and Competition in East and Southern Africa analyzes the 15 main ports in East and Southern Africa (ESA) to assess whether their proposed capacity enhancements are justified by current and projected demand; whether the current port management approaches sufficiently address not only the maritime capacity needs but also other impediments to port efficiency; and what the expected hierarchy of ports in the region will be in the future. However, in the case of many of the ports, the issue of landside access - the ports’ intermodal connectivity, the ease of international border crossing, and the port-city interface - is more important than the need to improve maritime access and capacity. The analysis finds that there is a need to improve the operating efficiency in all of the ESA ports, as they are currently less than half as productive as the most efficient ports in the matched data set of similar ports across the world, in terms of efficiency in container-handling operations. Finally, given the ports’ geographic location and proximity to main shipping routes, available draft, and the ongoing port-and-hinterland development, the book concludes that Durban and Djibouti are the most likely to emerge as the regional hubs in ESA’s future hub-and-spoke system. [ pdf Download (5.96 MB) ]

Profiled main finding: There is an urgent need to increase maritime capacity in all the East and Southern Africa ports, with certain caveats. The study has highlighted the growth trends across all the commodity groups in the East and Southern Africa (ESA) ports, and the resulting implications for capacity: Depending on growth rates, overall container demand in the 15 ESA ports will start to exceed current total capacity already by between 2025 and 2030; Dry bulk handling capacity gaps are already seen and are expected to be the largest in the ports of Mombasa (30 million tons by 2050), Maputo (15 million tons), Dar es Salaam (8–10 million tons), Berbera (over 7 million tons), and Durban (about 5 million tons); In the case of general cargo, the capacity gaps are neither as large nor expected as soon. No gaps at all in the base case scenarios are expected for the ports of Djibouti, Berbera, Dar es Salaam, Maputo, Durban, or East London; In the case of liquid bulk, demand is expected to be above capacity in a number of the ports by 2020–25. The capacity gap by 2050 will be particularly large in absolute terms at the ports of Mombasa (20 million tons), Djibouti (about 18 million tons), Dar es Salaam (15 million tons), and Beira (8 million tons), and it will be large relative to available capacity at Port Louis and, especially, Toamasina. [The authors: Martin Humphreys, Aiga Stokenberga, Matias Herrera Dappe, Atsushi Iimi, Olivier Hartmann]


Mozambique and the IMF:

  1. 2019 Article IV Consultation. The outlook for 2019 is impacted by the extensive damage from TC Idai and Kenneth. While it is too early to assess the impact of TC Kenneth on growth and inflation, preliminary projections suggest that real GDP growth in 2019 would decelerate to 1.8% owing mainly to losses to agricultural production and disruptions to transport, communications and services. Given the adverse supply shock to food availability in Beira and neighboring districts, inflation is projected to pick up to 8½ percent (y/y) by end-2019.6 Considering the limited room to reallocate budgetary resources, the primary fiscal deficit after grants is projected to reach to 2½ percent of GDP in 2019 due to lower tax collections in the cyclone-hit areas and higher spending related to emergency relief and reconstruction. Large BOP gaps are expected. The non-megaproject current account deficit is estimated to widen after TC Idai, to around 27% of GDP in 2019. Replacement for locally-grown foodstuffs, such as rice and maize, and reconstruction materials along with decreases in export receipts, including from Beira’s port services, will create a significant BOP gap. While external grants are expected to cover most of the external financing shortfall, the authorities will close the remaining BOP gap projected for 2019 with the recent RCF disbursement. [ pdf Article IV Consultation Staff Report (1.60 MB) ]

  2. Selected Issues report: Mozambique’s natural gas resources – tradeoffs and opportunities. It applies the Debt, Investment, Growth and Natural Resources (DIGNAR) model to analyze the macroeconomic effects of alternative scenarios of scaling-up public investment in a volatile and exhaustible resource revenue environment to meet the country’s development needs. The model results indicate that prudent and gradual investment scaling-up is preferable to aggressive, front-loaded investments given, inter alia, absorptive capacity constraints and private sector crowding-out effects. It also shows that external savings—perhaps put in a sovereign wealth fund—would mitigate Dutch disease effects and serve as much needed fiscal buffer. [ pdf Selected Issues paper (1.15 MB) ]

Related:

Anadarko’s statement announcing its Mozambique LNG final investment decision: “The Anadarko-led Area 1 Mozambique LNG project will be Mozambique’s first onshore LNG development, initially consisting of two LNG trains with total nameplate capacity of 12.88 million tonnes per annum (MTPA) to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1. The project has successfully secured in aggregate 11.1 MTPA of long-term LNG sales (representing 86% of the plant’s nameplate capacity) with key LNG buyers in Asia and in Europe. Additionally, the project is expected to have a significant domestic gas component for in-country consumption to help fuel future economic development.”

Reuters: “At $20bn, today’s FID is the largest sanction ever in sub-Saharan Africa oil and gas,” said Jon Lawrence, an analyst with Wood Mackenzie’s sub-Saharan Africa upstream team. Still expected this year are approvals from Exxon for a 15.2 mtpa project also in Mozambique, and from Russia’s Novatek for its 19.8 mtpa Arctic LNG-2 plant.

“The ECOWAS single currency is no longer a technocratic utopia”: Ivorian finance minister Adama Koné  (EcoFin)

Finance ministers and Central Bank Governors of the Economic Community of West African States gathered in Abidjan on 17 June to discuss ways to accelerate the creation of the single currency set to come out by 2020. Speaking during the meeting, the Ivorian minister of finance, Adama Koné, admitted that many challenges remained to be met until the project was completed. But there is “a political will” of West African authorities, many of whom are sometimes accused of being reluctant to abandon the highly controversial CFA franc. “The single currency is no longer a technocratic utopia,” he said. According to the official, hurdles to the currency’s creation mainly relate to the free movement of goods, capital and persons within the ECOWAS region. This meeting comes at a time when many observers have expressed doubts about the capacity of the countries to achieve this objective.

ECOWAS Committee holds workshop on measurement harmonisation (GhanaWeb)

The ECOWAS Committee for Metrology (ECOMET) and partners will, over the next three days, deliberate on and adopt drafts documents related to the calibration guides and harmonised verification procedures of measuring instruments to be used by member states. Professor Alex Dodoo, the Director-General of the Ghana Standards Authority, said countries like Ghana and other West African countries ought to work harder than before for the establishment of quality infrastructure to become integrated into the global network of quality and competitive trade. UNIDO’s Mr Fakhruddin Azizi said the implementation of the WAQSP had led to the creation of the ECOWAS Quality Agency (ECOWAQ) with a mission to ensuring the coordination and serve as the secretariat of the various components of the Regional Quality Infrastructure.

pdf AU Strategy for Gender Equality and Women’s Empowerment 2018-2028 (1.58 MB) : extract on Trade and Enterprise

The AU’s comparative advantage: The Continental Free Trade Area has been launched and shows promising signs of accelerating growth. The AU places a particular emphasis on increasing skills in science and technology, trade, the blue economy, and manufacturing and high growth agricultural value-chains. The AU can leverage public-private partnerships to identify solutions, innovations and opportunities. AU Agenda 2063 is prioritising the use of technology to improve agricultural activity especially for low scale farmers, the majority of whom are women. The Pan African E Network is an opening for a gender and ICT initiative. Informal cross-border trade, a sector in which women predominate, represents a significant volume of the total trade. Although women are breaking into traditionally reserved industries like mining, maritime, aviation, construction, IT and processing, the vast majority still operate informally. For example in Togo, women are important economic actors and contribute 46% of GDP. However, women’s enterprises are mainly informal, with over 70% representation in this sector through small craft and trade activities. Although 54% of the workforce is made up of women, there are only 30% women in manufacturing and 40% in agribusiness. Africa is embarking on major infrastructure projects, within countries and across borders. Construction is traditionally male dominated. The coming decade offers the opportunity to open up infrastructure to greater participation for women in the design, implementation, and benefits that ensue.

The AU willIntervention 1.2: Integrate and implement gender dimensions into AU Flagship projects, transformational initiatives and protocols on economic empowerment, financial inclusion and social protection, set-up African Women’s Development Fund (Fund for African Women 2) and de-risk banking and trading for women. Activity 1.2.1.1: Mobilize technical expertise and funding to develop knowledge and accountability tools to support effective mainstreaming and accountability for gender into all major continental transformational projects and AU protocols, set-up African Women’s Development Fund (Fund for African Women 2) and pilot projects to de-risk banking, formalize trading and recognize care work.

Belt and Road Economics: opportunities and risks of transport corridors (World Bank)

This study analyzes the economics of the Belt and Road Initiative with a particular focus on connectivity. It covers three main areas of analysis. First, it assesses the connectivity (e.g. transport, trade, investment) gaps in the BRI region. Second, it examines the economic effects of the proposed BRI infrastructure improvements, including the impact on international trade, cross-border investment, allocation of economic activity, and inclusive growth in the BRI countries. Third, it identifies complementary policy reforms and institutions that will support welfare maximization and mitigation of risks for all BRI economies. [World Bank: A framework to assess debt sustainability and fiscal risks under the Belt and Road Initiative]

Today’s Quick Links

Three new UN reports:

UNDESA: 9.7 billion on Earth by 2050, but growth rate slowing; UNICEF and WHO: Billions globally lack ‘water, sanitation and hygiene’; UNHCR: UNHCR’s annual Global Trends Report

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