Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Eric Montfort | Flickr

Today, in Rome: The Third AU-EU Agriculture Ministerial Conference is held on the theme; Promoting Sustainable Regional Agricultural Value Chains. Downloads:

Concept notes for the four sessions, seven side events. Session themes: Agricultural investment; Agricultural research and innovation; Digital solutions in agriculture; Sanitary and phytosanitary standards and food safety. Side event themes: TFRA recommendations, with focus on climate action; Continental strategy for geographical indications in Africa; Africa Food Safety Agency; Opportunities and benefits for women’s engagement with the agri-business development; Modernizing Africa’s agricultural value chains; Financing ETC.

South Africa, India at the WTO: Industrialized nations oppose proposal to reassess revenue loss due to moratorium (LiveMint)

The US and several industrialized countries severely opposed a joint proposal by India and South Africa at the WTO, Monday, for reassessing the revenue and other implications arising from the existing moratorium for not imposing customs duties on electronic transmissions on developing countries. At a specifically convened WTO General Council meeting to discuss the joint proposal from India and South Africa, New Delhi’s trade envoy Ambassador J.S.Deepak told his counterparts from the US and other countries that the magnitude of the “potential tariff revenue loss” due to the moratorium is around $10bn for developing countries as against only $300m for the WTO High-Income Members. The developing countries, he argued, “have the opportunity to generate 40 times more tariff revenue by imposing customs duties on ET (electronic transmissions) as compared to the developed countries, many of which have almost zero bound duties on physical imports of digitizable products,” said a participant, who asked not to be quoted.

Effectively, around 95% of world’s total tariff revenue loss due to the moratorium for not levying customs duties will be borne by the developing countries. In a measured response to the criticisms and opposition from the developed countries, South Africa’s trade envoy Ambassador Xolelwa Mlubi-Peters told her counterparts from the developed countries that it is incorrect to estimate revenue losses from using effective applied tariffs instead of bound tariffs. Even by using the effective applied duties instead of bound rates as argued by several countries at the meeting, “developing countries stand to lose more than 20 times of tariff revenue as compared to the developed countries,” she suggested. [DG Azevêdo: “WTO reform and development are intrinsically linked”]

AfCFTA updates: South Africa, Morocco, private sector involvement

  1. South Africa and the AfCFTA: extracts from a presentation by the DTI’s Wamkele Mene to Nedlac’s trade and industry committee (pdf, AgBiz). Strategic importance of the AfCFTA to South Africa: The African market provides SA with alternative market for export of value added goods and services. SA’s total trade with Africa amounted to R421bn in 2017 (exports: R311bn, imports: R109bn). SA had a trade surplus of R202 billion. Manufactured goods amounted to 64% of SA exports to the Continent. SA’s export destination is East and Southern African region, primarily SADC. AfCFTA presents an opportunity for expansion to new markets in West and North Africa. After entry into force of the Agreement, SARS shall introduce legislation to implement the agreed preferential treatment. The Customs and Excise Act amended to: include new tariff structure, Rules of Origin and attendant certificates, Import permits, Tariff Rate Quotas.

  2. Morocco and the AfCFTA: The Committee of Foreign Affairs and National Defense and Islamic Affairs and MREs (Moroccans Residing Abroad) in the parliament ratified, Wednesday, a partnership agreement in the field of sustainable fishing with the EU and an agreement to establish the African Continental Free Trade Agreement.

  3. AU’s Khauhelo Mawana urges African businesses to take lead in AfCFTA. ”Multi-national businesses are already strategizing to take full advantage of the AfCFTA market. Some business delegations have visited the AUC enquiring on how they can invest on the continent within the context of the AfCFTA. African businesses should take the lead in trading in the AfCFTA market. It is their market.”

Corporate Council on Africa’s US-Africa Business Summit: selected updates

  1. The US International Trade Administration website has opened a Prosper Africa section.

  2. New members of the President’s Advisory Council on Doing Business in Africa. US Secretary of Commerce Wilbur Ross announced that the Department of Commerce, on behalf of President Trump, has appointed 26 members to the President’s Advisory Council on Doing Business in Africa (PAC-DBIA for its 2019-2021term. US Deputy Secretary of Commerce Karen Dunn Kelley: “Over the next two years, the PAC-DBIA will continue to serve as an important forum for dialogue between the US and Africa, with a special focus on advancing the goals of the Prosper Africa initiative”. The appointed members for the 2019-2021 term of the PAC-DBIA are:

  3. US Department of Commerce: Deputy Secretary Karen Dunn Kelley. When it comes to trade, however, there is room for great progress and opportunity. US exports into Africa have decreased by 32% from their 2014 high. And we want to work with you to better understand how to reverse this trend. We know that American companies offer an unrivaled value proposition. Yet, we have lost ground to the increasingly-sophisticated, but too often opaque business practices of foreign competitors. There are many reasons for the decline in US trade. Within the United States, the Government’s export credit and other financing tools were sidelined or not optimized for current challenges. Many US small and medium sized enterprises have been unaware of the US Government’s export, investment, and risk-mitigation tools. And, the US Government’s personnel in Africa too often worked in silos. Obstacles for US companies within Africa are also substantial. The President’s Advisory Council on Doing Business in Africa noted in their 2018 report, “one of the main reasons US firms are not winning projects in Africa is because they are not competing.”

    The US Department of Commerce has also signed MOUs with the governments of Cȏte d’Ivoire, Ethiopia, Ghana, and Kenya to increase bilateral trade and investment. Today, I’m very pleased to add another nation to that list, as we announce that the United States will be signing a Memorandum of Understanding with Mozambique. These MOUs are designed to collectively identify priority projects in key sectors. The United States will then share that information with US companies to pursue the identified projects, as well as identify US Government resources. The MOUs also establish a forum for the governments to address and resolve business climate issues.

  4. Aubrey Hruby (Atlantic Council’s Africa Center): “The Trump administration is trying to expand the commercial toolbox that exists to help US companies in African markets. Will it work? We don’t know because the global context is what it is. Returns in the US are very high. So I’m not sure that US companies will want to venture outside when they can just stay at home and make a lot of money. But we have more tools than we’ve ever had before.” [Mozambique: OPIC signs letter of interest to invest in cashew company]

Yomi Kazeem: What does Facebook’s Libra currency mean for Africa? (Quartz)

While it’s unclear how adoption of Libra for everyday use in trade and payments will go, there’s an obvious opportunity for an immediate impact in Africa: remittances. Here’s how Facebook puts it: “Success will mean that a person working abroad has a fast and simple way to send money to family back home.” In the company’s best-case scenario, Libra will serve as a more effective cross-border money transfer service based on the promise of speed, lower costs and increased convenience for both senders and receivers. And that poses an existential threat to remittance companies, some of them being younger app-based players like Azimo and WorldRemit and could even hurt traditional behemoths like Western Union and Moneygram. [The consolidation of international correspondent banking relationships in Africa: workshop update]

West Africa to ditch the colonial CFA Franc and establish a regional pan-African currency by 2020 (African Exponent)

After two days of high-level discussions, West African ministers and central bank governors recently agreed on a draft report on the establishment of a regional currency. The report will be reviewed by heads of State in July 2019 on the establishment of a new regional currency. Among the key issues agreed upon are the exchange-rate regime and the monetary policy framework. The Ivorian Finance Minister, Adama Kone said: “At a ministerial level, we’ve established a roadmap.” This means West Africa is on track to have a single currency which will replace the problematic CFA Franc in eight countries in West Africa, provided they meet the convergence criteria. In the words of Guinea’s Alpha Condé: “I am a supporter of a regional currency and in 2020 we will have a single currency in the ECOWAS countries, whether they speak English, Portuguese or French, and CFA franc will become outdated.” Hopefully, the bloc does not postpone the process yet again as has happened since the adoption of the ECOWAS Monetary Cooperation Programme of 1987 in Conakry.

South Africa: Ebrahim Patel and his super-ministry in pole position to rev up policy (Business Day)

One casualty of the top-heavy ministerial mess Ramaphosa inherited was suboptimal co-ordination between the different departments, which may become less of a problem in the industrial arena with Patel’s ascendancy. The government itself recently reported that the state’s R50bn investment incentive basket of 244 programmes has been spread over an array of departments, and cabinet concluded that there should be better co-ordination between them all. The new super-department will allow for much improvement in this area, particularly in the vital areas of BEE and industrial support. Given that incentives are a key consideration when investors — local and offshore — weight up the merits of an expansion or a new project in SA, an overhaul is wise. And overdue. [The author, Duane Newman, is attached to Cova Advisory]

Africa Rail Conference: Minister Fikile Mbalula’s opening address (GCIS)

It will be remiss of me to downplay the fact that like any other mode of transport, rail has its challenges too, particularly in the region. In the absence of a regional rail regulator, we are constrained in ensuring that all these harmonised and adopted standards are implemented and most importantly, complied with in the region. It is against this backdrop that (South Africa’s) Railway Safety Regulator (RSR) is at the forefront, as tasked by the SADC Railways Sub-Sectoral Committee, to develop a framework to support the establishment of a SADC Regional Regulatory Authority. Only a week ago, RSR officials were in Dar Es Salaam, to meet with the Tanzanian Surface and Maritime Transport Regulatory Authority on the same. Even though this endeavour is still at a conceptual stage, I am confident that it will yield the desired outcomes that will enhance the rail industry across the continent.

Indermit Gill, Kenan Karakülah, Shanta Devarajan: Stressful speculations about public debt in Africa (Brookings)

Earlier this month, the African Economic Research Consortium held its 50th Biannual Plenary and Workshop in Cape Town. The topic was Growing with Debt in African Economies, and the discussions were energetic and educational. We presented a paper at the plenary, a preliminary version of which can be found here. Our main points are that public debt dynamics in many countries in sub-Saharan are now working against their stability and growth and, indeed, that of the subcontinent, but the story does not have to end in tears. We come to this conclusion by asking three questions: Has there been an increase in the capacity of African economies to bear higher levels of debt? Do markets and governments in emerging Africa have enough information about each other to make good decisions if there is a debt crisis? And, should we be confident that debt distress in Africa will be resolved in an orderly manner? [17th IMF Public Debt Management Forum: address by Tobias Adrian]

$4.2 trillion can be saved by investing in more resilient infrastructure (World Bank)

The net benefit on average of investing in more resilient infrastructure in low- and middle-income countries would be $4.2 trillion with $4 in benefit for each $1 invested, according to a new report from the World Bank and the Global Facility for Disaster Reduction and Recovery. The report, Lifelines: The Resilient Infrastructure Opportunity, lays out a framework for understanding infrastructure resilience, that is the ability of infrastructure systems to function and meet users’ needs during and after a natural hazard. It examines four essential infrastructure systems: power, water and sanitation, transport, and telecommunications. Drawing from a wide range of case studies, global empirical analyses, and modeling exercises, the report also finds major region and country-specific implications of investing in resilient infrastructure. For instance, today Africa and South Asia bear the highest losses from unreliable infrastructure: In Kampala, Uganda, even just moderate floods block enough streets to make it impossible for over a third of Kampalans to reach a hospital during the critical window of time following a medical emergency; Tanzanian firms are incurring losses of $668m a year (or 1.8% of GDP) from power and water outages and transport disruptions, regardless of their origin. Almost half of transport disruptions in the country are also due to floods, and flood-related transport disruptions cost more than $100m per year. The report offers five recommendations to ensure that infrastructure systems and users become more resilient: [Downloads: Sector Notes, Background Papers]


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