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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: AP | Abbas Dulleh

28 Jun 2019

Nigeria and the AfCFTA:

  1. Statement by H.E. President Buhari on receiving the Report of the Committee to assess Impact and Readiness for the AfCFTA. Extract: “For AfCFTA to succeed, we must develop policies that promote African production, among other benefits. Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of “made in Africa goods. That is, goods and services made locally with dominant African content in terms of raw materials and value addition. If we allow unbridled imports to continue, it will dominate our trade. The implication of this is that coastal importing nations will prosper while landlocked nations will continue to suffer and depend on aid. As I stated during the inauguration of this Committee, many of the challenges we face today, whether security, economic or corruption are rooted in our inability, over the years, to domesticate the production of the most basic requirements and create jobs for our very vibrant, young and dynamic population. Henceforth, we shall ensure that our negotiated agreements create business opportunities for Africa’s manufacturers, service providers and innovators.”

  2. Presidential committee recommends that Nigeria sign AfCFTA. Chairman of the Presidential Committee on Impact and Readiness Assessment, Desmond Obadiah, said the treaty will have positive and negative impacts on Nigeria and its neighbours. “Our report recognises that there will be significant adjustment costs to manage the negative impacts and to take advantage of the opportunities. The adjustment costs will include retraining workers in declining sectors to be able to take up employment in growing sectors, providing capital to business owners to retool their plants to remain operational and attracting investments to growing sectors in order to produce goods and services to export to Africa. The Committee proposed policies, programmes, projects and interventions which may position Nigeria adequately for the AfCFTA. We identified sectors which can act as arrowheads for Nigeria’s expansion into Africa, while efforts are intensified to attract private sector investments to the productive sectors. Our reports shows that on the balance, Nigeria should consider joining the AfCFTA and using the opportunity of the ongoing AfCFTA Phase I negotiations to secure the necessary safeguards required to ensure that our domestic policies and programs are not compromised.” [Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industry ask Buhari to sign the AfCFTA]

The EU and the AfCFTA: EU to provide 40 billion euros in grants to help create jobs in Africa

This was revealed by Ambassador Ranieri Sabatucci, the EU Ambassador to the AU, in an opening address to a two-day Horn of Africa AfCFTA forum focusing on the pharmaceutical industry. “As was highlighted by the EU Commission President, Juncker, in his state of the union speech in September last year, referring to the AfCFTA, he expressed the wish that the long term perspective is to create a comprehensive continent to continent free trade agreement between EU and Africa.” He said to prepare for this, economic partnership agreements, free trade agreements, “including the deep and comprehensive free trade areas and others in the countries north of Africa and other trade issues with the EU should be exploited to the greatest extent as building blocks to the benefit of the AfCFTA”. “To support this, a massive support of 40 billion Euros of grants under the new Africa-European Alliance for Jobs and Growth is proposed as from 2021 to 2027 to, among others, attract investments that would create 10 million jobs in Africa,” he said, adding the EU will continue to increase its support to Africa in that regard.

Five Facts on Fintech: Fact No 3 – Sub-Saharan Africa is a global leader in mobile money innovation, adoption, and usage. The region leads the world in mobile money accounts per capita (both registered and active accounts), mobile money outlets, and volume of mobile money transactions. Close to 10% of GDP in transactions are occurring through mobile money, compared with just 7% of GDP in Asia and less than 2% of GDP in other regions. Extract from the report Fintech: the experience so far: Countries in Southern Africa have seen notable increases in delivery of financial services through digital channels, but there is still room for significant improvement. Based on Findex 2018, the percentage of adults who made or received a digital payment in the last 12 months in South Africa, Namibia, Botswana, and Zambia stood at 48%, 33%, 36%, and 19% respectively. While these numbers are higher compared to Sub Saharan Africa median average of 13%, the levels are significantly lower compared to countries such as Kenya at 63%. [The authors: Tobias Adrian, Ceyla Pazarbasioglu]

Botswana: SADC TRF project gathers pace (Southern Times). The Ministry of Investment, Trade and Industry Minister has now taken a leading role in the development of the e-commerce strategy, which is funded through the EU/SADC trade-related facility programme. The mandate for the facilitation of e-commerce had since been delegated to the Ministry of Investment, Trade and Industry. “For Botswana, Euro 2 600 000 has been availed to us to implement the various interventions. The project was initially planned to be completed at the end of September 2019,” said Investment, Trade and Industry Minister, Bogolo Kenewendo, when launching the project. She added: “We are delighted that the project has been extended by a further two years from October 2019 up to September 2021 to allow us to complete implementation of all our activities.” [SACU and the Namibian revenue fix]

A rendezvous on Central Africa’s Digital Economy (23-27 September, Malabo). The main objective of the thirty-fifth session of the ICE is to consider ways and means to better mainstream the digital economy into the economic diversification strategies of the sub-region to accelerate its structural transformation, and to pool the efforts of all Central African countries in terms of digital technology, to set up an integrated digital ecosystem. Extract from the concept note (pdf): Twenty-one of the 25 least connected countries in the world are in the African continent, where only 22% of the population has access to the internet. Central Africa is not spared. In fact, it is one of the least connected African regions in the world. Indeed, according to the “2018 Global Digital” report, Central Africa recorded the lowest internet penetration rate with only 12%, behind North Africa with 49%, West Africa with 39% and East Africa with 27% Internet penetration rate. In addition, the sub-region still has serious setbacks such as the lack of a reliable and secure 24-hours-a-day broadband infrastructure, an ICT skills gap and weak institutional capacity to support innovative firms.

World Bank: The digital disconnect of informal businesses. Can digital technologies change the informal sector? The answer seems to be not yet. Informal firms hardly use basic technologies such as computers or even the internet for their business activities. Results from recently completed World Bank Surveys of informal businesses show that only about 1% of informal businesses in Lao PDR and Mozambique use computers for their operations. The figures for internet use are not that different with only 1 in 200 businesses in Mozambique using internet, and slightly higher in Zimbabwe with only 2% of businesses using internet. However, there is hope. Mobile money, particularly in the two African countries, has significantly penetrated the informal economy. In Mozambique over 40% and in Zimbabwe nearly half of businesses utilize mobile money in their operations. Studies have found that formal firms that use mobile money tend to invest more. An open question we wish to explore in the upcoming survey is whether mobile money can make informal firms more productive. [The authors: Asif Islam, Filip Jolevski]

SME Competitiveness Outlook 2019. Annual additional private investments of $1 trillion in small businesses in developing countries would play a pivotal role towards achieving the Sustainable Development Goals. This is according to the SME Competitiveness Outlook 2019: Big Money for Small Business – Financing the Sustainable Development Goals, released yesterday by the International Trade Centre. Currently, just a fraction of the $80 trillion managed by global asset managers is invested in small and medium enterprises in developing countries. At the same time, there is great, untapped potential to channel capital held by global funds towards these profitable investment opportunities. According to the SME Competitiveness Outlook 2019, the main factors holding investors back from channeling more funding into otherwise profitable investment opportunities in developing countries include a lack of scalable investment projects, non-transparent investment processes, misguided perceptions of the risks of investing in SMEs, and a lack of knowledge about enterprise capacities. Other key findings and recommendations of the SME Competitiveness Outlook 2019 include:

Landry Signé, Eric Olander: Can Trump’s Prosper Africa make America greater than China and other partners in Africa? (Brookings)

The US should embrace the African Continental Free Trade Area. If the AfCFTA is successfully implemented,the combined consumer and business spending in 2030 will be $6.7 trillion and the continent’s manufacturing sector is projected to double in size, with an annual output of $1 trillion by 2025 and over 14 new million jobs. Currently, the AfCFTA, along with Agenda 2063, is considered by Africans to be the most important tool for fostering their economic prosperity, accelerating industrialization, and providing jobs to the youth. Thus far, the European Union, China, and other partners have supported the AfCFTA, but the United States is still hesitant, which seems to be in contradiction to one of the goals of Prosper Africa: to empower Africa to drive its own growth. The US should instead produce a statement supporting the AfCFTA and should consider strategies for empowering the AfCFTA secretariat, such as capacity building and financing. [Tibor Nagy: How US’s Prosper Africa plan can benefit businesses on the continent]

FOCAC updates

  1. Joint statement of the Coordinators’ Meeting on the Implementation of the Follow-up Actions of the FOCAC Beijing Summit. Both sides will encourage their companies to strengthen project cooperation in accordance with market principles, in pursuit of economic and social benefits, in line with the actual capacity of African countries, and based on clearly-defined responsibilities. Both sides will further promote the exchanges between Governments, legislatures, political parties, young people, women, think tanks and NGOs in order to foster a good environment for China-Africa friendship and cooperation. The Chinese side is ready to increase technological transfer and training, encourage innovation cooperation and regional value chains development, support African countries in cultivating more technical, industrial and management professionals, and promote people-centered and sustainable partnership between China and Africa. Both sides will take the particularity and vulnerability of Small Island Developing States into consideration while implement the outcomes of FOCAC Beijing Summit. [FOCAC work report: Assistant Foreign Minister Chen Xiaodong; Keynote speech: Foreign Minister Wang Yi]

  2. E-commerce signals new future for ties between China, Africa. Charles Kayonga, ambassador of Rwanda to China, told the Global Times on Thursday that e-commerce platforms including eWTP can stimulate the creativity and productivity of the continent. “E-commerce is not a magic pill that solves every problem,” he said. “It can’t solve Africa’s deficit in its trade with China. To solve trade issues, you need productivity and manufacturing, and e-commerce can stimulate that, by opening up the market for African companies.” Hannah Ryder, CEO of Development Reimagined, an international development consultancy dedicated to finding new solutions to African development, told the Global Times that e-commerce is “absolutely the future” of trade between China and Africa. The new channel is improving mutual understanding and increasing opportunities on both sides. “A lot of African countries still have no idea about the huge potential of the Chinese market,” Ryder said. “People still have a lot of stereotypes about China and there is a lack of knowledge about what’s going on in there.”


WTO’s Committee on Trade Facilitation reviews progress of Trade Facilitation Agreement implementation

Members reviewed a record number of over 50 new notifications since the last Committee meeting in February. They were assisted by a WTO Secretariat update on the state of the ratification and notification process, which showed that 144 or almost 90% of all members have already deposited a ratification instrument. The most recent ratifications were from Egypt, Morocco and Angola. The Agreement entered into force on 22 February 2017 when the WTO crossed the required threshold of 110 member ratifications. Several delegations drew attention to outstanding notifications, especially in the area of implementation. Reference was made to an upcoming deadline for the submission of definitive dates for implementing measures requiring capacity building support.

Today’s Quick Links:

The G20 summit, starting today, is a chance for SA to boost foreign investment

Ronak Gopaldas, Anish Shivdasani: Africa needs to find ‘smart cuts’ to shorten its road to success

South Africa: The tricky thing about double tax agreements

South Africa – UAE Business Forum: UAE recognises SA as gateway to the African continent

Nigeria’s non-oil exports to UAE hit $608m in 2017

WTO’s DDG Wolff: The trading system faces severe challenges but none are insurmountable

What to expect from the World Economic Forum’s China meeting (1-3 July)

WCO: New integrity development tool available online

UNCTAD launches new statistical quality assurance tool

Welfare impact of value-added tax reform: the case of the Democratic Republic of Congo

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