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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: GCIS

10 Jul 2019

Underway, in New York: High-level Political Forum on Sustainable Development

Niamey Summit wrap, reactions

  1. Multi-video: Africa punches below its weight when it comes to international trade – AUC High Representative Dr Carlos Lopes interviewed by CGTN Africa

  2. 35th Ordinary Session of the Executive Council: pdf speech by AU Commission chairperson, Moussa Faki Mahamat (89 KB) . “As you are aware, the 22 instruments of ratification required for the entry into force of the Protocol establishing the Free Trade Area have been deposited by Member States in a relatively short period of one year. This unusual promptness is part of the dynamics initiated in Kigali, where a strong desire to accelerate the pace of continental integration was shown with the adoption of the ACFTA. We should, therefore, deal with all the outstanding issues, whether of a technical or political nature, with the necessary urgency. In fact, at the technical level, many operational tools are still to be developed. At the political level, the ratification of the Protocol to the Abuja Treaty on the Free Movement of Persons and Goods and many others for Regional integration, remains an urgent challenge for all of us. I, therefore, call upon all the Member States to ratify the Protocol on the Free Movement of Persons, which is an indispensable supplement to the economic and social integration to which we aspire. Furthermore, I would like to recall, in conformity with the new multidimensional index of African integration, that eight dimensions have been chosen to follow up and evaluate the level of Regional integration, namely trade integration, free movement of persons, political and institutional integration, monetary integration, financial integration, social integration and management of the environment.”

  3. Nigeria’s Sahara Power Group backs AfCFTA to transform Africa’s power sector. Managing director Kola Adesina says the AfCFTA has the potential to transform the continent’s power sector through alignment of policies, tariffs, cross-border manpower collaboration and fresh injection of capital. “The energy sector has several components along the value chain that require interconnectivity of all stakeholders to make uninterrupted power available. With the AfCFTA, Africa now has a platform to critically reconsider harmonized major infrastructure developments as well as the aggregate contribution and enabling legislation, policies and tariffs required to shore up power supply across the continent.” Adesina however highlighted the need for the continent’s political leadership to approach the implementation of AfCFTA “with one voice and a vision that is not driven by nationalistic considerations,” adding that the civil society should play a “balancing role” to ensure the agreement serves the interest of all Africans.”

  4. Business backs Tanzania government on AfCFTA. ”As the private sector, we expect to be involved in every step that our government takes towards the ratification of the agreement,” said Mr Frank Dafa, a trade policy specialist at the Confederation of Tanzania Industries. ”The one big challenge, competition, needs to be considered too. If we are to enter into this agreement we have to effectively compete with the likes of Nigeria and Egypt, which are more industrialised. The government needs to consult all the stakeholders concerned to make it easy for speeding up the processes.” Mr Ali Mufuruki, chairman and chief executive officer of Infotech Investment Group Ltd, is optimistic about the prospects of the free trade zone. Speaking during the AU Heads of States Summit in Niger on Sunday, in his capacity as vice chairman of the East African chapter of the AfroChampions Initiative, Mr Mufuruki said: ”I would like to appeal to the Government of Eritrea to get onboard the AfCFTA ship because it is the right thing to do and the time in now. I would also like to encourage the states that have signed but are yet to ratify the treaty to do so without further delay, so that we can begin this exciting journey together for the benefit of all our people.” [Egypt-Tanzania Business Forum: Tanzanian PM calls on Egypt’s business community to invest in Tanzania]

  5. Statement of Mr Mohamed Salem Uld Salek (Minister for Foreign Affairs of the Saharawi Republic): “The Moroccan Foreign Affairs Minister gave statements to the media after the end of the Extraordinary Summit of the African Union in which he tried to cover the great disappointment Morocco is facing at the political and legal levels. We wish to remind the Minister of Foreign Affairs of the Kingdom of Morocco, a State party alongside with the Saharawi State in the OAU/AU conventions and agreements, including the Continental African Free Trade Agreement, that Morocco is legally bound by the following:”


Three new working papers from the UNU-WIDER SA-TIED project

  1. Prospects and policies for the development of regional value chains in Southern Africa. This paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration. The trade data and case studies of three diverse sectors (apparel, food retailing, automotive) demonstrate the expansion and diversity of regional trade and regional value chains in Southern Africa. This diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade. Extract from Section 2.1: Intra- and extra-Southern African trade in goods (pdf):

    Substantial asymmetries in intra-regional trade flows are also present. As the dominant economy in the region, South Africa is the major source of intra-regional exports as well as the primary regional market for other SADC country exports. On aggregate, South Africa as a destination accounts for a gradually rising share (65 to 70%) of the other SADC members’ exports to the region (Table 1). South Africa is an even more dominant supplier of goods in the region, making up 88% of other SADC members’ regional imports in 2000 (Table 2). This share fell to 71% in 2017 as SADC countries diversified their imports to other SADC member countries and the rest of the world.

    Two further insights emerge from the asymmetry in economic size and trade flows of South Africa. First, although South Africa is a major market for goods from the region, it still only sources a relatively low share of its total imports from the region (7% in 2017). In contrast, a relatively high proportion of its total exports (23% in 2017) are sold to the region. Consequently, South Africa runs a large trade surplus with the region, although this has stabilized at around $14bn over the post-2010 period as SSA countries have increased exports to South Africa and diverted imports from South Africa to other SADC sources.

    Second, levels of integration into the region are relatively low once South Africa is excluded as a destination or source market. Only 6% of the rest of SADC exports are destined for SADC countries outside South Africa. Looking at imports, 11% of the value of imports by the rest of SADC countries is sourced from the SADC region outside South Africa (38% if imports from South Africa are included). The moderate levels of regional integration found thus primarily reflect patterns of SADC country trade with South Africa. [Download the policy brief version. The authors: Anthony Black, Lawrence Edwards, Faizel Ismail, Brian Makundi, Mike Morris]

  2. Linkages and spillover effects of South African foreign direct investment in Botswana and Kenya. Departing from contemporary FDI and productivity studies and scholarship on Africa, this paper focuses on FDI linkages and spillovers by examining country-specific cases, using primary data to investigate qualitative implications. In line with to the aims of previous studies, this paper (pdf) helps to enrich the South African FDI discourse in Africa by providing evidence from Botswana and Kenya. Specifically, the following research questions are pursued: What are the linkages forged by South African firms in Botswana and Kenya? What spillover effects emerge from linkages between South African firms and local firms in the host countries?

  3. Moving up the copper value chain in Southern Africa. Southern African countries - mainly Zambia and the DRC - account for around a seventh of global production of copper. In the 2010s, they imported over a third of the associated capital goods and components from South Africa. Given this strength (pdf), some observers suggest that the South African capital goods industry could do more to support copper fabrication in the region. Theoretically, investing in production of semi-manufactures (principally wire, cable, tubing) would promote industrialization and enhance value-add. In practice, however, unit prices have only been slightly higher for semis than for refined copper, limiting scope for fabrication—especially as local manufacturers obtain copper essentially at international prices. In any case, the South African capital goods industry is centred on mining, not metalworking machinery. It can only compete with overseas suppliers if it obtains increased financial support for exports and for research and development. [The authors: Neva Makgetla, Saul Levin, Sithembiso Mtanga]

The West Africa inequality crisis (Oxfam)

The Commitment to Reducing Inequality Index, devised by Development Finance International and Oxfam, has analysed data from 157 countries around the world, and ranked them according to three major policy areas that are recognized as being key to tackling inequality. For this review (pdf), CRI data have been used to assess the performance of all 15 member countries of the Economic Community of West African States, along with Mauritania. Government action in these areas has been rated to give countries a combined score and a CRI Index ranking in comparison with the other 15 countries in this region and with other African countries. The review also assesses policies relating to land and agricultural investment in West Africa. Analysis based on the CRI Index shows that, of the five major economic blocs in Africa, West Africa is trailing behind all the others in tackling inequality. In fact, West African citizens are living under governments that are only half as committed to reducing inequality as their counterparts in Eastern and Southern Africa. Oxfam’s assessment clearly indicates that governments in West Africa are, on average, the least committed to reducing inequality across all regions of Africa, and that most of them are choosing to ignore the inequality crisis rather than address it. The assessment does offer glimmers of hope, with some West African countries doing well on addressing inequality in certain areas, even if they are failing in others. Burkina Faso and Senegal, which have seen modest investments in progressive social spending policies, are notable exceptions, and Burkina Faso is one of the 10 countries most committed to social spending in sub-Saharan Africa. However, no other West African government appears among the top 10, and Nigeria, Sierra Leone and Guinea-Bissau are among the least committed to social spending on the African continent.

Sierra Leone:  pdf National Development Plan, 2019-23 (4.79 MB)  (IMF)

As a small open economy, Sierra Leone is highly dependent on the international price of its major commodity exports, particularly iron ore, for revenue and foreign exchange. Iron ore exports account for over 50% of total exports. At the same time, the country does not have any control over the price of its major imported goods, such as rice and fuel, which account for over 50% of total import value. Therefore, a drop in the international price of iron ore and or rise in the price of rice/fuel (adverse terms of trade) will adversely affect the macroeconomy. Consequently, lower levels of exports reduce the supply of foreign exchange and trigger inflationary pressures, which in turn increase the cost of goods and services purchased by government and reduce real household income. A recent Debt Sustainability Analysis conducted by the Ministry of Finance reveals that Sierra Leone’s debt situation is categorized as high-risk debt distress due to the fall in exports, low revenue generation, and slow economic growth. The high domestic debt service payments increase government expenditure and weaken fiscal stability. [A related IMF report,released yesterday]

Development of a SADC Guideline on cross-border tourism products in TFCAs (SADC)

The report was compiled through a combination of literature review, stakeholder consultation, and review of the draft analysis. Information presented (pdf) includes the status of existing cross-border tourism products in SADC TFCAs. This includes the prevailing enabling environment, governance arrangements, financial elements, and issues relating to their quality, marketing and sustainability. An overview on the processes used to establish cross-border tourism products is provided, in addition to a review of what has worked well, and what could have been improved. The analysis has led to a series of recommendations that are relevant for different stakeholders including the SADC Technical Committees on Wildlife and Tourism, TFCA managers and TFCA Joint Management Boards, cross-border tourism product operators and the SADC TFCA Network Tourism Community of Practice.

Customs authorities and traders are now able to track and monitor goods from Mombasa up to the DRC: this after the DRC was (yesterday) connected to the Regional Electronic Cargo Tracking system. A lengthy twitter thread, by @djnicknicholas.

Today’s Quick Links:

Kenyan avocado exports to China to increase 10% annually, export council projects

Zimbabwe: Local currency introduced earlier than planned due to market pressure says finance minister

Mauritius: Government to bring public sector debt to GDP ratio to 60% by end of June 2021

Angola to sign Lusophone country-specific Compact

Ethiopia commences feasibility study on Ethio-Sudan railway

ECOWAS, The Netherlands to step up development cooperation

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