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tralac’s Daily News Selection

tralac’s Daily News Selection

16 Jul 2019

Kenya: Ruto, Raila jointly launch national export strategy (The Standard)

Deputy President William Ruto and Opposition chief Raila Odinga yesterday launched a national export strategy aimed at bridging Kenya’s trade deficit. In a rare public display of unity, the two political rivals sat side by side while launching the policy document the pdf Integrated National Export Development and Promotion Strategy (4.44 MB) . The event was marked in Nairobi, where the Kenya Trade Week also started yesterday. Ruto expressed concerns about Kenya’s trade deficit, saying the country lagged behind. “It is clear Kenya’s export numbers are lagging behind; others in the global market,” said Ruto, adding: “We need to solve this problem. Our trade deficit is close to a trillion shillings.” Ruto said the policy document would help grow the Kenyan export share as a percentage to the country’s Gross Domestic Product from eight to 22% per cent. Raila complained about Kenya’s energy sector, saying it was hampering investment. “To do value addition you need a lot of power. Energy costs currently are too high. When the cost stands at 16 cents per unit, you cannot compete effectively internationally. You cannot compete with someone who pays 3 cents for power.”

Kenya: High exports cut current account deficit to 4.2% (Business Daily)

Kenya’s current account deficit narrowed to 4.2% of GDP in the 12 months to May from 5.8% in the corresponding period in 2018 buoyed by higher horticulture and tourism inflows. By the end of last year, the deficit stood at 5%, but has been progressively narrowing this year. In the 12 months to April the deficit stood at 4.5%, meaning the country’s position improved in May. “This reflects strong performance of exports particularly horticulture, resilient diaspora remittances, and higher receipts from tourism and transport services. Lower food imports also contributed to the narrower trade balance,” said CBK in its latest weekly bulletin (pdf).

Kenya’s open borders spell doom for struggling farmers (The Standard)

As a share of total imports, Kenya’s food imports have increased from 7% in 2008 to 10% last year, with the country’s imports dependency ratio (IDR) getting worse. According to figures by the FAO, Uganda, Ethiopia, Tanzania, and Rwanda, have lower cereal imports dependency ratio, meaning most of their domestic supply of maize, wheat, rice, and other cereals are produced locally. With a three-year average of 32.7% between 2011 and 2013, Kenya has the highest cereals IDR, higher than Africa’s average of 28.9%. Ethiopia’s dependence on imported cereals is at 7%, Uganda (8.6%), Tanzania (12.2%) and Rwanda (32.5%). To agricultural experts, sufficient supply of cereals is an indicator of food security in a country. Most of Kenya’s imported food comes mainly from Uganda and Tanzania. The rest, especially processed, is brought in from Asia and Europe. Imports of primary foods such as maize, onions, tomatoes, garlic, beans, eggs, tea, milk, citrus fruits have increased eight-fold in the last 10 years in value - from Sh3 billion in 2008 to Sh25 billion in 2018. Most of these foods and beverages have come from Uganda, Tanzania, and Ethiopia. [KNBS: Enhanced food balance sheets for Kenya 2014-2018 results]

Namibia: Charcoal industry now employs some 10 000 workers (New Era)

The charcoal industry in Namibia is experiencing an unprecedented boom with a growth of 42% in tonnages, according to the latest year-to-year figures. The blossoming industry also recorded a dramatic increase of 66% in production value, the State of Namibian Agriculture, a study by the Namibia Agricultural Union has revealed. Normally the industry is the supplier of some 6 000 jobs, but the current increased activities have pushed this figure up to between 9 000 and 10 000 workers. Considering different and connected factors such as current market demand and the industry’s ability to respond to such demand, it is estimated that Namibian charcoal exports could increase to 200 000 tonnes by 2020. Charcoal – also called Namibia’s black gold – is mainly an export product with valuable contributions towards the GDP of the Namibian economy. Charcoal production is also an important activity for managing bush encroachment in Namibia with an estimated 160,000 tonnes of export volume annually, making it the largest exporter of charcoal in the Southern African region.

Tanzania: Govt to boost tobacco growing communities to boost incomes (IPPMedia)

Prime Minister KassimMajaliwa has said the government is working to find markets for Tanzania’s produced tobacco to boost incomes and improve the welfare of farmers. He made the statement on Sunday when addressing tobacco stakeholders during a meeting held in Tabora region. He said the government has already negotiated with several countries, including Egypt and Vietnam that have promised to purchase the crop.

Can the peace-trade equation stabilise the Horn? (ISS)

Through the AfCFTA’s implementation processes, countries in the Horn could potentially create conditions that would enable them to coexist peacefully. A good example is the Ethiopia-Djibouti relationship. Both have invested more than $15bn for road and rail connectivity. Ethiopia uses the Djiboutian ports for 95% of its foreign trade and has invested heavily in them. Djibouti’s trade with Ethiopia accounts for more than 80% of its GDP, including electricity and water imports from Ethiopia. The region has the potential to effectively implement the AfCFTA, with dividends for peace and security. Trade disputes among Horn countries that might arise as the deal is activated could be resolved through its dispute settlement mechanism. Those responsible for this mechanism must recognise the challenges covered here, and the region’s peace and security dynamics. This is especially so given that one of the Horn’s most devastating wars, between Eritrea and Ethiopia, had trade relations at its heart.

Lesotho: Drought breeds multi-faceted crises for border communities (Lesotho Times)

The recent El-Nino induced drought has spawned a multi-faceted crisis for Basotho communities in the border areas with South Africa who are often forced to illegally graze their livestock in the neighbouring country. Sub Inspector Pita said Basotho nationals took advantage of the porous borders to illegally graze their livestock in South Africa. He said this had created a vicious circle where local and South African farmers stole each other’s livestock. “On this (Lesotho) side there is no veld solely because of the drought and the fact that farmers this side do not practice rotational grazing so they end up stealing or grazing their livestock in the fields of SA farmers. Some Basotho steal the livestock in South Africa and others even steal animal feed to come and feed their own livestock.” He said such practices caused problems for local farmers whose livestock were impounded as they were forced to pay fines in the region of M2500 for the release of each cow.

Women’s Empowerment and Demographic Dividend in the Sahel: resource mobilization roundtable

Pr Mariatou Koné (Ivorian Minister of Solidarity, Social Cohesion and the Fight against Poverty, and President of the Regional Steering Committee of SWEDD), reiterated the objective of the round table (6 July, on the sidelines of the AU Summit), which is to increase the investments of development partners and the private sector to enable the consolidation and extension of the SWEDD project to all 11 countries of the Sahel and beyond. Indeed, following the encouraging results recorded in the beneficiary member countries, the extension of SWEDD was desired. Each of the twelve private sector representatives expressed their support for various aspects of the SWEDD Project, including the training of women and girls, mentoring, project development, equipment provision, women’s entrepreneurship, awareness raising around the project, the granting of scholarships, funding through CSR programmes, etc. [SWEDD partners with Ecobank Foundation]

Nigeria needs radical industrialisation, NECA tells FG (Punch)

The Nigeria Employers’ Consultative Association has urged the Federal Government to reassess its strategies and tailor its policies and reforms towards a radical industrialisation of the country. The Director-General, NECA, Mr Timothy Olawale: “There is no better time for the government, to focus on a radical industrialisation of our country as a means of making it the hub of economic activities in the West African sub-region and also ensure Nigeria benefits maximally from the AfCFTA. We have consistently taken the lazy path of tax increases that stifle and further burden businesses rather than the ingenious way of promoting and stimulating production. Government should demonstrate a bold attempt to industrialise the country and take it out of the woods by embracing a major policy shift from focus on taxation to production. What our economy requires now are radical far-reaching policies like the abolition of the Value Added Tax on real estate sales, financial services and domestic airline ticket sales, and abolishing capital gain tax on sales of shares and import duty on spare parts. Reduction of VAT on small traders to 3%, abolition of import duty on machinery and raw materials, among many others. All these will directly stimulate production and create wealth for the nation and its citizenry.”

China: Ramping up investment in African agriculture (CTA)

Beijing’s main motivation for supporting investments in African agriculture is widely assumed to be securing food supplies for China but this is not supported by data. Africa supplied only 2% of China’s agricultural imports during 2010-15, according to Chinese customs figures, the USDA report notes. And, while much of its technical assistance and aid focuses on rice, China does not import rice or any other grains from Africa. Indeed, FOCAC stressed in its action plan the importance of helping Africa to achieve food security by 2030. Rather, aid flows appear to be designed to build goodwill in African countries, facilitating the entry and profitability of Chinese firms, and building markets for Chinese inputs such as rice seeds. For example, investments by Chinese animal feed supplier New Hope Group, including in Egypt and South Africa, focus on building markets in those countries for its feed.

Going for Growth (OECD)

Slow growth, high uncertainty and rising levels of inequality should prompt policy makers to take urgent action to achieve stronger, sustainable and more inclusive growth, according to the OECD’s annual Going for Growth report. It points out that the weakening of growth comes at a time when globalisation, digitalisation, population ageing and environmental degradation are key forces shaping economic developments. To better manage these megatrends, governments must carefully select, prepare, prioritise and implement country-specific structural reforms that boost long-term growth, improve competitiveness and productivity, create jobs and ensure a cleaner environment and equal opportunities for all. This year’s edition presents the top structural reform priorities in 46 OECD and non-OECD economies, alongside assessment of progress countries have made on key reforms in the past years. It points to a disappointing pace of reforms in 2017-2018, finding little sign of an imminent pick-up from the already modest pace of reform observed in the previous two years. [Chapter 3: The integration of green growth in Going for Growth 2019; South Africa Economic Snapshot; Various downloads]

Grow with the flow: An independent evaluation of World Bank Group support to facilitating trade 2006-17 (World Bank)

Sub-Saharan Africa accounted for 30% of the Bank Group’s trade facilitation projects (a total of 99). However, South Asia had a higher average per country (5.6 projects) compared to Sub-Saharan Africa (3.2 per country). The Bank Group also supported regional trade facilitation projects (12% of the portfolio) mostly delivered through World Bank loans in Sub-Saharan Africa. A total of 46 trade facilitation projects were regional projects, of which 65% were loans and 61% were in Sub-Saharan Africa. These projects focused on facilitating trade but also on improving logistics related to road or other transport infrastructure. These interventions were focused on technology upgrades, risk-based management, agency coordination, and organizational improvements to facilitate trade. Trade facilitation intervention areas also varied significantly by region. Rules and border operations were more common in Sub-Saharan Africa, East Asia and the Pacific, and Europe and Central Asia (See figure 2.2.b, pdf).

Today’s Quick Links:

EAC Gazette: 2 July 2019

Ruan Jooste: Chunks of SA’s new competition law hand huge new powers to Trade and Industry Minister Ebrahim Patel

Mauritius: Reform in the sugarcane sector a necessity, says Prime Minister

World Bank: Decomposing the labour productivity gap between migrant-owned and native-owned firms in Sub-Saharan Africa

Small Island Developing States: Mauritius hosts first technical meeting on pooled procurement

Cabo Verde: IMF executive board approves new policy coordination instrument  

Managing for Sustainable Development Results: OECD DAC Guiding Principles (pdf)

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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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