tralac’s Daily News Selection
The future of work in Africa: Harnessing the potential of digital technologies for all (World Bank)
This companion report to the World Development Report 2019: The Changing Nature of Work addresses the key themes of creating productive jobs and addressing the needs of those left behind. It builds on and contextualizes some of WDR 2019’s main messages to key specificities of the sub-Saharan Africa region. The report is structured around three main issues that will shape the future of work in Africa: the human capital needs of a young and rapidly growing largely low-skilled labor force, the prevalence of informal workers and enterprises and the social protection policies to mitigate risks resulting from disruptions to labor markets. Extracts (pdf):
3D printing can have a substantial impact on trade in services. Service agreements have become more important because intermediary goods and goods-related activities are now being supplemented or even replaced by services. 3D printers build physical objects from 3D computer-aided design data and replace certain transportation of goods by transmission of data. At the level of the General Agreement on Trade in Services, this may result in debates about what constitutes a good and a service in WTO legislation and, in turn, some WTO rules may need to be revisited. 3D printing can also substitute for trade in services (through the payment of license fees and royalties for designs) for the goods trade and provides opportunities for countries with restrictive policies toward trade in. Service trade regulations in Sub-Saharan Africa are no more restrictive than in other regions, measured by the World Bank’s Service Trade Restrictiveness Index, but existing de jure restrictions are often compounded by many additional de facto barriers and/or the non-implementation of existing agreements. Although some African regional economic communities have agreed to liberalize services, negotiations in this area have moved at a glacial pace, and services are not currently part of the AfCFTA framework. In summary, the potential effects of new technologies on global production networks and employment remain speculative; for now, the available information provides ambiguous results.
The structural transformation following AfCFTA will have implications for the future of work in the region. Increased trade can reduce overall poverty. Between 1993 and 2008, the change in real income of the bottom 20% of the population in developing countries was strongly correlated with a change in trade openness. Still, the reallocation of factors of production within and across sectors and countries will impose adjustment costs. In the short run, there will be job dislocations across firms, sectors, and borders, as a reduction in trade barriers increases the substitutability of labor within and between countries. Although there are expected economy-wide increases in investments and jobs, they are likely to divert to more efficient locations. Those communities with preponderant employment in declining industries are likely to see increased levels of poverty, absent supportive public policies. In subsequent phases of the integration, ease of labor mobility may affect migration. [The authors: Jieun Choi, Mark Dutz, Zainab Usman]
Review of ISDS decisions in 2018: selected IIA reform issues (pdf, UNCTAD)
In 2018, arbitral tribunals rendered at least 50 substantive decisions in investor–State dispute settlement cases. Most decisions were based on old-generation international investment agreements signed in the 1990s or earlier. Twenty-nine of the ISDS decisions, including five ICSID annulment decisions, were publicly available as of January 2019. Decisions rendered in 2018 touched upon many IIA reform topics, including: preserving the right to regulate (e.g. exclusions from treaty scope, interpretation of fair and equitable treatment, expropriation and umbrella clauses); improving investment dispute settlement (e.g. limitation periods for bringing ISDS claims, local litigation requirements as a prerequisite to arbitration, counterclaims); ensuring investor responsibility (e.g. legality of investment under host State law). Decisions from 2018 show some important developments: UNCTAD’s next High-level IIA Conference, to be held in November 2019, will offer an opportunity to take stock of IIA reform progress and lessons learned. [Companion analysis: Case-by-case tables on key issues addressed by ISDS tribunals in 2018]
South African court blocks Zambian plan to sell Vedanta copper mine (Reuters)
South Africa’s High Court, on Tuesday, ordered the Zambian government to halt the sale of Vedanta Resources’s majority-owned Konkola Copper Mines until a final decision is made through arbitration. Vedanta has been locked in a dispute with the Zambian government since May when Lusaka appointed a liquidator to run KCM, which is 20% owned by Zambia’s state mining company ZCCM and the rest by Vedanta. Zambia accused KCM of breaching the terms of its licence. The dispute in Africa’s second-largest copper producer has intensified concerns among international miners about resource nationalism in Africa. Mumbai-listed Vedanta denies that KCM has broken the terms of its licence and says it will defend its assets in the southern African country.
South African ruling has no effect on the current liquidation process of KCM - Musukwa (Lusaka Times)
Minister of Mines and Mineral Resources Richard Musukwa says the ruling handed by the South Gauteng High Court, granting Vedanta Resources an urgent interim interdict against Konkola Copper Mines minority shareholder, ZCCM Investment Holdings Plc, has no bearing on the current position of government on the liquidation process of KCM. Speaking to the media, after the ruling and flanked by Minister of Justice Given Lubinda and the Attorney General Likando Kalaluka, Mr Musukwa said that there foreign judgments are not enforceable in Zambia until they have undergone a rigorous process and that the judgement has no effect on the processes going on in Zambia about the liquidation of KCM. [UoZ’s Dr Sishuwa Sishuwa: Vedanta must go, but the government is messing up, will pay heavily]
Mozambique: Govt unhappy about South Africa, Zimbabwe, Malawi trade restrictions (allAfrica)
Mozambique’s Minister of Industry and Commerce Ragendra de Sousa has accused South Africa, Malawi and Zimbabwe of creating administrative difficulties that have prevented Mozambican companies from exporting their products under the SADC Protocol, Verdade reports. According to the report, in 2016 a Mozambican brand of soft drinks under the Trade Protocol of the Southern African Countries Communities, began exporting their product to Malawi where, thanks to the low price, managed to position itself as an alternative to soft drinks produced in the neighboring country. In 2017 MBS lifted the ban after the drink’s manufacturer Yaafico Industries complied with the bureau’s requirement on acid levels - but minister Sousa says the ban was lifted after the company proved their drink was safe to drink, and after the Mozambican government intervened. Alluding to the two other neighbouring countries, Sousa said pasta, tubes and even domestic beer are facing “gimmicks” to enter South Africa and Zimbabwe, revealing that he directly told President Emmerson Mnangagwa about the bad practices in Zimbabwe. The minister says Mozambique would use its geographical location as a “weapon”.
Ghana: 1st half export receipts hit $8bn (Modern Ghana)
Export receipt for the first half of this year remained robust at nearly $8.0 billion, the Bank of Ghana has said (pdf). Together with a relatively lower import bill, the receipts positively impacted on the trade account. Provisional trade balance for the first half of this year recorded a surplus of $1.9bn (2.8% of GDP), compared to a surplus of $1.3bn (1.9% of GDP) in the first half of 2018. The trade surplus was partly offset by net outflows in the services and income accounts, leading to a marginal current account surplus of $39m (0.1% of GDP) in the first half of 2019, compared to a deficit of $409m (0.6% of GDP) in the same period last year. Dr Ernest Addison, Governor of BoG, said the current account surplus, though marginal, was the first in recent history.
West Africa piracy a threat to AfCFTA plans, warns Ghanaian defence minister (Business Day)
Piracy off the coast of West Africa threatens plans to bolster regional trade, Ghana’s defence minister warned Wednesday, as navy chiefs discussed efforts to secure the troubled waters. “The sea is the super highway for global trade and the AfCFTA agreement cannot be successful without a secured maritime domain.” The two-day gathering in the Ghanaian capital — which included a delegation from the US navy — also focused on illegal fishing, oil thefts, and human and drug trafficking. “Today piracy and armed robbery in the Gulf of Guinea continue to pose a significant threat to regional and international shipping,” Ghana’s navy head Seth Amoama said. “Threats including illegal oil bunkering, kidnapping for ransom, illegal fishing and drug trafficking are common across our oceans, transnational crimes not only threaten national peace and stability they also come at great cost to the economies.”
Ethiopia – Djibouti Transport Corridor Project Phase I: Appraisal report (AfDB)
The project is part of PIDA and will boost regional integration, connecting land-locked Ethiopia to global markets via Djibouti ports and providing access to regional markets such as Uganda and South Sudan through the Kampala-Djibouti corridor. Southwards, the corridor links Mombasa-Addis Ababa corridor connecting Ethiopia and Kenya. The project will support the Djibouti Government’s strategy to boost transport and logistics in order to harness the country’s strategic positioning as a transport hub at the cross-roads of key trade routes between Asia and Europe and between East Africa and the Middle East. Currently, an estimated 35% of Djibouti’s GDP is derived from the transport sector, with Ethiopia accounting for 80% of truck traffic at the ports. The project compliments the Bank’s past interventions at port development aimed at enhancing Djibouti as a hub port (Annex B), as well as the Djibouti-Ethiopia railway by enhancing multi-modal linkages.
2019 Article IV Consultation. Niger faces daunting development challenges, aggravated by terrorist incursions, low uranium export prices, and climate change. Nonetheless, GDP growth picked up to 6.5% last year- and should average above 7% over the next five years thanks to reforms, substantial donor support, several large-scale projects, and a one-time boost from the projected commencement of crude oil exports in 2022.
Selected Issues: Navigating the challenges of governance. Descriptive statistics based on the World Bank Enterprise Surveys illustrate the negative association between corruption and private-sector performance in Niger (see figure 3). The analysis employs an unbalanced sample of 302 firms operating in manufacturing and services sectors in the years 2005, 2009 and 2017. To capture the extent of corrupt practices in the public sector that adversely affect private-sector performance, it considers firms in Niger that reported at least one bribe payment request across public transactions, including paying taxes, obtaining permits or licenses, and utility connections. Performance is alternately proxied by sales, employment, and productivity growth. Results show that exporters that pay bribes record on average a negative sales growth of 20.5% against +6.6% for those trading in a “clean” environment. Young firms, defined as those in operation for less than 5 years, register an average sales growth rate of 28.7% in the absence of corruption, against 7.4% otherwise. The negative association is also verified for older firms and non-exporters, and when using productivity growth as a measure of private-sector performance.
Republic of Congo: IMF Staff Report, Debt Sustainability Analysis
The decline in oil prices since 2014 sharply deteriorated Congo’s outlook. Average oil prices declined from over $100 from early 2011 to mid-2014 to below $40 by mid-2016. This led to a collapse in oil exports and a sharp decline in the external current account, with a deficit that exceeded 40% of GDP by early 2016. As a result, oil revenues, which had averaged 35% of GDP during 2004–14, declined to about 15 percent of GDP after the shock (2015–17) and only started to recover in 2018 with rising oil production and prices. Box 2 - Prospects in the Oil Sector (extract): The Republic of Congo’s proven oil reserves are estimated at 1.6 billion barrels and production is expected to peak in 2019. Production was around 121 million barrels in 2018 — an increase of about 20% compared with 2017. This helped Congo reach the third largest output level in sub-Saharan Africa after Nigeria and Angola. There are currently around 40 oil fields in operation, most of which are offshore. The projected increase in production will boost output levels to 140 million barrels in both 2019 and 2020. It results from a new offshore field (Moho Nord, the largest in Congo’s history)—expected to reach a peak level of 37 million barrels in 2019. Production from this new field, combined with Congo’s first deep-water field (Moho-Bilondo), accounted for 45% of total oil production in 2018. Additional capacity is expected to come from the the Banga Kayo and the Nene-Banga fields which will account for 20% of production. [An interview with Alex Segura-Ubiergo, IMF’s mission chief for Congo]
Other newly-posted country frameworks: The AfDB’s Burundi Country Strategy Paper 2019-2023; World Bank’s Country Economic Memorandum for Sao Tome and Principe
Today’s Quick Links:
AU may miss 2019 target for Single Airspace of Africa
South Africa: US-China trade war causes collateral damage
SA must plan for ‘worst case scenario’ amid Boris Johnson’s rise
UNCTAD, TradeMark East Africa extend deal to ease trade
EDB (Mauritius) joins the World Alliance of International Financial Centres
Bank of Ghana Governor expresses doubt on new Eco adoption strategy
Kenya: Lobbies oppose draft rules on food, horticulture crops
Kenya faces maize imports hurdle as regional states halt sale
Ghana Union of Traders Association: Fees by service providers at the port are exorbitant
UK’s DIT launches first ever ‘InsurTech for Development’ conference in Africa
Africa could be about to benefit from dovish policy shifts in the US, experts predict
Reuters: Nigeria’s central bank to start monthly review of banks’ loan ratios