tralac’s Daily News Selection
A single harmonised continental framework for collecting informal cross border trade is crucial. We need to talk the same language on informal cross border trade, and must move towards an AU framework for measuring ICBT to monitor the performance of the AfCFTA.
Interim AfCFTA Secretariat organises the inaugural meeting of the AfCFTA Council of Ministers not later than 31 October 2019
Decides to further discuss the submission of the G6 Countries (Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe) to undertake liberalization of the 90% of total tariff lines over a period of 15 years, subject to reciprocity, with the view to reach consensus and to report to the upcoming session of the Assembly of the AU in February 2020
Directs the Commission to support the Council of Ministers responsible for Trade to put in place the AfCFTA institutional and governance structures that will facilitate effective implementation of the various trade instruments under the AfCFTA Agreement
Also directs the Commission to have the structure of the AfCFTA Secretariat, its work program and budget approved by the appropriate AU Policy Organs by February 2020;
Takes note of the position of Director General of the World Trade Organization falling vacant on 31st August 2020 and directs the African Ministers of Trade to work towards ensuring that Africa succeeds in getting the position and contributes to the strengthening of the multilateral trading system following the established AU relevant processes and procedures. [Note: The decisions are also available in French, Portuguese and Arabic, here]
The sub-committee on economic and trade matters: Takes note with concern of the slow pace of the establishment of the AU Financial Institutions (AUFI) and recognises the determination of Africa to be a financially self-reliant continent; Requests the Commission to finalize the comprehensive study, including by undertaking thorough consultations with Member States, in order to understand the challenges and obstacles faced in signing and ratifying the Legal Instruments of AUFI;
Also requests the Commission to continue working with the Association of African Central Banks and the African Securities Exchanges Association to implement the macroeconomic convergence criteria for the establishment of the African Central Bank and fast-track the establishment of the Pan-African Stock Exchange; Takes note of the proposal of the appointment of H. E. Nana Dankwa AkufoAddo, President of the Republic of Ghana, as the Champion of AU Financial Institutions, to provide political leadership and awareness to accelerate their establishment as scheduled in the First Ten-Year Implementation Plan of Agenda 2063: The Africa We Want.
Adopts the theme Silencing the Guns: Creating conducive conditions for Africa’s development as the theme of the year 2020; Requests the Commission, PAP, PSC, AUDA-NEPAD, ECOSOCC and other stakeholders to work with the PRC and the Ministerial Follow-Up Committee on Agenda 2063, to develop a roadmap, including a matrix of planned activities with key deliverables and milestones for implementation of the 2020 theme, to be endorsed during the 33rd Ordinary Session of the Assembly in February 2020. [Note: The decisions are also available in French, Portuguese and Arabic here]
CPIA Africa: Strengthening debt management capacity (World Bank)
The 2019 Africa Country Policy and Institutional Assessment report covers the period January to December 2018. Over this period, the average quality of policies and institutions in International Development Association (IDA)-eligible countries remained unchanged, amid decelerating growth across the region. The overall CPIA score for IDA countries in Sub-Saharan Africa was 3.1 in 2018, the same as 2017, reflecting the slow progress in improving the quality of policy and institutional frameworks in the region. Partly reflecting this uneven performance, per capita income growth has stagnated in recent years, and poverty headcounts remain elevated. Against this backdrop, the 2018 CPIA results reinforce the call for IDA countries in Sub-Saharan Africa to accelerate the pace of policy and institutional reforms to foster rapid economic growth and poverty reduction. Three areas require immediate attention (pdf):
First, the quality of debt management needs to be strengthened. The buildup in public debt has continued in the context of weak debt management systems. Second, business regulatory reforms need to accelerate to support private sector development and job creation. Due to the slow pace of reforms, IDA countries in Sub-Saharan Africa are not converging toward the best business regulatory performance in some areas critical for private sector development including, most notably, in getting electricity. The average cost to obtain an electricity connection remains prohibitively high in many countries. Third, sustained efforts are needed to improve domestic revenue mobilization. In many countries, the yield of the domestic tax system has declined, as widespread exemptions narrowed the tax base amid weak capacity in customs and low compliance of taxpayers. Rationalizing tax exemptions and improving the efficiency of current tax systems could yield more revenue for countries to finance investments in human capital and infrastructure and ensure debt sustainability.
A report released by Africa Oil Week and Menas Associates about what lies in store for Africa’s oil and gas industry has concluded that, on balance, the continent’s economic performance is promising, particularly as global oil markets finally recover from their 2015-2016 lows. Africa’s proven oil and gas reserves respectively account for 7.5% and 7.1% of global totals. Experts predict that 2019 and beyond will see deep offshore exploration and mega gas finds, with the development of trans-continental pipelines, gas-to-power initiatives and refining potential. The report delves into major trends for 2019, including political transitions and regional integration through the AfCFTA which promises to reduce barriers to intra-African trade, facilitate the movement of people and strengthening Africa’s prominence on the world stage. A rosy picture is painted for natural gas as global consumption rises. Africa’s gas production grew by 8% between 2017 and 2018 – largely out of Egypt. In terms of opportunities, sub-Saharan Africa’s two largest producers of oil – Nigeria and Angola – are expected to launch bidding rounds this year. Equatorial Guinea, Uganda, Gabon and Congo Brazzaville have ongoing rounds, Ghana launched its first licencing round at the 2018 edition of Africa Oil Week, and Madagascar is hoped to offer a number of blocks this year. Africa Oil Week 2019 will feature two days dedicated to national showcases and bidding rounds at their upcoming event with 16 countries – including Côte d’Ivoire, Equatorial Guinea and Mozambique -presenting their national hydrocarbon sector to Africa Oil Week’s audience. [Note: The report can be downloaded here, after registration]
Harry G. Broadman: While advanced countries intensify protectionism, Africa embraces free trade (Forbes)
As to the total welfare gains generated by the reduction of tariffs and NTBs, the IMF estimates that AfCFTA will produce an increase in economic welfare for the continent as a whole of between 2% and 4% percent, depending on how quickly and extensively trade liberalization takes place. Importantly, most projections of AfCFTA’s effects indicate that the largest benefits will stem from the reduction in NTBs. Needless to say, relieving NTB’s in particular will be the toughest goal to achieve since, as is the case worldwide, domestic (in-country) vested interests will have strong incentives to resist unless they can be persuaded otherwise that on net they will gain from the policy changes. This is perhaps the most critical roadblock that Africa’s leadership faces in realizing the potential of AfCFTA. Unless adequate financial and other resources are provisioned within the agreement itself to ease the pain for the dislocation of businesses and workers that always accompanies liberalization of trade regimes and facilitate their transition to other activities, the promise of AfCFTA will surely be diminished. AfCFTA will not remedy all of Africa’s deepest problems. But it could well be an economic game-changer for the continent.
Apapa gridlock saddens me – Buhari (The Punch)
President Muhammadu Buhari said on Wednesday that he was saddened by the Apapa gridlock, especially the toll it had taken on business in the Lagos area. He spoke during a meeting with the leadership of the Lagos Chamber of Commerce and Industry led by its Chairman, Mr Babatunde Ruwase, in Abuja. However, he expressed hope in the ongoing efforts by the Federal Government and the Lagos State Government to end the gridlock. Buhari and the LCCI leadership reviewed Nigeria’s recent signing of the AfCFTA Agreement, both agreeing that there were pros and cons for the country. Buhari said: “The consultative approach Nigeria took on the AfCFTA is just another example of our desire for sustainable and inclusive growth. The team visited all the geopolitical zones. We met farmers, commodity traders, manufacturers, bankers and stock brokers. We listened and made notes of their views. Our studies revealed that although the services sector was doing okay, other key job creating sectors such as manufacturing and processing were still lagging behind. This is evident from the fact that intra-African trade only accounts for 14% of Africa’s total trade. As a continent, our consumption is mostly of goods imported from outside the continent.”
South Africa: A R4.42bn June trade surplus (SARS)
The R4.42bn trade surplus for June 2019 (pdf) is attributable to exports of R108.17bn and imports of R103.75bn. Exports decreased from May 2019 to June 2019 by R3.61bn (3.2%) while imports decreased by R6.33bn (5.8%). South Africa’s top five export countries: China (11.3%), Germany (7.0%), US (6.6%), UK (5.2%), India (4.8%). South Africa’s top five import countries: China (17.0%), Germany (10.4%), US (6.0%), Nigeria (5.9%), Saudi Arabia (5.3%).
Ethiopia’s parliament passed a bill on Wednesday to open up the country’s financial sector to an estimated five million of its citizens who have taken other nationalities, including allowing them to buy shares in local banks and start lending businesses. Ethiopia’s banking sector, which is closed to foreign investment and is still one of the most tightly state-controlled in Africa, is dominated by the two oldest and most profitable institutions, Awash Bank and Dashen.
RCEP talks likely to conclude this year, official says (China Daily)
Assistant Minister of Commerce Li Chenggang said since the 27th round of RCEP talks held in Zhengzhou, the provincial capital of Henan province, has made notable progress in many aspects between July 22 and 31, it will be conductive for the upcoming RCEP ministerial meeting to gain more consensus in Beijing from Friday to Saturday. More than 700 representatives from 16 countries including member economies of the Association of Southeast Asian Nations, Japan, Australia and India attended the 27th round of RCEP talks and they reaffirmed the goals reached during the second RCEP leaders’ meeting in Singapore last November. The parties held a plenary session of the Trade Negotiation Committee and parallel sessions of working groups on trade in goods, trade in services, investment, rules of origin, trade remedy, finance, telecommunications, intellectual property rights, e-commerce and laws and mechanisms. [India: Rice exporters want Centre to obtain duty cuts at RCEP]
Today’s Quick Links:
Karen Kandie: Powering regional integration through trade
Nigerian traders bemoan: Ghana’s borders levy charges too high
South Africa in good stead to address global oils demand
Africa wants to sell more to China: enter avocados
AUC, COMESA, UNDP Africa Office train AU member states in green climate financing
Woolworths has now lost nearly R12bn in 5 years trying to go big in Australia
OECD: Latest developments in steel making capacity (pdf)