4th SADC Industrialisation Week: selected updates

1. President Magufuli pushes for intra-African trade. Opening the 4th SADC Industrialisation Week and Exhibition in Dar es Salaam yesterday, President Magufuli – who will assume the regional bloc’s chairmanship during next week’s SADC Summit – said there was an urgent need to do away with hurdles hampering trade among Sadc countries. “An enabling business environment would create confidence among investors in manufacturing and eventually boost the value of intra-African trade,” said Dr Magufuli, whose government has taken a raft of measures with regard to Tanzania’s business environment since he took office in November 2015. He said 62% of exports from Africa are primary goods, whose prices are unpredictable, adding that this is what makes farmers poor. Citing the US, Japan, France and most Asian countries as examples, Dr Magufuli said these nations have strong economies largely due to massive investment in industry.

2. Tanzanian PM urges local manufacturers to capture Southern African market. Prime Minister Kassim Majaliwa on Tuesday urged local manufacturers of various goods to capture the expansive market in the 16 member states of SADC. “Tanzanian local industries are manufacturing goods that can compete in the SADC market and elsewhere,” Majaliwa told a news conference shortly after he visited the 4th Annual SADC Industrialization and Exhibition Week in the business capital Dar es Salaam. He said Tanzanian industrialists should find ways of partnering with their counterparts in the other 15 SADC members states with a view of producing goods for exports.

3. SADC Executive Secretary, Dr Stergomena Tax: The private sector is a critical partner in the SADC industrialization agenda hence the need for the formalization of the SADC Business Council. “SADC recognizes the role of the private sector, values its contribution. This is evidenced in the ongoing partnership and structures that have been put in place for this purpose, including the Industrial Development Forum and the SADC Business Council,” she further noted. SADC member states are likely to expand markets for goods and services through the signing and operationalization of the new AfCFTA, she stated. The pact had been delayed by the slow pace in the finalization of exchange of offers and the ratification of the COMESA-EAC-SADC Tripartite Free Trade Area Agreement, the SADC top official recounted. She urged member states to finalize tariff negotiations and ratification processes for the Tripartite Free Trade Area Agreement, a catalyst for the Continental Free Trade Area. She also called upon the private sector to join hands with governments in advocating for operationalisation of the COMESA-EAC-SADC Free Trade Area. “Let us utilize trade opportunities created by the SADC Free Trade Area with an integrated market of the 16 countries and a combined population of 327 million and a GDP of about $599bn,” Dr Tax appealed.

   The chairman of the Tanzania Private Sector Foundation, Salum Shamte, expressed concern that basic services such as railways, roads, water, electricity and internet are seven times more expensive for African businesses compared to Asian counterparts. It is high time that private and public sectors work together to address the bottlenecks that hold back African businesses, he said, emphasizing that the region has to work as one and remove all cross border trade barriers and increase intra-Africa investments and trade.

4. In brief: JPM wants barrier-free trade, Boosting SMEs competitiveness within SADC member states, Optimism expressed over private sector, Namibia hands over chair of SADC Business Council to Tanzania, SADC bloc links with China’s BRI over industrialization strategy

5. Related: Southern African News Features preview of the 39th SADC Summit

   Post-2020 SADC Agenda: ADC has begun the process of formulating a new development vision to succeed the pdf Revised Regional Indicative Strategic Development Plan (RISDP) (1.04 MB) that was approved in 2015 and runs until 2020. The review process is expected to lead to the development of a framework for the post-2020 regional strategy that takes into account SADC Principles and Common Principles as well as global and continental processes such as the African Union’s Agenda 2063 and the United Nations’ Sustainable Development Goals. With one year left until the 2020 SADC Summit (the 40th), the 39th Summit is expected to review progress towards the development of the post-2020 SADC Agenda.

   SADC Protocol on Industry: In a bid to enhance the level of industrial development, both nationally and regionally, and in pursuit of ensuring the attainment of unified goals and cohesion among Member States’ industrialization policies and strategies, SADC is developing a Protocol on Industry, which is set to be completed by August 2019. The protocol will be a binding instrument that will entrench and give legal effect to the pdf SADC Industrialisation Strategy and Roadmap (2.34 MB)  and will ensure adequate coordination, monitoring and evaluation of implementation. The proposed protocol is expected to strengthen the level of industrial development in the region and facilitate the harmonization of policies and strategies in Member States. Where Member States already have such policies and strategies in place, these should be reviewed and aligned to the SADC Industrialisation Strategy and Roadmap.

   pdf SADC Regional Infrastructure Development Master Plan (3.93 MB) : Implementation of the RIDMP is being done in three phases, covering the Short Term Action Plan (STAP) 2012-2017, the Medium Term Action Plan that runs up to 2022, and the Long Term Action Plan to be implemented up to 2027. Preliminary findings of a study commissioned by the SADC Secretariat show that the implementation of most STAP projects is behind schedule.

On cusp of pan-African trade deal, giant Nigeria clings to protection (Reuters)

Now that Nigeria is in, however, some trade experts fear its long history of economic protectionism and tepid support for the AfCFTA will undermine the bloc. “If Nigeria, after signing, decides not to implement, there will be a problem. There are so many administrative ways in which Nigeria can frustrate this agreement,” said Bismarck Rewane, CEO of Lagos-based consultancy Financial Derivatives Company. “Something has to give,” said John Ashbourne, senior emerging markets economist at London-based consultancy Capital Economics. “Will other African countries allow in Nigerian goods if the (central bank) is actively trying to discourage trade going the other way?” Nigeria’s protectionism has scuppered similar multinational initiatives in the past. Five years after negotiations wrapped up for an economic partnership between the EU and 16 West African nations, Nigeria’s failure to sign the deal has effectively blocked it for the entire region. Its adherence to the West African bloc ECOWAS’ common external tariff regime has also been patchy. [Companion multimedia report: Protectionism vs. a free trade dream in Africa]

DRC: Three Gorges has nothing on China-backed dam to power Africa (Bloomberg)

All eyes are now on Kabila’s successor, Felix Tshisekedi, who’s vowed to connect half of the population to the national grid over the next decade. Inga III, his advisers say, is one of his priorities - even though Tshisekedi hasn’t confirmed he’ll stick with the Spanish and Chinese consortia, which have yet to be awarded a concession contract. “We’re going at cruising speed,” said Michel Eboma, Tshisekedi’s chief adviser for mines and energy. “The president has the general interest of the people at heart, and Inga III aims at improving the life of the population.” Much will depend on China’s attitude. While President Xi Jinping’s government supports the project, he’s increasingly working to ensure that his Belt and Road Initiative doesn’t leave poorer nations with unsustainable debt. The uncertainty surrounding China’s approach has caused dislocations in projects across Africa. Inga III “has to be a project that guarantees repayment of loans because the financial budget of the government is very limited,” said Wang Tongquing, China’s ambassador to Congo. “According to the information I have, the plans of this project are not yet very mature, above all the plan for the consumption of the electricity after construction.”

Natural gas exploration in Mozambique brings in more state revenue (Macauhub)

Filipe Nyusi, speaking at the ceremony to lay the foundation stone of Mozambique LNG’s natural gas processing unit, also said that the project led by the Anadarko Petroleum Corporation group, “will catapult Mozambique’s economy on regional, continental and global levels.” “With the implementation of this facility, whose first stone we had the privilege to lay, a new page in the history of Afungi, Cabo Delgado, Mozambique and Africa has been turned,” said the president, adding that “this project irrefutably defines Mozambique as a destination for foreign direct investment.” The unit is estimated to cost US$150 million and will have the capacity to produce 12.8 million tonnes of liquefied natural gas per year, of which 11.1 million tonnes per year have already been sold to European and Asian buyers.

Biggest vehicle-exporters from South Africa in July 2019 (Carmag)

According to Naamsa, the South African automotive industry’s July 2019 export sales registered a “substantial gain” year-on-year, reflecting a climb of 22,1%, with 34 297 units shipped off during the month. In July, Mercedes-Benz held onto the top spot with 9 495 units of its C-Class exported from the East London plant. This represents an increase of 1 352 units, month on month. Ford, meanwhile, climbed three places to second, shipping off 9 253 units (comprising 9 247 units of the Ranger and six of the Everest) from its Silverton facility in the month. This represents a massive increase of 5 894 units over June’s effort.

Zimbabwe: Government to launch National Export Strategy (Sokwanele)

Government will this month launch the National Export Strategy expected to increase the growth of exports by at least 10% annually. This was said by Foreign Affairs and International Trade Minister, Sibusiso Moyo during an induction of new ZimTrade board members. The new members appointed by Government are the chairperson Mrs Clara Mlambo, Dr Davison Gomo, Ms Florence Makombe, Dr Gift Mugano and Mr Stewart Nyakotyo. The government-appointed members join Mr Admire Masenda, Mr Mike Eric Juru, Ms Peggy Rambanapasi and Mr Brian Kagondo, who were appointed by the private sector. Minister Moyo urged the new board members to consolidate market access opportunities for Zimbabwe in the region and promote regional integration under SADC, Comesa, Tripartite, African Continental Free Trade Area and Europe. He urged the new board to expedite the writing of a new constitution for the organisation to provide a reasonable tenure.

Kenya’s Africa imports beat exports for first time (Business Daily)

Kenya has for the first time bought more than she sold to African countries in the half-year period, signalling continued dwindling competitiveness of her products on the continent. Trade deficit in Africa — the gap between imports and exports — stood at Sh156 million, marking the first time Nairobi has run a deficit since the Central Bank of Kenya started to publicly keep trade records in 1999. Data from Kenya Revenue Authority show total exports in six months through June dropped 1.96% to Sh107.55 billion compared with a year ago, higher than 0.99% in imports to Sh107.71 billion. Orders from Kampala have dropped to Sh30.77 billion in the January-June 2019 from recent highs of Sh34.51 billion in 2013, the statistics kept by the CBK shows. Half-year exports to Tanzania have dipped to Sh15.79 billion this year from Sh21.73 billion five years ago, while those from DRC have dipped to Sh6.86 billion from Sh10.12 billion. Imports from Uganda, on the other hand, have doubled to Sh13.95 billion in June 2019 from Sh5.14 billion in 2014, while Tanzania’s has grown to Sh12.95 billion from Sh8.34 billion. [Editorial comment: Kenya and Africa trade deficit a wake-up call; Peter Biwott, Export Promotion Council CEO: We can emulate the successful sports model to boost exports]

Sachen Gudka: It’s time to capitalize on our export potential (The Standard)

The declining export trend calls for robust and strategic measures to increase our exports to the COMESA region. How can we realize this? First, we must address the cost of production if we are to remain competitive in the regional market. Kenya’s manufacturing sector, for instance, has been operating at about 13% cost disadvantage compared to our neighbouring countries. Second, we must diversify our export portfolio. For instance, tea accounts for 15% of the total value of Kenyan exports to COMESA countries . Such lean diversity limits our ability to competitively take up the huge market in the region. Third, we need to incorporate SMEs along the value chain. This means that we have to put in place preference policies that will favour SMEs under procurement as well as having in place a market structure that supports SME lending, market access and capacity building. Lastly, it is critical that all Member States respect standards, and that standards are not used to create nontariff barriers, which impede business. More so, the Rules of Origin and tariff­ discussions held since 2015 on Tripartite Free Trade Area should be adopted widely to avoid lengthy negotiations in the AfCFTA. [The author is chairman of the Kenya Association of Manufacturers and vice chair of the COMESA Business Council]

Regulators walk the ‘mobile money’ line (Bloomberg)

African telecom authorities must walk a fine line when it comes to regulating the move of mobile operators into financial services. They want to encourage this shift, but they also don’t want to be in a position where operators don’t have much oversight. This is what’s happening in Kenya, where mobile money transfer services like Safaricom’s M-Pesa don’t operate under regulations specifically meant to govern these kinds of services. The excitement around M-Pesa’s potential led Kenyan authorities to hold off on regulating it too stringently. This is now changing. Concerns over its potential for money laundering and having a single company play such a dominant role in an important part of its economy has seen Kenyan authorities steadily increase regulatory requirements over the last few years. The Kenyan parliament is now even proposing legislation that will see the provider of a telecom service split its other businesses, like M-Pesa, into a separate entity. This move will eventually see M-Pesa “provide separate accounts and reports”.