Next month, UNU-WIDER, in partnership with the Brookings Institution, launches its inaugural Massive Open Online Course: Industrial Policy and the Challenge for Africa

An interview with the UNECA’s Vera Songwe: Africa’s free trade area – the journey begins

Ministers of finance of member states signing on to AfCFTA have an important role to play to help countries implement the agreement. Tax and customs, for example, which are key components of AfCFTA, are matters under the ministry of finance. It’s up to the finance ministers to evaluate if, how and when revenues will increase for their countries and how these revenues will be expended. Once countries ratify the document, they have 10 years, some have 13 years, to put key policies in place to fully take advantage of AfCFTA. We expect countries to carry out a review of their macroeconomic policies, focusing on fiscal policies that are fit for purpose, and to help us not only to adapt to, and make the most of, AfCFTA, but more broadly to achieve Agenda 2063 and the 2030 Agenda for Sustainable Development. The urgent action is to create the enabling fiscal space to foster both public and private investment while ensuring economic diversification.

Nigeria: Forex ban on food importation will not affect AfCFTA – CBN’s Emefiele (Nairametrics)

Ghana and the AfCFTA: tweets from the ongoing national conference

1. Ghana’s Deputy Minister of Trade and Industry, Carlos Ahenkorah: “Whether we like it or not the moment AfCFTA is enacted, goods from all over Africa will come into Ghana. Quota free and tariff free. If you are not ready you will be in trouble.”

2. @ShariAnkomah: Day 2 of National Conference on AfCfta implementation with @MotiGhana pushing for greater ownership of our shipping vessels to reduce lead time between African countries. It takes 14 days to do Africa-Europe shipping but up to 28 days between Ghana and Cote d’Ivoire.

3. @AboagyeTMintah: Pharmaceutical manufacturing, another big opportunity we could leverage in the Ghana-Turkey economic relationship, especially with AfCFTA on the horizon.

The Indonesia-Africa Infrastructure Dialogue began today in Bali: It is being attended by 700 representatives from businesses and governments of Indonesia and African countries.

1. What is the Indonesia-Africa Infrastructure Dialogue? An extract from the concept note: Preferential trade agreement preliminary discussions and negotiations. Indonesia and several African countries will hold preliminary discussions and also start negotiations on the establishment of bilateral Preferential Trade Agreements. These discussions and negotiations will be officially launched during the opening of the IAID. Bilateral trade between Africa and Asian countries, including Indonesia is growing. The growth can be reflected through the increase of trade in 2018 that reached $11,25bn, compared to $4,77bn in 2009. In a period of only 10 years, the trade increased up to 236%. Such advancement can only be achieved by rapid development of infrastructure, both in Africa and Indonesia, as well as establishment of trade agreements and tariff reduction mechanisms.

2. Arifi Saiman: Setting sights on ‘free trade’ Africa. Economic integration is moving faster under the AfCFTA, which came into force in May. Pending more ratification by member countries — 27 of its 54 signatories have done so thus far — free trade could become fully operational by July 2020. The poorest continent in the world is rapidly catching up, and Asia may have to accommodate and agree to rename this era as the Asia-Africa Century. Indonesia has caught the African fever, but with AfCFTA, it can do a lot more and faster in tapping the growing economic and business opportunities on offer. President Jokowi gave the order back in 2017, and the government has since taken initiatives to engage more with Africa. It is now up to the business world to take up the challenge. Indonesia has 17 diplomatic missions and 16 honorary consul offices in Africa that are ready to help and make it easier for Indonesian companies planning to do business there. To borrow a phrase from the box-office hit The Lion King, it’s “Hakuna matata” (no problems). [The author directs the Centre for Policy Analysis and Development on Asia Pacific and Africa Regions at the Foreign Ministry]

3. Ambassador Salman Al Farisi: Indonesia and South Africa – struggle solidarity that seeks shared prosperity. South Africa is Indonesia’s largest trading partner in Africa. We are especially keen for this relationship to grow. The spirit of Bandung was essentially about South-South partnership and trade. We believe there to be great complementarities in our economies. We remain keen to share scientific expertise and are encouraged by scholarly exchanges that have been taking place largely unprompted by our governments. While manufacturing is a large part of both our economies, we are keen to grow other sectors such as tourism, beneficiation of raw materials and green technologies. In this regard, it’s worth mentioning that we also have a comprehensive strategic partnership between Indonesia and South Africa. This was signed on 17 March 2008 by then president of Indonesia, Susilo Bambang Yudhoyono and former president Thabo Mbeki. [The author is Indonesia’s ambassador to South Africa]

4. Veeramalla Anjaiah: Indonesia’s increasing presence in Africa. Several Indonesian companies are already present in Africa, and many more are expected to follow after the IAID meeting. For example, state-owned construction company PT Wijaya Karya, which has projects in Algeria and Niger, is planning to sign Rp 2 trillion worth of infrastructure and construction projects soon in Zanzibar, Senegal and Ivory Coast. Privately owned Indofood, Indorama, Wings Group and Sinar Antjol have plants in African countries. There is a huge potential out there. State-owned companies like Dirgantara Indonesia regularly sell top products to African countries, backed by Indonesia Eximbank financing scheme.

5. Starting the series of bilateral meeting on the side of IAID Bali 2019, FM Marsudi met Raila Odinga, High Representative of African Union for Infrastructure Development. Other Twitter updates: #IAIDBali2019, #IndonesiaAfrica, MoFA Indonesia: @Kemlu_RI

USITC’s hearing on US trade and investment with Sub-Saharan Africa: post-hearing submission by the Information Technology and Innovation Foundation (pdf)

The potential for digital duties on imports of digital products. A potential additional problem for the digital economy in SSA is that some countries (especially South Africa) want to enact duties on imports of digital products. To do this, South Africa and its like-minded partners (such as India and Indonesia) want to end a long-held WTO commitment to not enact duties on imports of digital products. Spurred on by dubious and misguided research from certain officials within UNCTAD, many SSA countries oppose efforts to negotiate new e-commerce and digital trade rules at the WTO and the extension of this moratorium on digital duties (due to be decided at the WTO ministerial conference in 2020).60 Allowing countries to enact digital duties, for example, would create the scenario where every song or movie or piece of software that is digitally delivered to a customer in another country would face a tariff, thereby putting it at a price disadvantage to local products, while also increase the price for consumers. Thankfully, Nigeria has dissented from the broader “Africa Group’s” efforts at the WTO to advocate for the end of the moratorium and an end to e-commerce and digital trade talks.

Looking ahead: Global digital trade. The United States has a few key partners in SSA to work with on efforts to set new digital trade rules at the global level. A few SSA countries - Cote d’Ivoire, Benin, Kenya, and Nigeria - have recognized the need to engage with dozens of others countries to discuss and negotiate new e-commerce and digital trade rules at the WTO. This builds on their collective membership of the WTO subgroup of developing countries — the so called “friends of e-commerce for development”— that share a common understanding of the positive impact of e-commerce and its versatility to create sustainable economic opportunities for all. In joining WTO talks, Nigeria and the other countries listed above defied their neighbors in the African Group (which includes Egypt, South Africa, and 41 other countries), who oppose negotiations because they want to enact duties on digital products and other protectionist barriers as part of “digital industrial development,” which is akin to the tried-and-failed use of tariffs and infant industry policies of the last century. [Read a summary of the submission, here]

WCO publishes an E-Commerce Package

The WCO E-Commerce Package, which has just been published, provides guidance to Customs administrations on establishing or enhancing the legislative, policy and operational framework for managing cross-border e-commerce. The Package includes the Framework of Standards on Cross-Border E-Commerce and the accompanying WCO Council Resolution adopted in June 2018, as well as various tools adopted in June 2109, supporting the effective and harmonized implementation of the various standards contained in the Framework. Given the phenomenal growth in cross-border e-commerce and its associated opportunities and challenges, Customs administrations are urged to implement the Framework of Standards in a phased manner, based on their national priorities, specificities, internal procedures, and resource availability. [Various downloads available, here]

Sources of manufacturing productivity growth in Africa (World Bank)

This paper investigates the sources of growth in manufacturing productivity in Cote D’Ivoire, Ethiopia and Tanzania in comparison with the case of Bangladesh. Based on the analysis of establishment census data since the mid-1990s, it finds that reallocation of market share between firms contributed substantially to productivity growth in each of the four countries, although to a varying extent. In Ethiopia, the impact of market share reallocations among survivors tended to be larger than those associated with increases in within-plant productivity. In addition, plant closure (or exit) boosted productivity more than new plant openings (or entry) did in the sense that the relative productivity of survivors (or continuing plants) was higher relative to that of closing plants (or exit cases) than it was relative to the productivity of newly opening plants (or new entrants). Reallocation of market share plays an important role in raising aggregate productivity in Côte d’Ivoire as well. But the pattern here is opposite to that in Ethiopia in that in Côte d’Ivoire entering (or newly opening) plants have larger impact on aggregate productivity growth than closing (or exiting) plants. Unlike the case with Cote D’Ivoire and of Ethiopia, the reallocation of market share among surviving plants is a smaller source of manufacturing productivity growth in Tanzania than the new plant openings and plant closure. [The authors: Patricia Jones, Emmanuel K.K. Lartey, Taye Mengistae, Albert Zeufack]