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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Stephan Gladieu | World Bank

26 Aug 2019

Victor Harison, Mario Pezzini: Firms must drive Africa’s transformation (Project Syndicate)

But if the AfCFTA is to fulfill its promise, African firms will need to prepare for a new, more competitive economic landscape. Between 2000 and 2018, the African market grew by 4.6% per year, and domestic demand drove 69% of that growth. But now is the time for the continent to reach its full potential with respect to economic development, job creation, and poverty reduction. With around 22% of working-age Africans starting new businesses – compared to 19% in Latin America and 13% in Asia – Africa has the highest entrepreneurship rate in the world. But African firms will need to improve their organizational, productive, and technological capabilities. To that end, the upcoming second edition of the African Union’s flagship economic report, Africa’s Development Dynamics, produced in partnership with the OECD Development Centre, offers a three-pronged strategy for both business leaders and policymakers to follow.

While African firms now file three times more International Organization for Standardization certifications per year than they did in 2000, Malaysian firms alone filed as many certifications in 2015. Matching grants or low-cost loans, which could help more innovative firms cover the costs of certification, would be well worth the expense. Evidence from 41 African countries shows that manufacturing firms with an ISO certificate have 77% higher sales per employee, and certified services firms have 55% higher sales per employee. [The authors: Victor Harison is the African Union Commissioner for Economic Affairs; Mario Pezzini is Director of the OECD Development Centre]

Arancha González Laya: Factories are no longer the sure route to prosperity – here’s why (WEF)

When Kenyan avocado farmers are able to obtain international health and safety certification and connect to foreign retailers, it can translate to four times more money in their pockets for each avocado they sell. For pineapple producers in Benin, better branding, marketing, and packaging – together with improved physical infrastructure – opens the doors to regional and international sales far more lucrative than selling unprocessed fruit in local markets. As for services, the digital revolution has made cross-border trade feasible for everything from programming to accounting and legal services. But value addition and trade in services aren’t just about technology parks in Bangalore or call centres in Dakar. They’re about hotels in Lao People’s Democratic Republic building commercial ties to local farms and tour operators. They are about young people in refugee camps in Kenya using freelancing platforms like Upwork and Fiverr to do internet ad design for clients in other countries. The upcoming World Economic Forum on Africa meeting in Cape Town will be looking at how to maximize the contribution of digital trade to growth and job creation in sub-Saharan Africa. Ongoing talks on e-commerce at the World Trade Organization offer the prospect of international rules of the game on digital trade, enhancing predictability and reducing transaction costs for businesses of all sizes. [The author is Executive Director, International Trade Centre]

Egypt’s non-oil exports are improving but not as much as experts might have wished (Ahram)

Egypt’s non-oil exports grew 2.3% in the first half of 2019 to $13.04bn, up from $12.75bn during the same period last year, according to figures released by the General Organisation for Export and Import Control. “The growth rate is not high enough, but it is good to see progress,” Sherif Fahmy, general manager at NGage Consulting, told Al-Ahram Weekly, adding that according to the International Trade Centre’s Trade Map website there was an untapped export potential for Egypt worth $18.3bn in countries like Saudi Arabia, the UK, Italy, the US, France, Spain, Turkey, Russia and some Arab countries. Compared to other middle-income countries that started at the same level or below in the early 2000s, Egypt’s exports-to-GDP ratio remains much lower, the World Bank’s Egypt Economic Monitor July 2019 report has said. It showed that Egypt’s exports of goods fell from 17 to 5.6% of GDP between fiscal years 2006 and 2016, although they picked up again in 2018 to reach 10.3% of GDP. Egypt exported around $2bn worth of goods in fiscal year 2017-18, 65% of which were non-oil exports. Many had hoped that the floatation of the pound, which caused it to depreciate by 50%, would work in favour of Egyptian exports because it would mean they would be sold at more competitive prices. However, that improvement was only meagre.

Merged agency races to grow exports, boost Kenya’s image (Business Daily)

Kenya has unveiled a new agency to promote its brand and push for its exports across the world. The Kenya Export Promotion and Branding Agency (Keproba) resulting from the recent merger of Kenya Export Council and Brand Kenya, is a convergent point for public and private sector organisations. The Cabinet approved the merger of the two agencies in October last year as part of the national exports development strategy. Prior to that, EPC concentrated in growing export markets while Brand Kenya worked to improved the country’s image abroad. Keproba chief executive Peter Biwott said the agency’s main task will be to help Kenyan companies and self-help groups to identify foreign markets as well as ensuring local products meet set international standards.

Uganda’s agricultural ministry concerned about EU ban on Uganda’s agriculture exports (New Vision)

EU reportedly accuses Uganda of exporting poor quality products and also of shipping products that presented with high contents of poorly mixed agrochemicals used to treat or preserve them. Agriculture Minister Vincent Ssempijja revealed that the EU has resolved to audit the sector in October for compliance with international and EU Health standards. If the products fail the audit, Uganda could be slapped with a ban for non-compliance with EU Phytosanitary (plant health) standards. According to Ssempijja, Uganda has on several occasions received warning over severe chemical contamination of horticulture exports over the last four years. [EU approves Uganda’s bid to export marijuana]

South Africa’s oranges take the world by storm (City Press)

One in every 10 oranges eaten around the world now comes from South Africa. The country’s flourishing fruit industry has increasingly made up a bigger proportion of the international trade, said the Bureau for Food and Agricultural Policy in its latest agricultural outlook for the period 2018 to 2028. Citrus, grapes and pome fruits, in particular, have strengthened their market position in the past decade. Citrus’ market share has risen from 4% in 2001 to more than 10% last year, followed by table grapes (5% to 7%) and pome fruits (3% to 6%). Citrus is South Africa’s biggest and most important fruit export, according to value and volume. By the year 2028 the country could be exporting 25% more cartons than last year, said the bureau. [South Africa: Booming blueberry industry predicted to create 14 000 jobs in four years]

Mozambique: Diagnostic report on transparency, governance and corruption (IMF)

Mozambique’s economy is at a turning point, and efforts to address governance and corruption vulnerabilities can have a lasting positive impact. The current levels of public debt have caused us to take a hard look at our governance and anti-corruption framework and have prompted various reforms to address the vulnerabilities exposed in this framework. In general, the problems in our society, and specifically corruption, have been examined in detail recently and are clearly macro-critical. One study estimated the costs of corruption to Mozambique during the period 2002 to 2014 at up to $4.9bn (approximately 30% of the 2014 GDP). The impact of these costs is widespread, affecting taxpayers, public service providers, the financial and private sector, as well as Mozambique’s international reputation. These costs are especially harmful at a time when our country has been hit by a series of shocks, notably the fall in commodity prices, drought, the withdrawal of donor budget support, and, more recently, Tropical Cyclones Idai and Kenneth. At the same time, Mozambique stands poised to reap significant revenues from natural resource reserves, and our duty as the government is to ensure the responsible stewardship of those funds for both current and future generations. By taking meaningful steps now to implement the governance and anti-corruption framework in an evenhanded, consistent, and effective manner, and to support efforts toward transparency and individual and institutional accountability, as the government, we can aim to achieve enduring results. [Note: The Government of Mozambique would like to thank the IMF Legal and the IMF Fiscal Affairs Departments for providing technical assistance to the preparation of this report]

EXIM Board votes to notify Congress of proposed $5bn financing to support US exports to Mozambique LNG project

EXIM’s financing could support an estimated 16,400 American jobs over the five-year construction period, including jobs at suppliers in Texas, Pennsylvania, Georgia, New York, Tennessee, Florida, and the District of Columbia. Through follow-on sales, thousands of additional jobs may be generated across the United States. Through fees and interest earned, the transaction also could create more than $600 million in revenue for US taxpayers, according to EXIM projections. The Mozambique LNG project would begin to develop the Rovuma Basin, one of the world’s most extensive untapped reserves of natural gas. “With the backing of the Trump Administration, U.S. investment in Africa has taken on a new urgency,” said Secretary of Commerce Wilbur Ross, an ex officio member of EXIM’s board of directors. US Trade Representative Robert Lighthizer, also an ex officio member of the EXIM board: “America’s energy companies offer the best goods and services in the world.”

Eswatini: Statement issued by IMF staff on conclusion of visit (IMF)

Eswatini faces a challenging economic environment. Since 2016, rising government spending and low revenue from SACU have increased public debt and contributed to large domestic arrears. International reserves have declined, although remain broadly adequate, and real GDP growth has been sluggish. The new government that was appointed in late 2018, continues to formulate its policy agenda to address these macroeconomic challenges. In the absence of policy action, the economic outlook remains fragile. Discussions focused on recent economic developments, in particular budget execution and planning, economic prospects, and the scope for further policy action. The 2019 Article IV consultation—annual review of the economy—with Eswatini is planned for late 2019.

Today’s Quick Links:

Kenya: East African Cables decries steep costs on SGR use

SA retailer Shoprite takes Sh571m Stanbic loan for Kenya stores

Uhuru flags off first crude oil shipment

Standard Bank, Africa’s largest bank joins Marco Polo trade finance network

Ghana needs skills upgrade and free trade to make automotive tax breaks work

Reuters: New Congo government shows influence of former president

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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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