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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Sebastian Liste | NOOR for FAO

04 Sep 2019

Launched today in Accra: The 2019 Africa Agriculture Trade Monitor

The 2019 Africa Agriculture Trade Monitor is being published at a critical moment for both international trade relations and African trade integration. There is a particular need today to mobilize the most detailed statistical knowledge and technically robust tools and methods to study Africa’s trade integration and identify the most important barriers to further integration, to identify which African regional trade agreements have worked and which have failed, and to determine which sectors in Africa are most competitive and examine the characteristics of its specialization. It is also necessary to assess the possible consequences of a more protectionist global economy for Africa. Finally, clear policy recommendations are needed for current trade integration efforts on the continent. It is in this spirit that this report was designed. The report makes it clear that the AfCFTA is central to addressing many of the policy challenges associated with economic integration and agricultural trade that African countries face today. The authors argue consistently that the new agreement creates an important opportunity for African countries to design regulatory frameworks that will provide an adequate response to these challenges. To do so, however, policy-makers will require a clear picture of farm trade on the continent, as well as the trends and drivers shaping economic outcomes: this report seeks to make a concrete, timely, and policy-relevant contribution in this respect.

The report comprises six chapters, with Chapter 1 providing a general overview of the report. Chapter 2 is devoted to Africa’s trade performance in world markets, Chapter 3 focuses on measuring regional trade integration, and Chapter 4 looks at the competitiveness of African agricultural value chains. Chapter 5 focuses on the featured topic of the 2019 report, namely the potential effects on African economies of ongoing disruption to the global trading system, and Chapter 6 examines trade integration in the featured region of Eastern and Southern Africa.

Extract (pdf): So, a striking feature of African trade is a high concentration of exports in a relatively small number of products, which are often raw or semi-processed. This may imply volatility in export revenues; and the early stages of value chains, in which African countries appear to be specialized, are often low-value-added stages. By creating a large domestic market, characterized by low barriers to international trade, AfCFTA could remedy these weaknesses by diversifying production bases (involving a rise along value chains) and stabilizing export earnings. We also showed that the level of intra-African trade appears relatively high: this is a conclusion identical to that reached in several academic studies, but contrary to those of institutional publications. This is essentially due to the benchmark used in each study. The second group of studies compares the share of intraregional trade in total trade of different continents, while the first group of studies defines a benchmark that considers all world trade. We demonstrate that the share of intraregional trade in total trade depends not only on trade barriers, but also on geography, economic activity, and so on. This is why a benchmark is required, and confirms that African trade is more introverted than extraverted.

AfCFTA Country Business Index: Expert group meeting update (UNECA)

Mr David Luke, coordinator of the African Trade Policy Centre, said “the Index will not only further contribute to better understanding of the challenges that private sector operators and traders at various levels face but also provide a tool for articulating their challenges to policy makers”. Mr Prudence Sebahizi, chief technical advisor and head of the AUC’s AfCFTA Unit, noted that the ACBI should be designed in a way that it complements other initiatives and tools including the African Trade Observatory and Pan-African Payment and Settlement System that aim at supporting the implementation of the AfCFTA. During the meeting, the proposed dimensions and indicators of the ACBI were critically reviewed and improvements have been suggested. A proposed survey instrument for collecting data from private and public businesses that produce/trade across borders in Africa was evaluated. The ACBI methodology will be refined and piloted in selected countries, Cameroun and Zambia, and be validated in the month of November 2019.

Africa’s Tripartite Free Trade Area to be operational in early 2020 (Xinhua)

Francis Mangeni, COMESA’s director of trade and customs, told Xinhua in Nairobi that so far five countries have ratified the TFTA that brings together COMESA, EAC and SADC trading blocs. “We expect another 11 countries to ratify the agreement before the end of the year so that the TFTA could be operationalized,” Mangeni said on the sidelines of the sixth COMESA annual research forum. “In the first year of operations countries (are) to fully liberalize trade on 66% of all goods and achieve 100% in five years,” he said.

World Economic Forum Africa: updates

  1. Remarks by President Cyril Ramaphosa during the Ease of doing Business seminar. We have moved to clear up uncertainty in the policy space with the finalisation of the Mining Charter and the release of the policy directive for the release of high demand spectrum. Work on a draft Oil and Gas Bill to guide the development of these burgeoning economic sectors is at an advanced stage and the Integrated Resource Plan that outlines the trajectory of our energy planning is close to finalisation. In support of accelerated industrialisation, we are refining our industrial strategy to focus on a number of key growth sectors including renewable energy, agriculture, and oil and gas.

  2. AngloGold Ashanti’s Sipho M Pityana: How Africa can secure its long-term economic growth. There is little doubt our policy responses ought to consider the current headwinds pulsing through the global economy. For example, we cannot at this stage disproportionately focus our resources on the manufacturing sector, which is currently in a slump amid frail global demand, dented by protectionism. While the sector may recover in the future, our policy fix has to ensure we also include other sectors including agriculture, services and mining. The challenge is three-fold: design data-dependent policies that boost productivity and long-term growth, cut debt and reduce Africa’s vulnerability to economic downturns.

  3. PwC’s Dion Shango: Why the skills gap remains wider in Africa. The current lack of skills is having real consequences. Of the CEOs who were extremely concerned about the availability of key skills, 65% of African CEOs (global: 55%) said the skills shortage was preventing them from innovating effectively, while 59% (global: 47%) conceded that their quality standards and customer experience were being undermined. In addition, 54% (global: 44%) confirmed that they were missing their growth targets because of inadequate skills. Only 3% of African CEOs (global: 4%) we surveyed said skills availability was not impacting on their organisations’ growth and profitability. The message business leaders are sending is clear. We need to act. Now. They also appear to be heeding their own advice, with 47% of African respondents (global: 46%) recognising significant retraining and upskilling as the most significant interventions needed to close skills gaps in their organisations. Twenty-two percent of CEOs in Africa (global: 17%) also identified establishing a strong pipeline of skills direct from educational institutions as an important step.

  4. WEF’s Maksim Soshkin: Sub-Saharan Africa has all the natural capital it needs to grow its tourism industry. Given sub-Saharan Africa’s potential for travel and tourism and the broad range of factors that need consideration, the industry can be used as a rallying point around which policy-makers and other travel and tourism stakeholders push for improvements in areas ranging from structural reform to infrastructure development. This could serve as a stimulant for broader economic development. Based on the results of the 2019 TTCR, sub-Saharan Africa showed the greatest improvement in international openness relative to the world, especially in regard to visa policy. Eight of the top 20 countries that showed the biggest reduction on visa requirements in the ranking came from the region. Moreover, 10 regional economies are among the top 20 scorers for more favourable visa requirements. For many economies, increased visa openness is strongly linked to tourism policy. For instance, Benin had the greatest percentage improvement in international openness (133rd to 92nd) in the ranking thanks to reduced visa requirements (122nd to 7th). The country recently announced visa-free access to all African countries, with visa reductions directly tied to its tourism action programme – a programme which is part of a broader integrated development plan.

Related commentary, by ABSA’s Peter Matlare: Much work on the ground needs to be done for AfCFTA’s success. Africa is not geared to remain a poor continent; Africans face poverty for the same reasons other nations were once poor. This means our poverty problems can be eliminated through solutions that other economies used to move from poverty and underdevelopment. But Africa has some catching up to do: its 2017 intra-regional trade accounts for just 17% of exports, against 59% in Asia and 69% in Europe. Coupled with this, Africa has missed out on the economic booms that other trade blocs experienced in recent decades. To turn around our economic challenges in Africa, appropriate and bold economic policies and practices are required. National governments must actively work with their regional counterparts and their private sectors to improve national and regional political economies. Transparency, collaboration and a belief in our shared future will help AfCFTA deliver the real benefits of integration.

WEF Africa sessions to take place tomorrow, Thursday

The Power of Digital Identities [Speakers: Bineta Diop, Paula Ingabire, Margaret Franco, Magdi Amin, Lacina Koné]

Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution [Klaus Schwab, Cyril M. Ramaphosa, Amina Mohammed]

Is Africa Ready for the Fourth Industrial Revolution? [Speakers: Iyinoluwa Aboyeji, Anne Githuku-Shongwe, Oliver Cann]

The Retail Revolution [Speakers: Arancha Gonzalez Laya, Ann Linde, Mukhisa Kituyi, Sihlesenkosi Majola, Brian A. Wong, Viliam Trska]

Education In The Age of the 21st Century [Speaker: Maxwell Hall]

Investing in the SDGs [Speakers: Frannie Léautier, Edward Ndopu, Hans-Paul Bürkner, André Hoffmann, Mark Suzman]

Today’s Quick Links:

TICAD 7: WCO highlights Customs’ role in the development of Africa

China initiates WTO dispute against additional US duties on Chinese imports

ITC issues call for women entrepreneurs to join second phase of SheTrades Invest

IMF: Illuminating dark corners of the global economy

Zanzibar President opens African region Commonwealth Parliamentarians’ Association Conference

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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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