tralac’s Daily News Selection
IFFs are widespread and secretive by nature. No one quite knows how to quantify losses in Africa due to IFFs. Estimates of these amounts hover between $50bn and $80bn annually and seem to be on an upward trajectory. Shockingly, this amount is higher than the annual Official Development Assistance that the continent receives. But how does this take place and who perpetuates these processes, which continue to stymie growth and development and is effectively impoverishing Africa? Do all African countries suffer from this malaise? From the evidence in the recent past, East and Central Africa have the lowest levels of IFFs, while the southern and West African region have the highest amounts of IFFs. Oil-exporting countries have a prominent share of IFFs, while higher levels of IFFs are linked to the size of economic activity in countries and regions. There is even a ‘top ten’ of countries in Africa, all of which are implicated in approximately 75% of total IFFs. Dominant on this list are several resource-rich countries. This book sets out in great detail both the problem of corruption and IFFs and the remedies and actions needed to eliminate these problems. It includes case studies of various countries where Government, State Institutions, the judiciary, the private sector and civil society have rallied to the call to eliminate corruption and IFFs. Case studies cover Mauritius, Uganda, Algeria, Cameroon, Burkina Faso, Morocco, Benin. [Download the accompanying Advocacy Brief (pdf)]
Uganda National Bureau of Standards: Annual Performance Highlights for FY 2018/19
During the FY 2018/19, UNBS undertook Product Certification and Management Systems Certification to improve the quality of locally manufactured products so that they are able to access regional and international markets. As you are aware, the EAC has become a major destination for Ugandan exports. Uganda in June exported more of her goods to the EAC than any other region in the world, according to the latest Performance of the Economy Monthly Report released. The report released by the Ministry of Finance shows that exports to the EAC region grew by 51.8% from $89.40m in May 2016 to $135.74m in May 2017. Exports to Tanzania and Kenya registered the largest increases of 114.5% and 111.2% respectively. Most of these exports are manufactured products that require UNBS Distinctive Mark, thus emphasizing the UNBS Distinctive Mark as a passport to regional markets and the need for manufacturers to invest in quality and certification of their products.
On July 1st 2018, a new regulation came into force on use of UNBS Distinctive Mark, 2018. The new regulation made it mandatory for products covered by compulsory standards to be certified and issued with a distinctive mark before they are allowed on the market. As a result, we witnessed an exponential increase in the number of MSMEs seeking certification. We registered 1,339 MSMEs seeking certification. We also trained 847 and visited 619 MSMEs to build their capacity to apply standards and produce products that conform to standards thus contributing to the government’s export promotion strategy. We certified 1,350 products against a target of 3,000 permits. All certified products were able to access the wider EAC market. We issued 28 management systems certification permits against a target of 35.
South Africa’s export performance faced bleaker prospects yesterday after data from the SA Reserve Bank showed that the country’s current account deficit widened beyond market expectations as global factors weighed in trade. Sarb said the deficit escalated to R204.1bn from a revised deficit of R143.5bn in the first quarter as the value of merchandise imports increased more than exports. It said trade balance switched from a surplus of R41.9bn in the first quarter of 2019 to a deficit of R27.2bn in the second quarter as the value of merchandise imports increased more than exports. Investec economist Lara Hodes said that South Africa’s export performance was likely to remain constrained on the back of a deterioration in international trade flows. Hodes said international trade volumes had contracted for the eleventh month in a row in July. “While import growth will likely be restricted by the moderation in the international oil price and subdued rates of domestic consumption, we could see the trade account recording a deficit position in the near term. The most recent trade figures for July saw the trade balance make a move into deficit territory, with a reading of -R2.9bn, after recording a surplus of R5.4bn in June and R1.7bn in May. This could in turn keep the current account deficit entrenched between -3 and -4percent in the third quarter.” [SARB: Current account of the balance of payments; India: Government likely to announce measures to boost exports soon]
South Africa: Protection tariffs for the sugar industry are on their way out (IOL)
Signs that import protection tariffs for the sugar industry might be phased out indicated a turnaround in government thinking on this issue, SA Sugar Importers Association chief executive Chris Engelbrecht said on Thursday. The Portfolio Committee on Trade and Industry said it had heard that the protectionist strategy for the sugar industry needed to be phased out in favour of one based on competitiveness. This followed engagements between the industry and the Minister of Trade and Industry, Ebrahim Patel, and Minister of Agriculture, Land Reform and Rural Development Thoko Didiza. Stakeholders agreed to an export-led approach targeting the African market through the implementation of the African Continental Free Trade Agreement to support industry competitiveness. This represents a refusal to agree to pleas from the local industry to tighten controls on sugar entering the South African market from other African countries. [Presentations to the Portfolio Committee on Trade and Industry: Status on matters relating to the sugar industry (pdf); Briefing Note: Engagements with the sugar industry (pdf); Supplementary information on sugar matters (pdf): The CSIR has been requested to undertake a detailed modelling on the different technologies/options and indicate possible new technologies to diversify the sugar industry]
African continental free-trade deal has a long way to go (Business Day)
Julia Choate, senior associate in Bowmans’ tax practice, said the Southern African Customs Union presents a “regional snapshot” of the opportunities and challenges that an African continental free-trade area might face. Any common market area has to deal effectively with contraventions of the agreement, Choate said. In the SACU agreement, the revenue-sharing formula seems to present “challenges” in this regard. Caroline Rheeder, senior manager in Cova Advisory’s customs and excise team, said during the discussion that SACU members are seemingly bypassing the revenue-sharing formula by imposing duties on goods. “The idea behind such an agreement is to reduce duties, and practices such as this must be avoided. If these practices are not stopped it would clearly present a barrier to trade.” Choate said that the revenue-sharing formula is calculated regarding the value of intra-Sacu trade. “What we tend to see in practice is that some members impose local levies on imported goods that are not manufactured in their country, and that effectively take the place of customs and excise duties.” The SACU agreement provides a specific carveout for certain restrictions on imports in which it is in the national interest to protect aspects such as public health, intellectual property or exhaustible natural resources, but this does not provide a blanket right to tax, Choate said.
Christian Abadioko Sambou: The African free trade zone can’t ignore continent’s security issues (The Conversation)
Entering the African free trade zone requires nations to relinquish an important part of their sovereignty at a time when widespread violence is posing unprecedented challenges to state sovereignty. States are facing opposition from rebel movements, terrorist groups, jihadis, vigilante organisations, transnational criminals, and so on. These groups are known for their mobility. They defy borders and national territorial sovereignty. Given that some states are being asked to increase their presence in border and remote areas, free trade and free movement of goods and people could become a real cause for concern. The thousands of kilometres of borders within the continent are theatres of violence. States experiencing armed conflict, among them Libya, Mali, Niger, Nigeria, Burkina Faso, the Central African Republic, Sudan and the DRC, share thousands of kilometres of borders with other nations. This explains why conflicts in Mali and the DRC impact the entire region, resulting in millions of displaced people and refugees. The Sahel-Sarahan strip, the Gulf of Guinea, the Great Lakes, and the Horn of Africa are all conflict zones. Therefore, problems with the movement of goods and people within these zones have less to do with infrastructural issues than with governance, peace and security. Such frontier and remote zones are vulnerable, due to a lack of state presence. They are also used for all kinds of traffic and transit and so remain highly prone to conflict. These security issues also apply online. [WEF panel: Free trade in Africa will need more than an agreement]
From 27-29 August, IGAD and IOM convened a meeting of senior representatives from institutions working on migration and national bureaus of statistics from the seven IGAD countries, and Tanzania, to begin a process of migration data harmonization. During the workshop, the seven IGAD member states, which are, Djibouti, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda, agreed to form an IGAD regional working group on migration data. The group will support peer exchanges, capacity building, and develop a set of guidelines to harmonize and standardize migration indicators and statistics to achieve comparability. In addition, to the IGAD member states, Tanzania is also going to reap benefits from this initiative. “It is essential that we can access reliable, timely data on migration in East Africa to ensure economic, social and political inclusion of migrant groups; to ensure that our economies can capitalize on the free movement of skills across the region; and to address migrant groups’ critical needs,” said Ali Abdi, Chief of Mission of IOM Uganda. An IGAD official on his part emphasized the importance of migration data in bringing to life their Regional Migration Policy Framework and its accompanying Action Plan. [Migration data in Eastern Africa; Sierra Leone has announced new Visa on Arrival policy: visa is free for ECOWAS member states; $25 for AU member states; $80 for others]
Chinese companies commit $1.4 bn for African energy projects (Logistics Update Africa)
The African Energy Chamber has recently concluded a visit in Beijing where it met with senior officials from the Chinese government, heads of state-owned energy companies, executives and entrepreneurs from the private sector. Throughout its meetings, the African Energy Chamber secured over $1.4bn with an intention to invest in Africa’s bankable projects in mining, oil and gas, power, and renewables. As LNG demand is growing by the day in China, Africa stands to play a role. In 2018, China consumed 276.6 billion cubic metres of natural gas, an increase of 16.6$ over 2017. In light of strong Chinese interest for Africa, and following demands from its Chinese partners, the Chamber will be hosting the first China-Africa Energy Investment Forum in 2020 in Beijing. [SA’s SEZs embark on roadshow to China]
Experts, who spoke to ThisDay, however, called for an earnest resolution of the diplomatic crisis between Nigerian and South Africa, given the huge bilateral trade between them. They stressed the need to seek diplomatic solution to the current spat between both countries, which appears to be degenerating. A reprisal against South Africa’s business interests in Nigeria, according to the experts, is not the way to go as it might lead to further job losses in the country. There are over 120 South Africa-owned businesses in Nigeria operating in different sectors. Speaking in an interview with THISDAY on the issue, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, said South African investments were quite huge and significant to Nigeria. “So, I think they should be able to resolve this matter amicably. We have about 14 flights between South Africa and Lagos weekly and that is a lot of business. It is in the interest of Nigeria and South Africa to resolve this issue so that it doesn’t deteriorate.”
The National Chairman of Nigeria’s ruling party, APC, Adams Oshiomhole, has urged Nigerians to boycott South African goods and services to protest the killings of Nigerians and other nationals living in that country. Mr Oshiomhole gave the advice at a news conference in Abuja on Thursday. “This is the time to show commitment to our citizens and show sympathy to our loved ones. This can be done by boycotting South African goods and services beginning with Nigerians refusing to use MTN mobile network. Happily, we have indigenous network such as Glo, Airtel and I believe 9mobile is still standing by. If Nigerians boycott the goods and services at least for 30 days; first, to stop using MTN network services, it will send a clear message. We have to review all of those things that give South African companies monopoly in which it makes money with very little value addition. We think that these steps will be appropriate message to South African government to offer satisfactory explanation. It should also pay compensations to those innocent Nigerians whose properties have been looted. South African Airways should be stopped, its landing right should be withdrawn and should not have the right to fly any part of Nigeria until these issues are resolved. We must protect Nigeria’s image its citizens and businesses wherever they are.” [Azu Ishiekwene: The tail wags South Africa-Nigeria dog; Why Fayemi, El-Rufai, Emir Sanusi were in South Africa]
The DRC and the IMF: 2019 Article IV Consultation report
This is the first Article IV mission to DRC since June 2015. The inauguration of President Tshisekedi in January 2019 marks the first peaceful transfer of power since independence. He has pledged to improve governance and scale up public investment. This Article IV consultation provided a welcome opportunity to re-engage with the DRC authorities after a long hiatus (the last consultation took place in July 2015). The authorities had cited political uncertainty as reasons for delaying the overdue consultation. Provision of economic data has remained broadly adequate for surveillance. Some recommendations from the previous consultation remain outstanding (Annex IV). These include: (i) stepping up domestic revenue mobilization; (ii) removing bottlenecks to private sector activity; (iii) strengthening governance and enhancing transparency, particularly in the management of natural resources; and (iv) recapitalizing the central bank to strengthen its financial and operational autonomy. The authorities have also expressed interest in a Fund-supported program to accompany their economic development agenda. [The accompanying Selected Issues report]