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tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: John Hogg | World Bank

16 Sep 2019

AfCFTA sensitisation workshops: Malawi, Kenya

  1. Malawi to host AfCFTA sensitization workshops. The Ministry of Trade and Tourism, in partnership with the ECA and the AUC, is organizing AfCFTA Awareness Workshop in Lilongwe and Blantyre, (17, 19 September, respectively). They aim to engage relevant stakeholders on AfCFTA issues, to secure a consensus for Malawi to ratify the AfCFTA Agreement. Each workshop is expected to bring together about 150 participants from private sectors, civil society organizations, parliamentarians, academia, and government.

  2. Kenya’s National Forum on the National Strategy for Implementation of the AfCFTA, organized by the ECA, commenced today. Tweeted highlights by @ECA_SRO_EA: Intra-regional trade within the EAC is high. Exports peaked in 2013 at $3.5bn, and by 2017 had declined to just $2.4bn. The AFCFTA will boost trade and development in Eastern Africa. East African firms are generally quite small: only 34 of them feature in the top 500 in the rankings of Africa’s top companies by turnover. Kenya and Ethiopia barely trade with each other: their annual bilateral trade is worth less than $100m.


A special feature on Namibia’s export competitiveness and regional integration: an extract from Annex VI in the pdf 2019 Article IV Consultation report (2.79 MB) , released on Friday by the IMF

Export competitiveness has been deteriorating recently, and efforts to diversify exports beyond traditional resource-intensive products have had little impact. Relatively high and fast-growing wages, elevated input and trade costs, as well as bottlenecks in the business environment have been associated with these trends. In addition, limited integration in the regional value chain, mostly due to weak trade complementarity and lack of harmonization of policies and regulations in SADC, have resulted in low backward linkages and productivity gains.

The decline in exports growth has been accompanied by a generalized reduction in market shares across products and partners, suggesting some loss of competitiveness. Despite being based on fast growing products (e.g., fish, beverages), since 2015 Namibia’s non-mineral world exports market shares have been falling, partly reflecting weaker demand in Namibia’s main partners, in particular African neighbors (South Africa and Angola). However, Namibia lost market shares across partners, signaling that the geographic distribution of exports does not fully explain exports underperformance. A constant market share analysis (see Box 1) suggests that after accounting for market distribution effects and commodity composition, the Namibia’s adjusted market share analysis has been declining.

The performance of exports of services has been more mixed, with some positive developments. In US dollar terms, since 2014 exports have declined by about 40% (2.3% of GDP), erasing gains accumulated during 2009–14. The decline has particularly affected travel, transport and other services to firms (partly linked to a lower demand from the oil and gas industry in Angola). Nonetheless, based on the number of tourists, Namibia is gradually imposing itself as a key destination in the region, gaining market shares from countries like Botswana, probably helped by a more competitive exchange rate. In addition, the government ambition to position the country as a gateway to the southern African market will likely increase the share of services in total exports.

Despite authorities’ efforts to diversify exports, the export structure has remained broadly unchanged and concentrated on resource-intensive and low added-value products. While exports are less concentrated than in other resource-rich countries, Namibian exports remain dominated by mineral products (around 60% of total exports) including diamond, uranium, gold, as well as processed metals such as copper blisters and refined zinc. Non-mineral exports include mostly food products (fish, live animals and meat, beverages and grapes). The strategy of the government to add value to the raw materials has so far had limited impact on developing general capabilities and more sophisticated industries. Namibia’s positioning in the product space offers little opportunities for diversification.

Namibia’s trade integration within the region has increased, but “productive integration” remains limited, partly reflecting the lack of trade complementarity. The implementation of the SADC Free Trade Agreement early in the 2000s in tandem with the gradual improvement in regional infrastructure has given some impetus to Namibia’s presence in regional trade. Namibia’s share in total intra-African exports increased to 2.9% in 2017 from 2.2% in 2010. Yet, this has been mostly driven by mineral products (e.g. diamond with Botswana since 2012) and re-exports. Exports to South Africa, the biggest market in the region and the main trading partner, have been limited to primary commodities and end-sales products, with very little intra-industry trade in manufacturing.

A plethora of non-tariff barriers hinder trade integration

Widespread non-tariff barriers and domestic market protective policies in Namibia stymie deeper regional integration and the development of regional value chains. Like other countries in the region, Namibia uses several non-tariff measures to protect its “infant” industries and to give preferential treatment to local suppliers (Table 2). In general, these measures tend to support import-substitution, target traditional products rather than modern export sectors, and lack monitorable indicators and sunset clauses. While boosting demand in the short-term, local content requirements distort factors allocation in the economy toward the non-tradable sector, ultimately hindering exports competitiveness on the long-term. On the other hand, efforts to promote exports were dispersed and at times setting limits (e.g., the export-processing zones regime does not allow to export more than 30 percent to SADC countries).

Similarly, South Africa’s industrial and domestic market protective policies have a significant impact on Namibia’s (and other BLNE’s) export opportunities to the largest market in the region. For example, extensive industrial rebates on intermediate inputs and capital goods are used in South Africa to lower input costs for specific industries in the country. Similarly, high local content requirements and complex rules of origins in the SACU region are in general very difficult to comply with particularly for new industries in Namibia and the rest of SACU countries, limiting export-led development. Overall, the absence of a regional body to set rebates, exceptions and export-import related regulations appears to hinder the opportunities of the smaller countries in the region, including Namibia, to rely on developing regional exports to power their countries’ development.

Lack of harmonized technical regulations and standards in the region hampers trade. According to recent studies, national rather than regional or international standards prevail in the region, and standards regimes in Southern Africa, the largest market in the area, are often characterized by an over-reliance on mandatory inspections and certifications hindering regional integration. Moreover, overlapping responsibilities for regulation and, in general heavy government involvement in all dimensions of the standards system create further unnecessary barriers to trade, especially if technical regulations and standards are applied in a discriminatory fashion against imports.

SA farmers concerned about live cattle exports from Botswana (Farmers Weekly)

The South African Red Meat Producers’ Organisation (RPO) has expressed serious concern about the announcement by the Ministry of Agriculture in Botswana that the country will be opening its borders to live cattle exports with immediate effect. This trade directive, issued by the Botswana government, would be in effect until 31 March 2020, and included exports to South Africa, according to Gerhard Schutte, CEO of the RPO. He said that while this was permitted in terms of the free trade agreement between members of SADC, it could result in a drop in local prices, putting further financial pressure on local commercial and developing cattle farmers. “South Africa’s beef producers are already under tremendous pressure because of issues such as ongoing drought and ever decreasing profit margins. This unilateral decision by Botswana is, therefore, extremely disappointing,” Schutte said. [Botswana farmers want permanent ban of vegetable imports: A group of vegetable producers from across Botswana are calling for a permanent ban on imports of tomatoes, potatoes, cabbages, carrots, beetroot and green peppers from South Africa and other vegetable exporting countries.]

How technology and e-logistics services can spur trade across Africa (The Standard)

All these notwithstanding, the higher cost of goods made in Africa has still rendered them uncompetitive on the global marketplace. This has largely been driven by logistical costs, due to systemic inefficiencies. It is estimated that the cost of logistics accounts for up to 40-60% of the final price of goods in African nations, whereas it only takes up 6% of the prices in the US. This is how a mango that goes for only KSh5 at the farm gate ends up with a KSh70 price tag at the supermarket shelf in Nairobi. With these kinds of prices, how could this produce from Kenya compete effectively in the marketplace?

Durban Aerotropolis to turn King Shaka international airport into a smart city

The Department of Trade and Industry has announced plans for a major new smart city in KZN. Speaking on Sunday, DTI deputy minister Nomalungelo Gina said that the 50-year Durban Aerotropolis master plan will turn the entire surface area around King Shaka International Airport into a smart city with diversified economic activities that will boost the province’s economy. Gina said that the plan will cover 2,000 hectares of land as well as 10,000 hectares of green space for expansion. She added that the plan is expected to create over 750,000 jobs. “The Durban Aerotropolis is the only greenfield aerotropolis in Africa and provides a unique opportunity for investors in various sectors including property, manufacturing, aviation and pharmaceuticals,” she said.

New SEZ for the Vaal Region in the pipeline  (dti)

The Deputy Minister of Trade and Industry, Mr Fikile Majola has told community members in Evaton in the Vaal region, Gauteng that government is taking major steps towards the designation of the Vaal Special Economic Zone. Emfuleni Executive Mayor, Councillor Gift Moerane, urged the locals to ensure they set up their businesses, cooperatives and consortiums and skill themselves appropriately, to prepare for opportunities that will come with the establishment of the new mega city, Vaal 21 River City. This project was unveiled by the Gauteng Premier, Mr David Makhura, and described as South Africa’s “first post-apartheid” city. The development will house 400 000 square metres of commercial office space; 60 000 square metres of retail and leisure component; and 20 hectares of park areas with 5000 residential units. [Public Works and Infrastructure Minister Patricia de Lille: De Lille said her dream was to solve this problem by building a smart city as mentioned by Ramaphosa during his State of the Nation Address. “You still need an airport, and I was thinking of Lanseria Airport and find a space and build a new city there. So that is what is on my mind, it is not something that is official but I think it’s one of the ways to solve this problem.”]

Pan African Forum on Migration: Cairo meeting update  (AU)

In her keynote address, the Director of Social Affairs Department Mrs Cisse Mariama emphasized the need for the forum to be synchronized with political decision-making structures of the African Union. For the first time in the history of the PAFOM, Ministers have been invited to participate in the meeting. She said that the AU Commission believes that through the Ministerial participation, the recommendations of this and future meetings will have the relevant support by the highest political decision makers. The outcome report will also be submitted to the upcoming Specialized Technical Committee of Migration, Refugees and IDPs which is the AU Statutory Ministerial meeting for their validation. Mrs. Cisse underlined the need to invest in evidence-based continental migration trends and updates through improvement and investment in the collection, analysis and dissemination of accurate information and research on migration issues in the continent. During the three-day meeting participants will be discussing the following sessions:

Southeast Asia ministers laud UNCTAD’s database on non-tariff measures (UNCTAD)

Economic ministers from countries in the Association of Southeast Asian Nations (ASEAN) commended UNCTAD for its work on a database of non-tariff measures (NTMs) in the region during their latest ministerial meeting held on 6 September in Bangkok. UNCTAD developed the database in cooperation with the Economic Research Institute for ASEAN and East Asia as a resource to assist ASEAN countries in populating and developing the NTMs section of their national trade repositories. “As room to liberalize tariffs further is limited, addressing NTMs is fundamental to fully realize the ASEAN economic community,” Hidetoshi Nishimura, ERIA president, said while handing over the joint UNCTAD-ERIA database to ASEAN Secretary-General, Dato Lim Jock Hoi, in Bangkok on 10 September on the sidelines of the 51st ASEAN Economic Ministers’ Meeting. Over the past 15 years, tariffs have declined worldwide, however the number of NTMs has increased dramatically – 15% in ASEAN countries over the past three years.

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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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