Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo Credit: World Bank

Tributes continue to pour in following the death of Nigeria's chief trade negotiator and one of the AfCFTA's architects, Ambassador Chiedu Osakwe.  A selection:

(i)  David Luke: Chiedu was a great African. A man who believed trade is a sustainable road out of poverty in Africa; a man who chaired final stages of AfCFTA negotiations with wit, humor and skill; a man who worked hard to secure Nigeria’s signing deal; and I’ve lost a friend of over 20 yrs.

(ii)  Ambassador Albert Muchanga: Heard with sadness, passing away of brother and giant of AfCFTA, Ambassador Chiedu Osakwe. He contributed immensely to what AfCFTA is and will be. Condolences to family, people and the Government of Nigeria.

(iii)  President Buhari: "President Buhari commiserates with all friends, relations and professional associates of the deceased, who served the country for many years as Foreign Service Officer, before joining the WTO, and later accepting to return to the country as a trade adviser to the Ministry of Industry, Trade and Investment, and Director-General of NOTN. The President affirms that the intellectual depth, fervour and sense of patriotism that Amb. Osakwe handled will be sorely missed, especially the front-line and historical role of chairing the Negotiating Forum of the African Union from June 2017 to March 2018, during which time the negotiations were concluded on the Agreement Establishing the African Continental Free Trade Area."

(iv)  Olu Fasan: The African Union should honour this great African. The AfCFTA negotiations were going nowhere until he was asked by the AU to lead them in 2017 and he turned the negotiations around. He should be honoured posthumously - perhaps naming the AfCFTA Secretariat building after him!

(v)  Sand Mba: My role model Ambassador Chiedu Osakwe, DG, Nigerian office for Trade Negotiation has passed on. He was the finest trade negotiator in the world that originated from Nigeria. A trade negotiator personified and a strong pan Africanist that was dedicated to Africa development.

(vi)  Paul Okolo: Even as his health was failing, Osakwe soldiered on passionately, strenuously canvassing Nigeria's position on the AfCFTA. One can safely say he finished well when he saw President Buhari sign the trade deal in July in Niamey. He'll be greatly missed.

(vii)  The Africa Report: Chiedu Osakwe’s passing may hit free trade ambitions. One of the band of tireless and exceptionally qualified Nigerians who pushed the country forward beyond the glare of the limelight, Ambassador Osakwe was one of the strongest advocates for the creation of the AfCFTA.

(viii)  CNBC multimedia: Nigeria remembers trade icon, Chiedu Osakwe who passed on at 64.

Selected trade policy events now underway: Gaborone, Lusaka

(i)  The 53rd meeting of the SACU Commission began yesterday in Gaborone and will conclude today. The 54th meeting of the SACU Commission is scheduled for 3-4 December 2019, in Windhoek. The schedule of associated prepatory meetings can be accessed here.

(ii)  A workshop to validate Zambia’s strategy for the implementation of AfCFTA Agreement starts today in Lusaka and will conclude tomorrow. The workshop will also review the proposed Terms of Reference for the National AfCFTA Committee on the AfCFTA to ensure the terms provide a solid foundation for the required leadership in the implementation of the AfCFTA Agreement in Zambia.

Outcomes of selected recent trade policy events: 

(i)  African Multidimensional Regional Integration Index training workshop (Lusaka). The AMRII, therefore, in part, responds to the Union’s quest for monitoring and evaluation tools. The new index is composed of 7 dimensions and 39 indicators, which are both qualitative and quantitative. It consists of thresholds for assessing the RECs and identify those lagging behind in the implementation of integration plans and programmes such as the Abuja Treaty and Agenda 2063. This new index was approved by the 3rd STC of Finance, Monetary Affairs, Economic Planning and Integration, in March 2019 as the main tool for evaluating African regional integration. The AU’s Department of Economic Affairs has since rolled out training workshops for member states to facilitate better understanding of the methodology and tool and to also obtain technical inputs from experts, before its final utilization as the sole technical tool for assessing, monitoring and evaluating Africa’s integration process.

(ii)  Malawi's recent AfCFTA sensitization workshop. The workshop mapped out specific benefits of the AfCFTA for Malawi, such as access of Malawi's products and services to 1.2 billion people; creation of business opportunities for Malawians; promoting industrialization for the country due to increased market; infrastructure development; amongst others.

(iii)  35th session of the ICE of Senior Officials and Experts for Central Africa (Malabo). A motion was made for upgraded laws and regulations to cushion the smooth take-off of the digital economy accompanied by appropriate institutions to peddle progress, as well as for shared cross-country visions for the digital age. Mr Norberto Bartolomé Monsuy, Adviser at the Presidency of Equatorial Guinea on digitization: “Our subregion is one of the smallest in the world, so it is time to break our silos and work together as a team,” he said in a candid vote for regional integration in all spheres but more so in the digital ecosystem."

EAC locks out duty-free car imports from South Africa (The EastAfrican)

Players in the automobile sectors from the EAC and SACU are developing a joint policy to encourage motor vehicle manufacturing that is beneficial to both blocs. This development comes at a time when the TFTA tariff negotiations launched more than four years ago are near conclusion. The two economic blocs have had a prolonged battle over whether to abolish the contentious 25% import duty under the Tripartite Free Trade Area.  The two blocs have agreed that import duty on some motor vehicle parts will be abolished within the first five years of the TFTA, and others will enter duty free as provided under the EAC CET. The move ostensibly curbs a massive influx of motor vehicles from South Africa into the EAC region once the more than 700 million-people TFTA comes into force. It is estimated that the number of vehicles imported into East Africa each year has grown to over 250,000 and is expected to reach 500,000 by 2030. “We have agreed to discuss the sector in terms of the regional value chain and not liberalisation of motor vehicles coming from SACU,” Kenya’s Principal Secretary in the Department of Trade Chris Kiptoo told The EastAfrican.  The EastAfrican has also established that EAC and SACU have agreed to retain the more than 25% duty as provided for under the existing EAC Common External Tariff to all imports of sensitive dairy products such as milk, yoghurt, cheese and butter into the EAC bloc. Those classified as not sensitive will be liberalised through a five-year duty phase down after the TFTA enters into force.

Linking Southern Africa into South Africa’s global value chains (UNU-WIDER)

The objectives of the study are two-fold: First, it identifies the existing lead products of South Africa, in which South Africa forms its own GVCs, and estimates the potential market share that Southern African countries could capture in South Africa’s markets by supplying intermediate inputs for these lead products. This provides a basis for selecting products for potential investment to increase regional integration in Southern Africa. Secondly, narrowing the analysis to the agricultural sector—a key regional priority sector with immense potential for industrial growth and large-scale employment—the study identifies existing agricultural lead products in South Africa, and the ‘new markets’ to which South Africa can export. This is intended to highlight products in which South Africa can expand its existing GVCs to new markets and potentially increase regional integration.  [The authors: Karishma Banga, Neil Balchin]

An evaluation of the single currency agenda in the ECOWAS region (Brookings)

The Eco will clearly not be the panacea for West Africa’s myriad problems, including high levels of unemployment, especially among the burgeoning population of youth and the increasing numbers of the poor. The lessons from the eurozone highlight continuing challenges among a group of highly developed countries with very strong institutions. ECOWAS will do well to heed these lessons. Second, efforts by member states to strengthen domestic macroeconomic frameworks are important. Third, concerted efforts must be made to reduce the inordinate bureaucratic delays that severely constrain exports and imports at the border. Launching the single regional currency, the “Eco,” by January 2020 is, at best, an expensive distraction that the people of West Africa can ill afford at this particular moment. [The author: Aloysius Uche Ordu;  Peter Kristensen: What is happening on West Africa’s coast?]

US-Africa trade and investment relations:  Responses to EXIM Competitiveness Report (2018)  (pdf)

(i)  EXIM 2019 Sub-Saharan Africa Advisory Committee Statement:  Africa is richer, freer, and offers more opportunities to the United States than the continent did a few decades ago. If the American business community does not engage there, Africa will take its business to China and other countries. By any number of metrics, Africa is going to be one of the world’s greatest business opportunities of the next 50 years. EXIM has a critical role in helping American business take advantage of these opportunities, and, in so doing, create and sustain jobs in the United States. Africa does not receive the attention that it deserves in terms of its countless entrepreneurs, spectacular growth, and the amazing progress that has taken place in recent years. Today Africa’s middle class encompasses approximately 350 million persons.  Forty percent of Africans now live in cities, and 50% will live in cities in ten years. Widespread advancements in technology have greatly expanded communications across the continent. For example, there are now more than 650 million mobile-phone users in sub-Saharan Africa. According to many estimates, sub-Saharan Africa will have a larger working-age population than China and India combined in 30 years. This “demographic dividend” can be expected to lead to accelerated economic growth. The United States would do well to find ways now to share in that growth potential, especially considering that Africans in business throughout the continent continue to tell us that they want to buy from Americans.

Today, China is the number one exporter of goods to 19 of 48 sub-Saharan African countries and has become Africa’s largest trading partner. Forty countries on the continent have signed bilateral trade agreements with Beijing. If Africans view the United States only as a provider of foreign aid, at some point they are going to question the US commitment to the continent. It is important that the United States offers a viable and more favorable alternative. EXIM Bank is a critical instrument of engagement to reframe the relationship between the United States and Africa as a mutually beneficial economic partnership. If the United States does not have a strong EXIM, that will make it much harder for American businesses to engage in Africa and to realize the opportunities on the continent. In summary, Africa offers tremendous business opportunities for the United States.

(ii)  EXIM 2019 Advisory Committee statement:  Based on a review of the overall landscape, it is clear that the export credit environment has undergone a fundamental change in a short period of time. There are significant new state actors multiplying the range of financing options being offered to exporters and buyers. In particular, the Advisory Committee concurs with and would draw attention to the report’s findings regarding the aggressive growth of Chinese export credit agencies  activities. In 2018 alone, it is estimated that China provided more than $500bn of export credit—in just one year approaching the $610bn that EXIM has financed in its entire 85-year history, in nominal value. In fact, China’s export finance activity is larger than all the other export credit agencies in the G7 combined. And in the larger picture, China today is the world’s largest official creditor, possessing a portfolio more than twice the size of the World Bank and IMF combined.

The Advisory Committee was struck by the changes occurring in Chinese export credit activity that have fundamentally transformed the nature of official export credits, stimulating other export credit providers to broaden their offerings of unregulated and other, more opaque forms of support. EXIM’s Competitiveness Report accurately documents how extensively foreign ECAs have expanded programs aimed at embedding their small- and medium-sized exporters into the global supply chain to the detriment of US exporters, particularly small businesses. Indeed, the world economy is four times the size of the US economy. To ignore this development is to resign ourselves to a reduced presence in world geopolitical affairs and accept a lower standard of living for Americans in the long-term future. Export promotion now also has become a critical lever for macroeconomic growth for many governments. Other governments are strategically using ECAs to influence procurement decisions in ways that hinder the participation of US firms.

Witney Schneidman: AGOA 2.0 must embrace Africa’s new common market (The Africa Report)

Most specifically, reciprocity needs to replace the non-reciprocal structure of the current trade relationship. AGOA 2.0 also needs to be developed in a manner consistent with the implementation of the AfCFTA. AGOA’s benefits should be extended past 2025 as long as agreement has been reached on the phase-in of mutually reciprocal trade benefits. The phase-in periods should be different for Africa’s low-income, lower-middle-income and upper-middle-income countries. Revising the AGOA framework should be a priority in the US-Africa relationship as US goods and services are being increasingly discriminated against in Africa – at a time when the commercial relationship should be deepening. Given the EPAs, for example, a refrigerator or tractor being exported from an EU country will enter the South African market with a 4.5% tariff. That same refrigerator or tractor coming from the US will face an 18.4% tariff. Not only does this stifle the US-Africa commercial relationship, but it also discriminates against African consumers and companies, who will automatically find American products to be more expensive.


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