tralac’s Daily News Selection

tralac’s Daily News Selection

01 Oct 2019

Diarise: AmCham Business Summit 2019 (4-5 November, Nairobi) 

Peter Draper: How should Africans respond to the investment, technology, security, and trade wars? (Brookings)

The modern world economy is now characterized by a rapidly shifting technological frontier within which several previously distinct realms are now converging. Sub-Saharan Africa could benefit from the increasingly interconnected global economy. At the same time, the United States’ tough response to China’s growing economic heft, as well as increased worldwide backlash to globalization, is incentivizing some economies to look inward. Trade policy and strategy is back in focus with a vengeance, and increasingly contested. How might an Africa caught in the middle of these opposing forces navigate this new global trade environment while maintaining its growth momentum of the last two decades?

Africans should also up their game in the high-stakes WTO reform negotiations currently unfolding in Geneva, with a view to securing the institution’s future. Currently, Africans participate primarily to carve out exceptions and leverage aid flows. Supporting reasonable US demands, notably with respect to countries graduating from special and differential treatment status once objectively verifiable development thresholds have been passed, will be essential. Not to do so will drive the US and some developed countries further from the institution, hasten its demise, and sharpen the shocks set out above.

The Trade for Her conference: Empowering women through international trade (EU)

The conference (held on Monday in Brussels) looked into the results of the first ever study on barriers for women in the EU, who are engaged in international trade. High-level representatives from international organisations, governments, businesses and civil society shared their experiences, views and ideas on women in trade in four thematic panels (pdf): Empowering women through international trade – challenges and solutions; Barriers for women to trade in Europe and beyond; Enhancing opportunities for women in trade – what role for business?; Looking for synergies – The role of other policy areas in empowering women. Female participation in EU exporting activities - jobs and wages (pdf):  This analysis sheds new insights on the gender-balance of the employment opportunities supported by extra-EU exports. It shows that in 2017 more than 13 million female workers in the EU had jobs thanks to the exports of goods and services to the rest of the world. However, there is a gender gap when it comes to the employment prospects offered by extra-EU exports: only 38% of the jobs dependent on exports to the world are taken up by women. The analysis suggests that such gender gap is largely due to the concentration of female employment in the less export-oriented sectors, notably in services. Furthermore, the current note makes clear that labour compensation for female workers in exports-supported jobs stagnated in comparison to total employment over the time period considered. Although all exports-supported jobs benefit from a wage premium, there is a gender wage gap of 4 p.p.

Remarks by Roberto Azevêdo (WTO Director General):  Inclusive growth means closing gender gaps.  Women face disproportionate barriers to using trade for job opportunities and higher incomes, the Director-General noted. While some of the barriers are well identified, from discriminatory laws to difficulties accessing credit, others spring from the way nominally gender-neutral policies affect men and women differently and need to be better understood. DG Azevêdo described how some WTO members were working to do just that, including under the framework of the Buenos Aires Declaration on Trade and Women’s Economic Empowerment. He cited several initiatives undertaken on this front, including workshops to better understand the links between trade and gender in areas like government procurement, global value chains, regional trade agreements and e-commerce.

Remarks by Arancha González (ITC Executive Director):  Before I conclude, let me share with you five key takeaways from the study: First, we need to do more to get women to participate in international trade in the first place. Second, some of the policy interventions required do not need to be targeting women specifically. Third, sometimes gender-specific interventions are called for, such as in access to finance.  Fourth, where is the voice of women entrepreneurs in Brussels? Women entrepreneurs may be well organised at the level of individual Member States but they need to ensure they are visible at the EU level. This is a call for action for many of the dynamic, ingenious women entrepreneurs I see between the public. DG Trade needs to hear your voice loud and clear. Fifth and final take away, this study opens up new questions for future surveys. Why are so few women entering trade in the first place? How are women participating in trade in services? Women are, after all, mostly found in the services sector. [Rwanda to bridge gender gap in private companies; World Bank: Toward better economic opportunities for women in Malaysia]

G20 contribution to the 2030 agenda: progress and way forward (OECD)

This report looks at how the G20 has collectively contributed to Sustainable Development Sectors (SDS) defined in the Action Plan and at the G20’s current priorities across the three dimensions of sustainable development – economic, social and environmental while also examining how the G20’s work on cross-cutting issues such as gender equality is helping to deliver results. Cross-cutting issues and partnerships (extract): Further analysis on macroeconomic, trade and investment policies from a gender perspective could help to develop integrated policy solutions, and to direct greater investments to women-led business and to services and activities that would free up women’s time and favour their economic empowerment and greater participation in the labour force. Additionally, reducing gender inequalities in unpaid care work and breaking down gender bias, gender-discriminating norms and institutions and other invisible barriers to women’s access to finance, land and formal sector employment are priorities to be addressed, including through legislative and regulatory measures, capacity building and other dedicated measures.  

Nigeria: FG sees 8% export expansion under AfCFTA (Vanguard)

Vice President, Prof Yemi Osinbajo, disclosed this at the Institute of Directors 2019 Annual Directors’ Conference in Abuja, adding that with an intra-African trade surplus at $3.8bn for goods and $13.2bn trade deficit for services, AfCFTA presents both opportunities and threats for the Nigerian market. “AfCFTA can transform Nigeria from a ‘target economy’ to the ‘Africa Gateway Economy’, boosting job creation through increased intra-African trade, and spurring growth through enhanced economic welfare; with an estimated 8% increase in Nigeria’s total exports.” He stated: “Nigeria is not protectionist and defensive, rather, we are actively confidently, blazing the trail towards an open, modern and integrationist economy. With our internal market size, Nigeria is well placed to tap into the natural gravitational pull for investment attraction, to promote retention and consolidate Nigeria’s participation in regional and global value chains.”

Pointers from the AfCFTA sensitisation workshop in Harare:

(i) Ambassador James Manzou (Permanent Secretary in the Ministry of Foreign Affairs and International Trade): “In line with the Transitional Stabilization Programme and Vision 2030, government is undertaking various economic reforms to address supply side constraints and enhance firm level competitiveness to take advantage of opportunities presented by the AfCFTA among other trade agreements." The Zimbabwe government recently established a Trade Remedies Unit within its Competition and Tariff Commission to deal with unfair trade practices in preparation for the opening up under the AfCFTA. He added Zimbabwe was negotiating for a longer liberalisation period of 15 years for its 90 percent tariff offer under the AfCFTA by which time they envisage better performance from the country’s industry and an improvement on their macroeconomic environment.

(ii) Batanai Chikwene (ECA Economic Affairs Officer): “Key reforms are required to ensure that industrialization, trade and investment generate optimum benefits for Zimbabwe. These include reforms in the areas of trade facilitation, infrastructure development, doing business reforms to create a better conducive environment for the private sector, product quality and standards and the general policy environment, its consistency, clarity and stability to facilitate the evolution of a competitive industrial sector able to capture opportunities arising from the AfCFTA.”

Namibia: Truck port in the Zambezi Region looks promising (Namibian Economist)

In the quest to respond to the provisions of NDP 5’s Master Plan for Development of an International Logistics Hub for SADC countries in the Republic of Namibia, the study was commissioned to ascertain the investment needs and financial feasibility for a truck/dry port along the Trans Caprivi Highway. The aim being to service truckers on their way to and from the borders of Botswana, the DRC, South Africa, Zambia, Zimbabwe and Botswana with the wider aspiration of serving landlocked countries in SADC. Our analyses shows, that based on the average daily traffic of approximately 1400 vehicles a day (2019 figure) which includes a 14.5% heavy vehicles component, the entire project is feasible. The development would include a fuel station, truck parking area, bed and breakfast facility and warehousing facilities. The addition to the GDP of the Zambezi Region is estimated at a minimum N$5,000,000 per year over a 20 year analysis period. Over the same period, the proposed development shows an Internal Rate of Return of 29.43%, a B/C Ratio of 3.32 and Net Present Value of N$51,000,000. The total investment need is approximately N$38,000,000. [The author: John Saunderson, principal transport economist at Amir Consulting]

Fifth Conference of African Ministers Responsible for Civil Registration (14-18 October, Lusaka): concept note (pdf, AU)  

Advances in technology present an important opportunity for the digitalization of civil registration and vital statistics (CRVS) systems, through which the strategic benefits of legal identity for all to Africa’s development can be harnessed. Digital technology, including the extensive use of mobile devices in Africa, provides an incomparable opportunity for interoperability and real-time data sharing through interconnected systems across public and private sectors. Inclusive and trustworthy civil registration and digital identity systems are also crucial components for accelerating progress towards many of the SDG targets relating to poverty, good governance, social protection, financial inclusion, gender equality, migration and universal health coverage. Furthermore, digital identity integrated with civil registration systems can be instrumental in protecting statelessness, managing forced displacement and enhancing the efficiency of delivering humanitarian assistance. This combination helps to improve the lives of millions of people while also boosting national capacities to register vital events and produce vital statistics. When digital identity systems are recognized across borders and used online, they can be a powerful platform for innovation and for fast-tracking the implementation of the African Continental Free Trade Area.

The IMF has launched the 2019 Financial Access Survey

The FAS is a unique supply-side dataset that enables policymakers to measure and monitor financial inclusion and benchmark progress against peers. The dataset covers 189 jurisdictions with more than 150 indicators on financial access and use with historical data from 2004. The FAS was launched in 2009 and has evolved over time to adapt to the changing landscape of financial services, including the rise of fintech and growing demand for more granular data. The FAS data suggests that there are major disparities in the use of financial services between men and women, especially in low- and lower middle-income countries. In countries such as Pakistan, Uganda, and South Sudan, less than 30% of borrowers at commercial banks are women. In contrast, the high-income countries in Europe, including Denmark and Poland fare better, with close to 50% of borrowers being women (Table 1). The latest FAS data tell a familiar story for SMEs—in low- and middle-income countries. SMEs have limited access to borrowing despite the fact that SMEs contribute up to 40% of national income, creating 70–95% of new jobs.  Bank lending to SMEs in has remained stagnant at around 6 percent of GDP over the past five years in low- and middle-income countries. 

Companion analysis: Mobile Money Note 2019

While mobile money growth shows no sign of ebbing in Sub-Saharan Africa, other regions of the world are not far behind. South Asia showed the highest growth in mobile money accounts in 2017 and constitutes 34% of all registered accounts globally. Bangladesh, Indonesia, Pakistan, and Philippines are some examples of countries experiencing high mobile money growth in Asia. In fragile states, from 2015 to 2017, while the number of commercial bank branches per square kilometer remained less than 2, the number of mobile money agents per square kilometer increased from 18 to 27. This increase in fragile states corresponds to a growth rate of 50%, compared to 16%in non-fragile states. In addition, between 2015 and 2017, mobile money accounts in these states almost doubled while the value of money transactions carried out on these accounts have grown by more than three times (see Figure 3). 

India’s RCEP reticence (The Interpreter)

RCEP is a proposed free trade agreement between the 10 members of the Association of Southeast Asian Nations countries and its six existing FTA partners, namely Australia, China, India, Japan, Korea, and New Zealand. The countries covered by RCEP account for 25% of global GDP, 30% of global trade, 26% of foreign direct investment flows, and 45% of the world’s population. For India, the potential is significant. RCEP countries account for almost 27% of India’s total trade, about 15% of India’s exports, and 35% of imports. India’s trade deficit with RCEP has risen from $9 billion in 2005 to $83 billion in 2017, of which, China alone accounts for over 60% of the deficit.

To dispel India’s reticence on RCEP, deeper analysis is needed on whether the deal will lead to cheaper goods, both for intermediate and final stages. So far, the rise in Indian trade deficit with its FTA partners has occurred due to cheap imports of final products, which may have pleased consumers but added to the angst of domestic producers. Cheaper intermediate goods can help in making Indian exports competitive. But the ultimate decision whether or not to be a part of RCEP should not just be driven by goods prices alone. It must consider other areas, such as services, investment, and employment potential. RCEP is a tightrope walk. India with its scale and domestic market opportunity has a lot to offer, but it can also afford to be strategic in evaluating trade deals. The focus needs to be on where India can promote its exports, while conscious that it should not act in a fashion detrimental to its emergence as a global player. [The author: Natasha Jha Bhaskar]

Today’s Quick Links:

Dubai’s e-commerce strategy: update

Lauren Johnston: What fast-ageing countries such as China tell us about our economic future

Reinventing the wheel: Phase One of the US-Japan trade pact

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