tralac’s Daily News Selection
Commonwealth trade ministerial: Reform WTO and resist protectionism
Following a meeting in London, ministers from the 53 Commonwealth member countries declared their collective support for free trade in a transparent, inclusive, fair and open multilateral trading system, with the WTO as its core institution. They agreed that any WTO reform should take into account the views of all members, underlining the special circumstances of the developing and the least developed countries, as well as small and vulnerable economies, including Small Island Developing States. Ministers also endorsed an action plan designed to boost trade among their countries to at least $2 trillion by 2030, through the Commonwealth Connectivity Agenda. Intra-Commonwealth trade is projected to reach $700bn by next year. Commonwealth Secretary-General Patricia Scotland: “Building on this, the Commonwealth Connectivity Agenda will help businesses, including micro, small and medium sized enterprises, to plug into global trade networks and benefit from world trade. In this way, intra-Commonwealth trade offers immense opportunities to contribute to reducing poverty and achieving sustainable development.” [Note: The communiqué includes the Commonwealth Statement on the Multilateral Trading System]
A suite of postings on
Nigerian trade policy issues, trends:
National Bureau of Statistics: Commodity Price Indices and Terms of Trade, Q2 2019 (pdf). Nigeria's major trading partners (both imports and exports) in Q2, 2019 were India, China, Spain, United States and Netherlands.
The All Region group export index, on average, rose by 1.02%, following a (0.19%) increase in May and 0.83 % in June. In May, the rise in the All Region group export index was mainly attributable to increases in the prices of export trade to Asia (1.5%) which was, however, partly offset by decreases in the prices of export trade to America (-0.56%), Africa (-0.32%) and Europe (-0.2%). In June, the rise in the all regions group export index was attributable to increases in trade with Asia (4.56%) and Europe (0.56%). These increases, however, were partly offset by decreases in the prices of export trade to America (-2.63%), Africa (-2.04%) and Oceania (-0.96%).
The All Region group import index, on average, fell by 0.25%, following a 0.17% decrease in May and 0.08% decrease in June. The 0.17% decline in the All Region group import index, in May, was mainly attributed to decreases in the prices of import trade from Oceania (-7.92%), America (-4.35%) and Europe (-0.34%) though the decline was partly mitigated by increases in the prices of import trade from Africa (+2.48%) and Asia(+1.19%). Similarly, the All Region group import index declined in June, by 0.08% , driven by decreases in the prices of import trade from Africa (-3.72%), America (-2.46%) and Asia (-0.60%). The decline was partly mitigated by increase in the prices of import trade from Oceania (23.78%) and Europe (0.64%).
The All Region group terms of trade stood at 102.5 in April, 102.9 in May and 103.8 in June. This represents an increase of 0.36% in May and of 0.9% in June. On average, the terms of trade increased by 1.27%.The increase was a result of the rise in the prices of goods traded with Asia (5.54%), America (3.78%) and Europe (0.06%), but was partly offset by decreases in the prices of goods traded with Oceania (-10.36%) and Africa (-0.98%) during the quarter.
Reuters: Nigeria plans to team up with Cameroon to agree cocoa premium. Nigeria aims to team up with Cameroon to agree a premium for their cocoa with buyers, the vice president of the World Cocoa Producers Organisation told Reuters, after top growers Ivory Coast and Ghana moved to boost prices for their crops. The plan suggested by Nigeria, the world’s fourth-largest cocoa producer, is part of a drive by growers in West Africa and Latin America to try to address a perceived imbalance between farmers’ incomes and money made by big commodities traders. Ivory Coast and Ghana, which account for nearly two thirds of global output, have imposed a fixed “living income differential” of $400 a tonne on all cocoa contracts sold by either country for the 2020/21 season. World Cocoa Producers Organisation Vice President Sayina Riman, who doubles as president of the Cocoa Association of Nigeria, said Ivory Coast and Ghana had effectively agreed a $400 per tonne premium above global prices for their cocoa, and that Nigeria wanted to follow suit to protect its farmers. Nigeria has had informal discussions with Cameroon, Riman said.
Dairy product imports drop by 25.19%. Following the Central Bank of Nigeria’s restriction on foreign exchange for importation of certain products, Nigeria has witnessed a 25.19% drop in importation of dairy products from New Zealand and three other countries. The country imported N211 billion ($578.97m) worth of the product between 2017 and 2018. Findings by New Telegraph revealed that the sharp drop had to do with CBN’s policy on foreign exchange restriction on the product, as data by International Trade Statistics show that the country imported $331.19m worth of the product in 2017 and $247.78m in 2018. According to details of the ITS data, New Zealand export dropped by 9.4% from $122.4m to $110.9m, while that of Netherlands declined by 41.97% from $107.94m to $62.6m.
Nigeria records N323.4bn agric trade in three months. The total foreign trade of agricultural goods recorded in the country amounted to N323.4bn between April and June 2019. N73.5bn, or 22.7% of this figure, was exported while N249.95bn was the import value, according to figures obtained from the National Bureau of Statistics. “The value of agricultural exports was 14.66% lower than in Q1, 2019 and 14.48% lower than in Q2 2018. By economic region, agricultural goods were exported mainly to Asia and Europe, valued at N49.2bn and N18bn respectively. The dominant agricultural products were sesamum seeds mainly exported to Japan (N5.9bn), Turkey (N4.8bn) and China (N2.8bn). Other major drivers of agricultural exports were cashew nuts in shell, mainly exported to Vietnam (N12.7bn) and India (N4.2bn), as well as good fermented Nigerian cocoa beans exported to the Netherlands and Germany, valued at N3.3bn and N2.7bn respectively.”
Manufacturers Association of Nigeria Export Promotion Group. Nigeria’s manufacturers and exporters have been called upon to explore opportunities presented by the AfCFTA, by moving away from commodity export to exportation of finished goods. Stakeholders who spoke at the AGM of the Manufacturers Association of Nigeria Export Promotion Group made this call and maintained that AfCTA offered Nigeria, as the largest economy in Africa, and one of the leading intra-African trading nations, huge export opportunities. The managing director, Intra-African Trade Initiative, The African Export-Import Bank, Ms Kanayo Awani, noted that manufacturers represented the largest collection of entrepreneurs in Nigeria, and would ensure robust and competitive manufacturing sector that would make the country a regional and global economic power. The Chairman, MAN Export Group, Chief Ede Dafinone, expressed concerns over the low performance in the non-oil export earnings for the year 2018, and called for a more export-friendly government. While he said the group was engaged in several meetings with the National Assembly and the Nigeria Export Promotion Council on the approval of exporters to participate in the promissory notes programme of the Federal Government, Dafinone added that the body would continue to liase with the government on the need to reverse its stand on the closure of the country’s borders. [Border closure: MANEG warns on manufacturing, exports collapse]
Pharmaceutical firms seek N300bn bailout. Chief executive officers of top pharmaceutical companies under the auspices of Pharmaceutical Manufacturers Group-Manufacturers Association of Nigeria, PMG-MAN are seeking N300 billion bailout funds from the Federal Government to enable them reposition the industry in anticipation of the AfCFTA agreement take-off. In an interview with this newspaper in Lagos, the Chief Executive Officer, Biotec Pharmaceutical Limited and a chieftain of PMG-MAN, Dr Eugene Okorie, explained that the AfCFTA pact would put the country’s economy on the edge, especially the pharmaceutical sector’s contribution to the growth and development of GDP. He said that the sector was in dire need of funding, saying that N300 billion bailout was needed very urgently to salvage the pharma industry if Nigeria does not want to remain a ‘dumping ground’ for all sorts of illicit drugs.
FG sets up 89-person team to monitor daily importation, consumption of petrol. The team, according to a statement from the Nigerian National Petroleum Corporation, was drawn from five key agencies comprising the corporation itself, Department of Petroleum Resources, Petroleum Products Pricing Regulatory Agency, Petroleum Equalisation Fund, and Department of State Services. Their job, the statement explained, would be to ensure transparency and accountability in the distribution of petroleum products across the country. It said the team, code-named ‘Operation White’, was inaugurated by the Minister of State for Petroleum Resources, Mr Timipre Sylva, who reportedly noted that they would help to authenticate the actual volume of products imported and consumed in the country and ensure that Nigeria attained energy security. Sylva equally observed that the initiative was long overdue for the country and charged members of the team to carry out the assignment with commitment, zeal and patriotism. He stated that he was optimistic that the operation would stem the smuggling of petroleum products by some unscrupulous operators, stressing that the savings from the exercise would support infrastructural development in the country. He also recalled that few weeks after the closure of the country’s land borders, daily petrol consumption dropped from 60 million litres to 52 million.
- Reuters: Nigeria seeks $62 bln from oil companies – attorney general. Nigeria is seeking $62bn from oil companies under regulations that allow the government to revisit revenue-sharing deals on petroleum sales if crude prices exceed $20 a barrel, the attorney general told Reuters on Thursday. The government in Africa’s largest oil exporter relies on oil for some 90% of foreign exchange. Oil prices rose to more than $100 a barrel in 2014 before a sharp drop that triggered a 2016 recession in Nigeria, leaving the government struggling to fund its budgets. A law dating back to the 1990s that governs oil production sharing contracts allows the government to review revenue sharing once the oil price rises above $20 per barrel.
Other country trade updates
South Africa: Absa plans China office in Asia investment banking expansion (Bloomberg)
Absa Group Ltd.’s corporate and investment banking unit plans to open an office in China as part of an expansion that will also target other parts of Asia and the Middle East. “Next year, we will be seeking strategic approval from our board for an on-the-ground presence in China,” Charles Russon, the division’s chief executive officer, said in an interview in Johannesburg. “My hunch is it will be Beijing. It’s actually one of the questions we’ve asked the strategic team to figure out.”
Malawi: Consultations on a National Export Strategy and Action Plan, 2020-2025 (Commonwealth)
The new strategy, to be developed with Commonwealth technical assistance, will cover the period from 2020 to 2025, building on key lessons learned from the national export strategy of 2013-2018. The keynote speaker at this week's consultations, Minister of Industry, Trade and Tourism Ibrahim Salim Bagus said: “We cannot continue to do business as usual and expect different results. There is a need for a complete overhaul in the way we conduct our business as a sector if we are indeed going to meet our objectives in the new export strategy.” Malawi faces a significant trade deficit, importing about twice the value of goods as it exports. A review of the previous strategy (2013-2018) found that Malawi was able to strengthen its oil seed sub-sector, but broadly, exports lagged behind imports with its export basket remaining narrow and market diversification remaining slow.
Kenya: Exports to China up 74% on farm produce orders (Business Daily)
Chinese orders for Kenyans goods jumped 74.13% in the first six months of the year, signalling economic dividends from a diplomatic charm offensive that Nairobi has mounted from late 2018. China bought goods worth a record Sh7.48 billion compared with Sh4.30 billion in the same period of 2018, Kenya National Bureau of Statistics indicates. Nairobi has been conducting aggressive trade promotion and marketing campaigns in China, primarily aimed at growing and expanding the market for Kenyan farm produce. Coffee, specialty tea, cut flowers and avocados are some of the farm produce which continue to gain market access to China, Kenya Export Promotion and Branding Agency chief executive Peter Biwott said. India is, however, proving hard to crack thus far, with Kenyan exports falling Sh1.84 billion, or 37.61%, to Sh3.05 billion in the half-year period of 2019 compared with a year earlier.
Demand for Kenyan products has slumped in Rwanda and Burundi amid competition from China, India and Saudi Arabia, a study by Kenya Export Promotion and Branding Agency (Keproba) shows. Kenya, which mainly exports iron sheets, steel, oils, perfumes, paints, paper and cigarettes to the two landlocked States, has recorded slow export growth as other players come into their turf. “There is a notable trend in the abandonment of the Kenyan brands in Rwanda and Burundi due to increasing prices, unavailability of products, competition from substitute products and counterfeiting,” says the study released yesterday. Kenya commands three percent share of the import market in the two countries, valued at about Sh6.5 billion in Burundi and Sh17.8 billion for Rwanda. [Related: Kenya to set up product warehouses in Rwanda, Burundi and Congo]
@KEPROBA: Kenya’s trade surplus in the EAC has been on a dwindling trend with imports from the region growing at twenty times faster (22%) than exports (1%) in the period 2014-2018. This study gives us an analysis of what we need to do to gain export market share. [KEPROBA infographic: Kenya's exports to Rwanda, Burundi 2010-2018]
Zambia owed major mining companies 2.8 billion kwacha ($215m) in tax refunds as at 30 June, 2019, Finance Minister Bwalya Ng’andu said on Thursday, the latest development in a long-running dispute with the miners. In December, the Zambian government withheld payment, saying the correct documentation had not been provided. The government has verified that it owed the companies 2.834 billion kwacha in Value Added Tax refunds although the mining firms were claiming an additional 4.955 billion kwacha without providing evidence, Ng’andu said.