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tralac’s Daily News Selection

tralac’s Daily News Selection

07 Nov 2019

Domestic resource mobilization: fight against corruption and illicit financial flows (African Union)

The aim of this report is to share experience on the initiatives set up by members states and international organizations to mobilize domestic resource and optimize tax collection, win the fight against corruption and strengthen tax cooperation to stem IFFs. The report is divided into two parts and fourteen chapters. The first part comprises analytical contributions while the second part presents specific actions that are being taken by AU Member States, to mobilize domestic resource and fight against corruption and IFFs. This type of partnership is to be continued. Extract from Chapter II - Taxation and Domestic Resource Mobilization (pdf):

The first section describes developments in revenue-to-GDP and tax-to-GDP ratios in Africa compared with other regions. It shows an improvement in revenue mobilization in African countries over the past two decades. However, the continent still has, on average, the lowest revenue-to-GDP ratio compared to other regions. The section also shows how low efficiency of some of the most important sources of taxation, such as the value-added tax and the corporate income tax), are significant constraints to better performance.

The second section analyzes some of the structural conditions that may account for the lower tax-to-GDP ratios in Africa, including the level of development, trade openness, sectoral structure, income distribution and institutional quality. It shows that African countries could, on average, mobilize up to 5% of GDP in additional tax collection, through a combination of reforms that improve the efficiency of current systems (including through the reduction of tax exemptions), and through institutional changes (such as improvements in governance and measures to control corruption).

The third section analyzes lessons from revenue mobilization case studies. It emphasizes the elements of successful medium-term strategies for revenue mobilization and the importance of political economy factors, such as building broad-based support for the reform process through proactive outreach strategies to both the public and private sectors. Finally, the chapter also discusses the role of recent technologies (that is, digitalization) to empower tax policymakers with quicker access to more reliable information and to deepen the tax base.

Horn of Africa countries launch regional initiative as peace dividend beckons:  $15bn investment on the cards (AfDB)

The initiative was formalized on 18 October, on the sidelines of the World Bank Group/IMF Annual Meetings in Washington.  The countries (Djibouti, Eritrea, Ethiopia, Kenya, Somalia) agreed on priority projects and programs that will constitute the initiative, which is being developed by the countries with support from the AfDB, the EU and the World Bank. The effort will culminate in a financing forum next year to seek investors to realize a package of priorities identified by the quintet, which has over the past decade registered some of the highest growth rates in Africa. The Horn of Africa nations identified four priority areas:  (i) improving regional infrastructure connectivity; (ii) promoting trade and economic integration; (iii) building resilience; (iv) strengthening human capital development. Most of the Horn of Africa countries easily outpaced the continent’s average growth rate in 2018. Extract from the communiqué (pdf):  The attached table comprises the agreed package of initial priorities.  The cost of the economic corridors component is put at $9bn.  The regional trade facilitation component  is estimated at $0.45bn. It covers technical assistance (corridor approach, tackling NTBs, harmonization of products standards), 13 one-stop border posts, and  dry ports

Concluding today, in Asmara: the 23rd conference of the Intergovernmental Committee of Senior Officials and Experts for Eastern Africa.  

(i)  UNECA news updates: Eritrea’s Saleh urges Africa to tap into her potential and capabilities to spur regional integrationEast Africa needs a better quality of economic growth to tackle the job challengeClean energy for all in Africa need sustainable long term financing

(ii)  Profiled session concept notes, documentation:  How to fast-track AfCFTA implementation in Eastern Africa,  Creating a unified regional market towards the implementation of the AfCFTA in Eastern Africa, Promoting regional trade for faster job creationBoosting regional tourism in Eastern Africa, Harnessing the blue economy for regional integrationCrowding-in investment for energy and infrastructure development

Sustainable financing of regional infrastructure and industrial projects in SADC: a PPM posted by the AfDB.  Consultancies include developing financial instruments for Member States; the compilation of a regional project briefs report; the development of a methodology for SADC industrial value chain project prioritization framework; value chain analysis and mapping.

A preview of Friday's Uganda-DRC Business Forum:  Uganda is set to host the first joint bilateral business talks with the DRC aimed at providing a platform to the business communities from the two countries to share experiences. The joint business summit (9 November) is also aimed at identifying opportunities for trade and investment.  State Minister for Trade, Michael Werikhe Kafabusa, said Uganda will soon embark on constructing One-Stop Border Points on most of most crossing border points with DR Congo to ease trade among the two countries. “We have done it with Rwanda and now we shall be embarking on Uganda-DRC borders. Our traders are experiencing challenges in obtaining travel and other trade-related documents to DRC. With the One-Stop Border Points,  such challenges will be solved."

Nigeria’s neighbours must obey fair trade rules, says Emefiele (ThisDay)

Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, says Nigeria’s neighbours must comply with fair trade practices to avoid depriving Nigeria the benefits of the AfCFTA agreement, explaining that Nigeria would prevent itself from becoming a dumping ground for goods that did not originate from Africa. "If the agreement is going to be of value to our country, the situation where other countries and goods are on transit point to enable a type of subsidised imports in Nigeria which harm our local farmers and industries cannot and should not be tolerated. All parties must work to encourage fair trade in order for the gains of AfCFTA to be achieved. The CBN will continue to implement policies that will enable improved domestic productivity and further the growth of non-oil exports in Nigeria as a more diversified economy is crucial in promoting stable growth and in creating job opportunities on a wider scale and it would also help to improve our non-export earnings thereby protecting our economy from the volatility of the crude oil market."  [AfCFTA: Nigeria's FG seeks private sector collaboration]

Republic of Congo: IMF staff completes mission for 2019 Article IV and First ECF Review

Non-oil growth could turn positive for the first time since 2015 thanks to the recovery in the agricultural, forestry and transportation sectors, but it will remain below 1 percent, and with many economic sectors still in recession. The mission welcomed the projected GDP expansion, but noted that growth remains too low to reduce poverty and too dependent on developments in the oil sector. Greater efforts are needed to improve economic management and advance reforms to support private sector activity to achieve higher and more inclusive growth. Inflation remains subdued, running at 1.7 percent year on year through September. “The current account surplus is expected to reach 8 percent of GDP in 2019, in part due to growth in mining and forestry exports. These developments are particularly welcome as export diversification is essential to supporting a healthy balance of trade once oil production begins to decline.

Joint Ministerial Statement on Investment Facilitation for Development (pdf, WTO)

The following communication, dated 5 November 2019, is being circulated at the request of the delegations of...: We recognize the reinforcing relationship between trade and investment and their key role to leverage development in today's global economy, as well as the need for closer international cooperation at the global level to create a more transparent, efficient, and predictable environment for facilitating cross-border investment. We fully support the 2017 Joint Ministerial Statement1 adopted in Buenos Aires aiming at developing a multilateral framework on Investment Facilitation for Development. We also agree that facilitating greater developing and least-developed Members' participation in global investment flows should constitute a core objective of the framework. The discussions shall not address market access, investment protection, and Investor-State Dispute Settlement.

Expanding trade in information technology products (pdf, WTO)

The Committee of Participants on the Expansion of Trade in Information Technology Products, hereinafter referred to as "the Committee", was established pursuant to the provisions of the Ministerial Declaration on Trade in Information Technology Products, and the provisions for the Implementation of the Ministerial Declaration on Trade in Information Technology Products, in order to carry out the provisions of paragraphs 3, 5, 6, and 7 of the Annex to the Declaration. The Committee has held two formal meetings in 2019: on 14 May and 31 October.

The total number of WTO Members that are participants to the Ministerial Declaration is 82. The Committee has consistently reviewed the status of implementation, a summary of which is provided in document  G/IT/1 and its revisions. The document details that all but one participant had submitted the formal documentation for the rectification and modification of their WTO schedules in order to incorporate the commitments arising from the Ministerial Declaration, and that they had been certified by the Director-General. Three implementation issues, concerning India, China and Indonesia, have been raised at the May and October meetings of the Committee. The Committee continued its deliberations on the NTMs Work Programme in 2019. Regarding its work on the EMC/EMI Pilot Project, the Committee took note that, among the 53 participants, 42 had provided survey responses and the Committee encouraged those that had not yet done so to provide the information without any further delay. In considering ways to advance and expand its work on NTBs other than EMC/EMI, the Committee continued its discussions on the follow-up to the workshop held on 7 May 2015 on NTBs affecting trade in IT products and to the Symposium for the 20th Anniversary of the ITA held in June 2017. At the request of the Committee, the Chairperson undertook informal consultations with interested delegations to examine the recommendations and avenues that were suggested by industry representatives and such consultations will continue in 2020. 

Ensuring frontier and space technologies bring development to all (UNCTAD)

A global middle class has emerged, fuelled by rapid growth in emerging economies and other populous and relatively poor countries.  At the same time, wealth is more concentrated with 26 billionaires owning as much as half the global population. With the right policies, frontier technologies can help make economies and societies more inclusive and address environmental concerns, but they also pose new challenges. They could disrupt labour markets, exacerbate or create new inequalities and raise ethical questions. To address these challenges, the UN Commission on Science and Technology for Development inter-sessional panel for 2019-2020 is set to continue deliberations on how to make rapid technological change work for all. The discussions  (7-8 November, Geneva)  will explore how to tackle inequalities linked to digital frontier technologies such as artificial intelligence (AI), big data and robotics.  Extracts from the two draft Issues Papers prepared for the meeting:   

A new wave of business ideas has emerged that are considered promising investments (pdf). According to market data from one venture fund, tech start-ups in Africa raised more than $1bn in equity funding in 2018. This represents a growth of 108 year-on-year. Nine countries received funding of more than $10m:  Kenya, Nigeria, South Africa, Tanzania, Egypt, Malawi, Senegal, Rwanda and Ethiopia (see Figure 3). Some of the largest recipients have business models which align with the SDGs, especially in the domain of financial inclusion, such as Tala from Kenya which offers loans via a mobile app using non-traditional loan scoring. Other vital areas for inclusive and sustainable development and achieving the SDGs still need to generate promising solutions. For example, education and health received only 2.7 and 1.5% of all equity funding respectively, whereas fintech dominates (see Figure 4).

At the moment, only eight African countries have launched their own satellites (pdf) (Algeria, Angola, Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa), with more than half of the satellites being launched in the last five years (Space in Africa, 2018). As more and more developing countries consider using space technologies, it is important that they make the right technical, social and political decisions recognizing their needs and priorities.

Today's Quick Links:

Afrobarometer: Africa’s digital gender divide may be widening

Egypt is Brazil's No 1 trade partner in Africa, Arab region

Ethiopia’s mining sector has potential to stimulate economic growth and poverty reduction, says Chinganya

Rob Swinkels: How can Zimbabwe tackle its entrenched poverty traps?

Chad: IMF staff completes review mission

Cabo Verde: WBG launches new country partnership framework

Europe: Facing spillovers from trade and manufacturing

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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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