Building capacity to help Africa trade better

tralac's Daily News Selection


tralac's Daily News Selection

tralac's Daily News Selection
Photo Credit: AusAid

Underway in Addis Ababa:

(i)  SheTrades Global 2019 (held in conjunction with the World Export Development Forum). Discussions will engage with women entrepreneurs from 40 business associations across Africa, to discuss their readiness to take advantage of AfCFTA markets.  Twitter updates: #shetrades

(ii)  Africa Industrialization Week 2019: Positioning African industry to supply the AFCTA market.  Twitter updates: #AIW2019Key objectives include:

Promotion of startups, small and medium sized enterprises/industries, as well as established middle and high-cap enterprises to strengthen the continent’s capacity to integrate into the global production and trading system.

Providing a platform for public-private engagement between industrial policy makers, the private sector, civil society, and development cooperating partners as they endeavor to share ideas on how to shape the continent’s industrialization agenda.

Development of a continental strategy on the automotive value chain to catalyze industrialization.

(iii)  Launching tomorrow, in Geneva: UNCTAD's Least Developed Countries Report 2019

11th African Private Sector Forum: selected highlights from the declaration (AU)

We acknowledge the need to make greater efforts to establish the right business framework to attract sustainable investment and foster our effort for entrepreneurs, small and medium-sized enterprises, and start-ups. We also acknowledge the importance for Africa to adapt clear SMEs policies that puts SMEs at the center of industrialization drive; identify opportunities and create policies that are linked to the domestic delivery; and for African Union Commission, in collaboration with the Regional Economic Communities, to support African member states to create regional value chains that offer greater opportunities for industry.

We call upon the AUC, in collaboration with its pan-African development institutions and other development partners, to establish the necessary mechanisms such as technical and financial capabilities to support the operationalization and seamless implementation of the AfCFTA.

We call upon member states, in collaboration with the private sector,  to initiate local currency cross border payments platform to facilitate cross border trade and involve private sector financial institutions in the financing decision.

We call upon the on AUC to set up a committee and develop a strategy focusing on the 4th Industrial Revolution. We also call upon member states to accelerate the training of youth particularly in the areas of Digital and STEM (Science, Technology, Engineering and Mathematics) and provide greater support to incubators. We agree to support start-ups with mentoring and skills development by creating more partnerships between start-ups and established companies.

We encourage member states to involve women and youth in the decision-making process and provide specific entrepreneurship skills and robust training that could help them to reduce their risk of failure. We also encourage member states in collaboration with the private sector to facilitate access to finance for women and youth entrepreneurs through grants that would enable them start up business enterprises.

7th Annual AUC – US High-Level Dialogue: joint communique (AU)  

The two sides discussed economic growth, trade, opportunity, and development, commending the entry into force of the AfCFTA, with a market of 1.2 billion people. Highlighting the signing in August 2019 of a joint statement in support for the AfCFTA by Ambassador C.J. Mahoney, Deputy US Trade Representative, and Ambassador Albert Muchanga, AU Commissioner for Trade and Industry, officials welcomed Prosper Africa, the establishment of the US International Development Finance Corporation, and the possibility of Millennium Challenge Corporation regional compacts, as these will promote sustainable economic development in Africa. Both sides further reaffirmed their support for the AfCFTA. The AUC highlighted its development agenda for regional integration, especially enhancing the AfCFTA as a strategic means to increase competitiveness and attractiveness to business.

Officials welcomed the AUC–US joint communique to advance women’s economic empowerment and entrepreneurship, signed in April 2019, and look forward to additional cooperation in the near term. They also acknowledged the importance of investing in projects that promote regional integration as an avenue for creating opportunities for African youth. The AUC noted with satisfaction the endorsement of the second Comprehensive Africa Agriculture Development Program biennial review report on the implementation of the Malabo declaration on agricultural transformation in Africa. The two sides agreed to continue consultations on the establishment of the AU Food Safety Agency.

Four priorities for African aviation: remarks by IATA's Alexandre de Juniac at AFRAA annual general assembly (IATA)

The success of African aviation is also challenged by high costs. African carriers lose $1.54 for every passenger they carry. High costs contribute to these losses: Jet fuel costs are 35% higher than the global average. User charges are excessive: they account for 11.4% of African airlines' operating costs. That is double the industry average. And there is a plethora of taxes and charges, some unique like Redevance fees, Hydrant fees, Railage fees, Royalty Fees and even Solidarity taxes.

Additionally, we ask governments to follow treaty obligations and ensure the efficient repatriation of airline revenues at fair exchange rates. This is an issue in 19 African states: Algeria, Burkina Faso, Benin, Cameroon, Chad, Congo, Cote d'Ivoire, Eritrea, Ethiopia, Gabon, Libya, Mali, Malawi, Mozambique, Niger, Senegal, Sudan, Togo and Zimbabwe. We have had success in clearing the backlog in Nigeria and significant progress has been made in Angola. It is not sustainable to expect airlines to provide vital connectivity without reliable access to our revenues. So, we urge all governments to work with our Africa team to make this a priority.

A further priority for governments is liberalizing intra-Africa access to markets. The high barriers that African states have erected between their neighbors are evident in trade levels.  Less than 20% of African trade is within the continent. That compares poorly with Europe at 70% and Asia at 60%. What would help aviation unlock more of Africa's potential, not just for trade, but investment and tourism as well? IATA is promoting three key agreements which, when combined, have the potential to transform the continent:

COMESA Court launches revised rules of arbitration

The COMESA Court of Justice has launched revised arbitration rules aimed at guiding the business of the court more efficiently in the current dispensation. The launch was conducted in Lusaka during the opening of the 22nd Meeting of COMESA Ministers of Justice and Attorneys General. Delegates attending the meeting commended the Court for its consistent improvement of its processes and procedures thus making it a dispute resolution institution of choice for citizens of the regional trade bloc. The revised Rules were adopted by the Council of Ministers in November 2018. Among the key issues in the agenda of the meeting of the Ministers and Attorney’s General were: an Amendment to Article 28 of the Treaty to expand the jurisdiction of the Court to include Investor State Dispute Resolution, amendment of the Treaty to include Arabic as the fourth language of the Court and the renewal of tenure of the judges.

Lesotho:  Customs modernization programme zooms in on the harmonized system (WCO)

Deliberations that took place during the workshop addressed a wide range of topics relating to strategies of optimization of the existing tariff classification work practices in the LRA and the underlying infrastructure.  Particular attention was paid to the implementation of HS-related standards enshrined in the WCO Revenue Package instruments and Council Recommendations. The detailed gap analysis that was carried out during the workshop revealed that most of the fundamental building blocks of the tariff classification infrastructure were already in place in Lesotho.  It was agreed that further modernization efforts should focus on the improvement and fine-tuning of the existing structure and modus operandi.  This will become part of the overall modernization plan currently being implemented by the LRA. [WCO participates in a regional ECOWAS workshop on capacity building of women cross border traders]

Bridging the mobile digital divide in Sub-Saharan Africa: costing under demographic change and urbanization (IMF)

Digital connectivity, including through the modern cellular network technologies, is expected to play a key role for the Future of Work in sub-Saharan Africa.  We estimate the cost of introducing a full-scale 4G network by 2025 in SSA and an operable 5G network by 2040. We adapt the costing model of Lombardo (2019) by accounting for the significant demographic transformation and rapid urbanization in SSA. We use the WorldPop and GADM databases and the UN’s medium-variant population projections to project the population densities at the highest level of administrative division for each SSA country in 2025 and 2040. For full 4G connectivity, the required capital and operational costs stands approximately at $14bn by 2025 and for 5G connectivity, costs amount to $57bn in 2040, conditional on having the 4G in place by 2025. These costs roughly translate to 8.4% of annual subscriber income, on a median basis, by 2025 for 4G and 4.9% of subscriber income by 2040 for 5G. Having the infrastructure in place is not sufficient to bridge the mobile Digital Divide. In addition, policies are needed to address affordability and knowledge gaps.

Managed trade: What could be possible spillover effects of a potential trade agreement between the US and China? (IMF)

The trade discussions between the U.S. and China are on-going. Not much is known about the shape and nature of a potential agreement, but it seems possible that it would include elements of managed trade. This paper attempts to examine the direct, first-round spillover effects for the rest of the world from managed trade using three approaches. The results suggest that, in the absence of a meaningful boost in China’s domestic demand and imports, bilateral purchase commitments are likely to generate substantial trade diversion effects for other countries. For example, the European Union, Japan, and Korea are likely to have significant export diversion in a potential deal that includes substantial purchases of U.S. vehicles, machinery, and electronics by China. At the same time, a deal that puts greater emphasis on commodities would put small commodity exporters at a risk. This points to the advantages of a comprehensive agreement that supports the international system and avoids managed bilateral trade arrangements.

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