Building capacity to help Africa trade better

tralac's Daily News Selection


tralac's Daily News Selection

tralac's Daily News Selection
Photo Credit: Reuters

The 21st Ordinary Meeting of the Summit of the EAC Heads of State, scheduled for 30 November, has been postponed.

EAC Secretary General,  Ambassador Liberat Mfumukeko said on Wednesday that the 21st Summit was postponed after a request by one of the members of the summit, adding that the postponement had nothing to do with a dispute or disagreement among any of the EAC Partner States. Amb. Mfumukeko said that a new date for the 21st Summit meeting would be communicated later after consultations among the EAC Heads of State. Amb. Mfumukeko, however, said that the 39th Meeting of the Council of Ministers slated for 21-27 November, 2019 would proceed as initially planned.  Update: According to official correspondence from the Rwandan minister of State in charge of EAC Affairs, Olivier Nduhungirehe, a new date in January or February will be communicated after consultations among EAC heads of state.

The EAC Trade and Investment Report 2018: East African countries turn to neighbours for more trade (The East African)

The East African Community Trade and Investment Report (2018) shows that all EAC member states save for Burundi recorded growth in trade with their regional counterparts. The report prepared by the EAC Secretariat shows that Uganda, Tanzania, Rwanda, South Sudan and Kenya’s combined exports to the EAC and Southern African Development Community regions amounted to $3.1bn and $1.9bn in 2018 respectively.

Burundi’s total trade with other EAC partner states fell by 11% to $150.9m in 2018, from $162.6m in 2017. Kenya’s total trade with EAC partner states increased by 4.7% to $1.95bn in 2018 from $1.86bn in 2017, mainly on account of increased total trade to Uganda, Tanzania and Rwanda. Rwanda’s total trade with EAC increased by 13.4% to $638.8m from $563.2m in the same period. Tanzania’s total trade with other EAC partner states increased by 14.6% to $811.3m, from $707.7m while that of Uganda improved by 21.2% to $2.05bn from $ 1.69bn. However, South Sudan’s trade deficit with the EAC region declined by 15.7% to $375m from $444.6m in the same period. 

According to the report, EAC’s increased exports to SADC excluding Tanzania was as a result of the increased benefits arising from the membership to the EAC-COMESA-SADC Tripartite. Total imports from China, India and EU amounted to $7bn,  $3.9bn and $3.7bn respectively, constituting 18.1%, 10.2% and 9.8% of total imports respectively. Imports from Asia and the Middle East declined but still constituted 44.3% of total imports.

US - Africa trade trends under the African Growth and Opportunity Act: Report of the Government of the United States for the year 2018 (WTO)

The following communication, dated 12 November 2019, is being circulated at the request of the Delegation of the United States.  Extract: In 2018, US imports under AGOA fell 11.8% from $12.2bn to $10.8bn, due in most part to a decrease in the value of imports of mineral fuels (HTS chapter 27) . In 2018, mineral fuels accounted for approximately 72.9% of US imports under AGOA, compared to approximately 75.5% in 2017. Other leading categories of US imports include apparel (HTS chapters 61 and 62) and motor vehicles (HTS chapter 87). South Africa is currently the largest non-oil AGOA beneficiary. Other leading non-oil beneficiary countries are Kenya, Lesotho, Mauritius and Madagascar.

Motor vehicles was the leading AGOA non-oil product sector for most of the period 2016-2018. Imports under AGOA in this product sector reached approximately $537.3m in 2018.  Another leading non-oil sector for the period 2016-2018 was apparel. Apparel represented 41.5% of total non-oil AGOA imports (not including its related GSP provisions) in 2018. Imports of apparel under AGOA rose from $1.0bn in 2017 to $1.2bn in 2018. Eighteen AGOA beneficiary countries have shipped apparel products to the United States under AGOA since 2001. In 2018, leading apparel exporters under AGOA were Kenya, Lesotho, Madagascar, Mauritius, Ethiopia, Tanzania, Ghana and South Africa. The leading category of apparel in 2018 was cotton men's or boy's trousers and shorts.

Statistical annexes are provided to present a detailed description of the trade aspects of the AGOA programme from 2010 to 2018. Table 1 provides summary information on US imports for consumption under AGOA from 2010 to 2018. Table 2 provides information on leading US imports for consumption under AGOA provisions from 2016 to 2018. Table 3 provides information on US trade with AGOA countries from 2010 to 2018.

UAE – Africa trade and investment relations: Implementing Dubai's Silk Road Strategy

(i) Global Business Forum Africa 2019 concludes with call to bolster UAE-African economic ties. More than 2,500 delegates from 76 countries attended the fifth edition of Global Business Forum Africa, including presidents of Liberia and Zimbabwe, the prime ministers of Mozambique and Uganda, as well as ministers, policymakers and prominent businessmen, who shared their insights on Africa’s evolving economic landscape. A total of 350 bilateral business meetings were held on the sidelines of the two-day forum, marking a 75% increase compared to the previous edition. Sessions during the event covered a wide range of key issues and trends impacting African economies, including the shift towards regional integration following the launch of the AfCFTA, advanced technologies reshaping the government and business spheres and the role of startups and cross-border cooperation in driving the continent’s next phase of growth.

(ii) Africa has 'a key role' in Dubai's Silk Road Strategy. At the Global Business Forum Africa 2019 organised by Dubai Chamber, Nadya Abdulla Kamali, CEO, Dubai Customs World, said the whole world is looking at Africa for trade opportunities. "That's why Dubai embarked on new initiative in 2019 - the Dubai Silk Road Strategy. The government's approach to looking at Africa is how to unlock the potential. The infrastructure is there, the trade treaties are there. these aren't the challenges any more. The challenges are the lack of soft skills and capabilities. You can have best port, the best airport and the best train station, but the trade facilitation is not there. If we want hubs in Africa to be recognised as trade hubs, we need to sell those hubs as functioning properly. You need to able to reach your destination without being interrupted, in terms of customs, in terms of clearance. it's not just dropping your goods. It's clearing your goods.”

(iii) Dubai’s non-oil trade with Africa to exceed $272bn.  Dubai’s non-oil trade with Africa will exceed Dh1 trillion ($272.24bn) for the period extending from 2011 until the end of 2019, asserted Majid Saif Al Ghurair, Chairman of Dubai Chamber. Al Ghurair also noted that it had already reached Dh926 billion ($252.09bn) in the 2011-2018 period.

(iv) Dubai to grant UAE permanent residency visas to 200 African investors. Up to 200 “prominent” African investors will receive the UAE golden permanent residency visas under a new initiative launched in Dubai. The ‘Be Part of Dubai’ initiative has been launched by the Dubai Chamber of Commerce and Industry in collaboration with the General Directorate of Residency and Foreigners Affairs and Dubai Free Zone Council. It aims to support ongoing efforts to attract and retain high net worth businessmen from Africa by providing them with an “easy and streamlined way to obtain long-term visa residency visas and significantly contribute to Dubai’s economy”, a statement said. As part of the agreement, the three entities will work together to identify priority sectors for attracting investments to Dubai, in line with the emirate’s income diversification targets.

(v) Dubai lays out plans for Kigali dry port. The owners of Dubai Ports (DP) World Kigali Logistics Platform, a new modern inland cargo handling facility, are considering the feasibility of running it as a regional e-commerce hub. The $35m facility, launched in October this year, sits on 13 hectares and features an Inland Container Terminal with ample warehousing capacity, a container yard, administrative and services buildings, and parking spaces. Nadya Abdullah Al Kamali, Chief Executive of Customs World, told The New Times here that they are working on aligning the Kigali operations with e-commerce activities. She added that the facility is being marketed as an avenue to serve the regional market as a one-stop-shop facility. This comes at a time when the Dubai-based Customs World is in the process of selecting four hubs in Africa for its Dubai Silk Road Strategy, which seeks to increase UAE’s involvement in transport and logistics services across the globe.

(vi) In brief: Dubai looks to deepen relations with Kenya beyond oil businessGhana, UAE sign five pacts

Germany – Africa trade and investment relations:  G20 Compact with Africa Investment Summit commentaries, updates

(i) Robert Kappel, Helmut Reisen analysis of the G20 Compact with Africa: The audacity of hope. Two years is perhaps not long enough to allow for an appraisal of how effective the CwA has been in achieving its aims. Thus, the dominant approach in the official documents has been input orientation rather than output monitoring. By contrast, this study is data driven. It assembles the most recent data on governance, debt, capital flows and savings in the 12 current CwA partner countries. Governance scores have improved since 2016. However, FDI and national savings have not yet responded accordingly. In fact, both fell for the majority of CwA partners during the 2017–18 period. Thus, it often proved impossible to tame public debt dynamics. In view of the macroeconomic data discussed here, the positive tone of the CwA Monitoring Reports to date appears hollow.

In this study (pdf), we take a more detailed look at three quite different CwA countries, with which Germany has established a special partnership: Ethiopia, Ghana and Senegal. Due to its special agenda focused on developing infrastructure and promoting FDI, the CwA pursues a policy that does not trigger structural change towards the development of local entrepreneurship, industrial clusters, the modernisation of agriculture and thus broad-based employment, but instead is a model oriented towards exports. Exports can help to enable loans to be repaid and thus help to prevent countries from falling into debt traps. This strategy makes sense, but has the disadvantage that endogenous growth generated by the activities of local farms and companies is counteracted to a certain extent. Thus, the CwA strategy can have unintended consequences. These include:

(ii) Speeches by Federal Chancellor Angela Merkel

In addition, we have made the conditions for export guarantees and investment guarantees more attractive. Since 2018, exports to the Compact countries alone, amounting to 330 million euros, have been covered by federal guarantees. There are applications in the amount of one billion euros. So we increase ourselves.  We come from a relatively low level when compared to China and other countries. We also know that foreign trade is often the precursor to local engagement, for example in the form of investment. Therefore, these numbers are quite promising. Incidentally, we once looked at ourselves: how has the World Bank's "Ease of Doing Business Index", which is of importance to many investors, developed in recent years among the compact countries? We can say that the index has improved a lot, especially for the Compact countries. I would like to congratulate all of them. So now we can show a lot of practical examples; and if you want to know more, you can find out later in the atrium.

The decision to invest in Africa, of course, remains a private-sector decision. We can not accept this decision from any entrepreneur or entrepreneur. But we can help, we can build trust, and we can say about the Compact states that we have more transparent conditions than we had before. We have, as it were, a further step - as is done in the German Development Ministry by Gerd Müller and his crew - to conclude bilateral reform partnerships with some of the Compact countries. This is already the case with Ghana, Tunisia and Côte d'Ivoire and now also with Senegal and Ethiopia. We can also say that such a reform partnership is open to everyone. Here we talk about the conditions; and the Minister is also in discussion with many representatives of the other Compact countries. So, a lot has started, but I do not want to paint too positive a picture because we still have problems to solve. This includes the big question of security, especially in the Sahel region. Here we have other tools to try to reconcile security and development. The terrorist challenges are serious.

Today's afternoon session serves to discuss the political framework and the conditions of the Compact. This morning, the conversation with the economy was in the foreground. Now it's the conversation between us. It's about getting honest analysis: what progress have we made, what handicaps do we still have, what are the barriers? - I am glad that you are all ready to give us your opinion. Because it is supposed to be a learning process. We do not need to make any window speeches here, it's about getting things done. Because of my visits to Africa, I am well aware of the demanding youth you have, who expects you to act and the results to be visible. That is why I believe that our meeting here on the one hand is a sign of lived multilateralism and on the other hand, it should also be something that bears fruit and brings results.

(iii) Merkel urges reforms in Africa to woo German investors to the region. Welcoming African leaders to Berlin has become something of a routine for German Chancellor Angela Merkel since the Compact with Africa initiative began. This year's summit is the third of its kind, but interest from the region seems to be waning. Only seven heads of state from the 12 Compact countries were in attendance — a far cry from previous years, especially when compared to the first summit in 2017 that was launched with much fanfare. Prominent African leaders like South Africa's President Cyril Ramaphosa and Ethiopian Nobel Prize laureate Abiy Ahmed, who were present at last year's event, were absent. Merkel said the Compact with Africa initiative, which aims to boost private investments in African countries that commit themselves to macroeconomic reforms, has already made progress. That, in turn, could spur investment, she added.

But critics of the initiative say the effects on the ground are negligible. Official figures only show a meager increase in foreign direct investment in the 12 Compact countries — and the response from German countries has been largely lackluster. While German investment in Africa has grown, only some 600 companies with German capital are currently doing business on the continent. "I hear from our African friends time and again that they want more from the German business community. Yes, we will turn our words into deeds", the chairman of the Sub-Saharan Africa Initiative of German business, Heinz-Walter Grosse, told the conference, but admitted: "We have to increase the speed."

Germany's business community, which is traditionally risk-averse, still largely shies away from establishing a presence in Africa. Small and medium-size companies, in particular, that form the backbone of Germany's economy are worried that an investment gone wrong could threaten their existence. Stefan Liebing, chairman of Afrikaverein, a lobby group of German companies that are active in Africa, called on the German government to improve the conditions for public guarantees for German companies wanting to do business in Africa.

(iv) Kagame to German investors: Africa is ripe for investments. Kagame commended Germany Chancellor Angela Merkel’s leadership in prioritizing investment from the German business community. The Head of State highlighted an example of Rwanda’s partnership with Germany companies like Volkswagen (VW), Siemens and SAP, saying that it “demonstrates the competitiveness of our economies and the reforms that have been happening in the ease of doing business." Thomas Schaefer, the Chairman and the Managing Director of Volkswagen South Africa told business executives present especially those from Germany that the continent was particularly ready for investments in the automotive industry where his group is already invested. He pointed out that the continent was faced by challenges of dumping of used cars and extraordinary importation of fuel, saying businesses could tap into that to address challenges. VW presently assembles cars in Rwanda, the journey which Schaefer said started back in 2016. “In the next move, we are going into electric mobility because there is no way a country like Rwanda can continue to import fuel. We believe Rwanda can go carbon neutral,” he noted.

(v) In brief: Egypt, Germany sign agreements worth 330 mln euros on renewable energy, vocational training; Sisi speaks of Egypt's efforts to advance automotive industry with Daimler AG


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