Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Global Ireland: Ireland’s new Strategy for Africa, to 2025 (DFA)

To increase the value of two-way trade between Ireland and Africa to at least €5n by 2025 and to promote investment, we will:

Build on the strategic Local Market Team approach to grow exports and investment, include a trade focus to the increased number of Ministerial visits to Africa, and further develop business networks with viable propositions to boost trade and investment.

Increase support for innovation by funding Irish-African private sector collaboration, including through expansion of the Africa Agri-Food Development programme, the piloting of a new Ireland Africa Tech Development Fund, and exploring investment in areas such as female entrepreneurship and climate innovation.

Complement the triennial high-level Africa Ireland Economic Forum with an annual programme of focussed seminars and engagements with private sector and non-governmental actors;  Expand and enhance Ireland’s network of Double Taxation Agreements in Africa, consistent with international standards and serving mutual interests.  As a global actor, we will (pdf):  

Andrew Mold: A sceptics guide to the AfCFTA - and why the sceptics are wrong (OECD)

Objections to the AfCFTA follow familiar lines. There are a series of misconceptions which underpin these objections:  “African countries all trade the same things”,  “AfCFTA is a ‘neo-liberal’ project serving the interests of big corporations”,  “How can the AfCFTA succeed while regional trade is actually declining?”,  “It won’t be implemented”

Cameroon readies strategy for partaking in Africa's common market (UNECA)

Antonio Pedro, Director of ECA’s Subregional Office for Central Africa, argued that “the establishment of a conducive business environment to improving the productive capacity of the private sector is a concern to both state and non-state actors”. “This is one of those cases where collaboration between the public and private sector has to be at its best; coherence between the trade, industrial development and foreign policies has to be enhanced; and a closer attention needs to be paid to interventions at the macro and micro levels.” Pedro put the objective of the exercise into perspective, saying “Cameroon's accession to this new market must contribute to the creation of trade rather than a diversion of trade. 

Namibia: Quarter Two Trade Statistics Bulletin 2019 (pdf, Namibia Statistics Agency) 

The overall value of exports and imports for q2-2019 were estimated at N$23,468 million and N$27,247 million respectively, hence, total trade (export plus imports) amounted to N$50,715 million from N$49,250 million recorded in the previous quarter and N$48,869 million registered in the corresponding period of 2018. Chart 1 shows Namibia persistent trade deficit over a period of ten quarters, from q1-2017 to q2-2019.  The trade balance, measured as the difference between exports and imports for q2-2019 amounted to a deficit of N$3,779 million from a revised N$5,475 million deficit in q1-2019 and N$1,138 million registered in q2-2018. 

During the period under review, Namibia mostly exported to five countries namely; China, South Africa, Belgium, Botswana and Spain (Chart 4). These countries are the same reported in the previous quarter except that Botswana slipped one place down to the fourth position while Belgium moved up one place to occupy the third position. Together, these countries made up the largest share of the value of all goods exported to the rest of the world, with 58.2% of the value of all goods exported destined to these markets. Subsequently, overall exports to these markets grew by 10.7% to register N$13,657 million after recording N$12,335 million in the corresponding quarter a year ago. 

China lodged on top of the list as the largest export destination, accounting for 20.1% of all goods exported and South Africa in the second place accounting for 16.6%. Belgium and Botswana accounted for 7.8% each while Spain’s contribution to domestic exports stood at 5.9%. Further analysis of Chart 4 shows that exports to China experienced the largest growth of 48.9% (N$1,548 million) to N$4,713 million up from N$3,165 million witnessed in the corresponding quarter of 2018. Spain followed with 36.2% growth, up from N$1,023 million recorded in q2-2018 to N$1,393 million in the current quarter.

Botswana: International merchandise trade statistics, August 2019 (Statistics Botswana)

Botswana’s total exports amounted to P3, 700.4 million, resulting in an increase of 39.2% compared to the revised July 2019 value of P2, 658.9 million. Imports for the current month were valued at P5, 071.2 million, showing a decline of 14.0% from the revised July 2019 value of P5, 896.0 million. The UAE was the largest destination for Botswana exports, having received 25.3% of total exports during August 2019. India and Belgium followed with 19.7% and 12.6% respectively. South Africa received 12.4% of total exports. Asia as a regional block received 63.7% of Botswana’s total exports during the month under review. The EU got 16.7% while SACU received exports accounting for 15.4%. 

Botswana mostly exported diamonds, accounting for 87.3% of total exports during the month under review. Machinery and transport equipment contributed 4.2% while meat and meat products and salt and soda ash contributed 1.7% and 1.2% percent respectively. SACU as a region contributed 78.1% to total imports during August 2019. Most of the imports from SACU came from South Africa followed by Namibia, accounting for 67.4% and 10.5% respectively, of total imports value for the month. Imports from Asia and the EU regions made contributions of 10.5% and 4.0%, respectively. Canada and USA respectively contributed 3.7% and 1.5% of imports into Botswana.

Nigeria: Digital Economy Diagnostic (World Bank)

Nigeria is capturing only a fraction of its digital economic potential and will need to make strategic investments to develop a dynamic, transformative digital economy, according to a new World Bank assessment.  The report provides an assessment of the state of the country’s digital economy around the five pillars of the Digital Economy for Africa initiative (pdf); digital infrastructure, digital platforms, digital financial services, digital entrepreneurship and digital skills—key foundational elements of a digital economy. Extract (pdf):

Despite its entrepreneurial potential, Nigeria remains a minor player in the global digital economy in terms of exports of digital goods and services. The Information and Communication Technology (ICT) 56 sector expanded in the last decade: its contribution to GDP doubled in 2010–2017 (Figure 20) and accounted for 12.2% of the GDP in 2018. In 2018, the sector contributed 9.65% to GDP growth. However, in 2017, only 5% of Nigeria’s exports were in the ICT sector (Figure 21). 

Nigeria is Africa’s largest market for digital products and services, but its growth is constrained. Despite its protracted economic recession, Nigeria remains Africa’s largest ICT market with 82% of the continent’s telecoms subscribers and 29% of Internet usage. However, overall digital literacy rates remain low, especially among women, and low-income and rural populations. Micro-entrepreneurs and local SMEs are also missing out on digital dividends. [How tough is it to be a tech entrepreneur in Nigeria? Results from a new surveyUNCTAD: Young digital entrepreneurs leading Africa into a new era

Updates, commentaries on Nigeria's closure of its land borders:   

(i) Obasanjo backs border closure, FG restates terms for reopening. Briefing State House correspondents after the weekly Federal Executive Council meeting, the Minister of Information and Culture, Alhaji Lai Mohammed, asked the country’s neighbours, particularly Benin Republic, to respect the ECOWAS protocol on transit, ensure that right duties are paid on containers and uphold the sacrosanct of the rule of origin. He said the freedom of movement of goods from one country to another would be guaranteed only when all the various MoUs that were signed by the parties, were respected and also provided those goods were manufactured in the exporting states. He stated that despite diplomatic effort to resolve the differences with Benin and Niger over the border closure, the three Comptrollers of Customs of Nigeria, Benin and Niger, who met on Tuesday, failed to reach a compromise on the disputes.

“All we are saying is ‘please let us respect the protocol on transit’. ECOWAS set up a protocol on transit of goods, which is very simple. If a container meant for Nigeria is dropped in Cotonou, the authorities in Benin Republic should escort the container to Customs in Seme border, and that way proper duty will be levied and will be paid. But what has been happening over the years is that our neigbours will transload the container, put about five containers on one truck and drive it to the border as if it is only one container that they are going to pay duties on. Worse still, less than even 50% of what is meant for Nigeria will come through the approved border."

(ii) Shut borders: Uproar in ECOWAS Parliament. The verbal exchange followed presentation of Nigeria's country report by its delegation at the ECOWAS Parliament, led by Deputy Speaker of the House of Representatives, Ahmed Idris Wase at the 2019 Second Ordinary Session of the parliament in Abuja. Wase told the parliament that prior to the Nigeria's land border security drills, the Nigerian Government had in 2016 banned importation of rice through land borders. He said that despite this measure, imported rice continued to flood the Nigerian market at rock bottom prices, thereby rendering locally produced rice unattractive to buyers. Specifically, he said "most of the smuggled goods are not part of the legal items captured under the ECOWAS Trade Liberalization Scheme, ETLS, but rather imported by third countries, such as rice produced in Thailand and Vietnam, exported to Benin and finds its way to Nigeria through smuggling."

The Nigerian delegation had hardly finished its presentation when lawmakers from different ECOWAS countries voiced their dismay at the border closure, arguing that it goes against the spirit of the ECOWAS Protocol on free movement of persons and goods. Ghanaian lawmakers, led by Kwasi Ameyaw Cheremeh, said the closure of the borders since September this year was a major issue affecting Ghana's trade with its neighbours in the region, noting that several trucks from Ghana sending goods to Nigeria had been stranded at the Seme-Krake side of the border for over two months now.  Speaker of the ECOWAS Parliament, Moustapha Cisse Lo, condemned the closure of the border between Nigeria and Benin and between Niger and Nigeria, and urged immediate re-opening.

(iii) Central Bank Governor Godwin Emefiele on Tuesday said he would advise the Nigerian government to maintain the border closure in the interests of boosting economic output, which has been recovering relatively slowly in the non-oil sector. Emefiele said the impact of the closures on prices was “reactionary and temporary” and that the medium-term benefits of the government’s decision outweighed the short-term costs, after inflation soared to a 17-month high last month. 

(iv) Olu Fasan: It’s wrong to force feed Nigerians with local foods. The lesson is thus clear. Nigeria may close its land borders today and succeed in curbing smuggling, as the current border closures seem to have done, but if it opens the borders tomorrow without addressing the underlying institutional and policy problems, smuggling would resume. But how long would Nigeria close its land borders without doing irreversible damage to its vast informal sector, which at 65% is, according to the Financial Times, the largest in sub-Saharan Africa? What about legitimate businesses, including the export sector, that are affected by the border closures? And what about the social and human costs in terms of the impacts on ordinary Nigeria?

(v) Joachim Jarreau: A border patrol force is unlikely to solve Nigeria’s smuggling problem.  However, the scale and persistence of smuggling across the border has more fundamental causes. Nigeria has a restrictive trade policy, imposing high duties, or even import bans, on many products. This creates price differences between Nigeria and its neighbours: imports from third countries are cheaper in neighbouring markets than they are in Nigeria. In turn, these price differences create an incentive for smuggling goods across the border. The border patrol will not address this fundamental cause. Moreover, the experience from the past three decades also suggests it is unlikely to succeed.

(vi) Two twitter threads by @LeenaHoffmann

Over the past 4 years I have been involved in three projects investigating Nigeria’s informal economy, its trade relations with its neighbours/cross-border cooperation and regional integration in West Africa. In light of ongoing debates on Nigeria’s land border closure I feel compelled to draw on these research activities to share “two fundamental reasons and another” why I’m puzzled by the land border closure and think it is wrongheaded.

The other fundamental reason why Nigeria's border closure decision is wrongheaded is related to port competitiveness. There is fierce competition between West Africa's seven main maritime gateways to serve the regional market and to specifically handle Nigerian trade.

(vii) Léopold Ghins, Philipp Heinrigs: Nigeria’s border closure - why it will not pay off. African decision makers should endorse long-term policies that take potential adverse effects on consumers into consideration and seek to improve the overall business climate. This implies considering the realities of an increasingly interconnected world and relying on well-identified comparative advantages to allow countries to “leap directly into the global economy”. It is hard to believe that keeping borders closed in Africa’s largest economy is a step in that direction.

China small manufacturers’ rising exports to Africa help offset plunging sales to US amid trade war (SCMP)

Growing optimism is spreading among some small Chinese manufacturers in sectors ranging from car parts to textiles, as a spike in exports to countries involved in the Belt and Road Initiative is starting to offset a portion of lost demand from the United States due to the trade war. Exporters say they have seen a sharp uptick in demand from nations involved in Beijing’s trademark foreign policy initiative, which aims to link Asia, Europe and Africa with a network of ports, motorways and railways.

“Take the textile industry as an example, many export-oriented factories in Zhejiang that I know have doubled or even tripled their orders to the African market this year,” said Steve Xie, a textile exporter from the Chinese manufacturing hub, whose own business has seen a 40% increase in orders. “Every textile factory in Haining and Yiwu city is talking because there have been a particularly large number of African buyers placing orders this year. The increase in orders from Nigeria and Ethiopia is huge.”


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