Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Today, in London: The UK-Africa Investment Summit

  1. Growth Gateway announced at UK-Africa Investment Summit

    The service will help businesses access the UK government’s trade, investment and finance offer for Africa all in one place. It will be made up of:

    Online information: a section of great.gov.uk will provide up-to-date information on the UK government’s trade, investment and finance offer, as well as African market guides, UK sector guides and a tool to help businesses understand what support they may need, and how best to access it; the content will be available in English, French and Portuguese.

    A UK-based team of trade and investment professionals: to help African firms export to the UK, find investment partners, and help UK and international companies to trade with and invest in Africa; the team will work closely with Her Majesty’s Trade Commissioner for Africa, Emma Wade-Smith.

  2. A new initiative to enhance UK-Africa economic relations: UK-Africa Prosperity Commission (UK All-Party Parliamentary Group for Trade Out of Poverty, ODI)

    As African Heads of State and business leaders convene in London on 20 January for the first ever UK-Africa Investment Summit, the APPG Trade out of Poverty, and the Overseas Development Institute, is encouraging the UK government to engage them on a proposal for a joint UK-Africa Prosperity Commission. The new Commission would chart out the opportunities and future directions for a dynamic, new comprehensive economic partnership between the UK and African countries covering the inter-linked dimensions of trade, investment, aid and technology for the next decade. It would allow the UK to shape a shared prosperity agenda collaboratively with our African partners and business communities. This two-way relationship is what Africa wants most of all, and a joint commission would distinguish the UK’s approach from that of the US, EU, Germany, Japan, France and other industrialized nations. [Download the concept note (pdf) for the UK-Africa Prosperity Commission. The authors: Dirk Willem te Velde, Tom Pengelly]

  3. Africa and the United Kingdom: Challenges and opportunities to expand UK investments (ODI)

    Currently, UK foreign direct investment in Africa is heavily focused on the extractive sector and in South Africa. The low penetration of UK FDI beyond mining and financial services and in other countries suggests that there are opportunities as well as challenges to increase the role of British investors in boosting African economies. While to date, the evidence gathered suggests that UK firms show little appetite for investing in manufacturing, developing this sector is a key priority for African governments, and is an area where the UK firms can offer expertise in a wide range of supporting activities, including insurance and business, professional and financial services. Diversification away from the extractive sector will also be key if the British government is to realise its ambition of making the UK the top G7 investor in Africa by 2022. The concentration of UK investment in the extractive sector is also undesirable because spillovers are limited and the risks of appreciation of the exchange rate are higher. Recommendations (pdf):

African governments should better coordinate efforts to strengthen the business climate and to address barriers to trade. Poor regulatory frameworks can facilitate corruption and uncertainty which hamper investment and raise business operation costs.

In particular, African governments should eliminate regulations that discriminate against foreign firms, reduce investment requirements and distribute the requirements of compliance with regulations and taxes equally between domestic and foreign firms.

Infrastructure in energy and logistics should be improved to attract investment, including in manufacturing, and to prompt diversification of investments.

UK aid should continue to be used to facilitate coordination, help address bottlenecks and contribute to the provision of public goods that companies may require.

An adequate combination of trade policies, investment and aid will determine the creation of opportunities that benefit private sector activity in the UK but, crucially, also contribute to the economic transformation and development of Africa. [The authors: Maximiliano Mendez-Parra, Sherillyn Raga, Lily Sommer]

President Buhari: A new case for a Commonwealth based on trade (The Sun)

Yet there is also a case to be made that our two Commonwealth countries should try, with other members, to deliver more – collectively. In 2015, I became the first head of a new Commonwealth Enterprise and Investment Council tasked with boosting trade and investment within the wider organisation. Now with the United Kingdom – the Commonwealth’s largest economy – no longer obliged to ringfence its economy with tariffs, this mission will be given a jolt of vitality.

However, we must be realistic: the commonwealth will not suddenly become a multilateral-free trade zone. Today many members reside within regional free trade and customs zones of their own. Yet without any of us needing to relinquish these ties, we can work together to minimise – consistent with respective memberships – as far as possible many of the tariffs and barriers on commodities, products and services. Because member countries’ national laws are built on the principles of English jurisprudence, we might work together from this common platform to better align regulations on investment, certification and trade.

Other commentaries:

Twitter updates: #InvestInAfrica

India-South Africa trade and investment issues: extracts from the Joint Ministerial Commission (Dirco) 

On trade and investment: The Ministers, while acknowledging the growth in bilateral trade volume noted the considerable scope for growth in commercial and investment relations through facilitation of cooperation between business entities in India and South Africa. Both sides encouraged the exchange of trade missions and participation in trade fairs and exhibitions. Both sides agreed on the need to expedite the consultations to finalise the India-SACU PTA at the earliest.

On agriculture: The Ministers noted the progress made in Agriculture sector at the recent FoC meeting, where both the countries agreed to identify two agricultural products for mutual market access and tasked their officials to quickly facilitate market access to these products. EAM expressed hope that the barriers to trade in agro-processed sectors (seafood and bovine meat) would be removed soon and tasked their officials to address and resolve the issues related to phytosanitary regulations and others on priority. The Work plan that has been under discussion between South African Agricultural Research Council (ARC) and Indian Council of Agricultural Research (ICAR) has been finalized and is ready for signature.

Global Economic Prospects: Slow growth, policy challenges (World Bank)

Global growth is projected at 2.5% in 2020, just above the post-crisis low registered last year. While growth could be stronger if reduced trade tensions mitigate uncertainty, the balance of risks is to the downside. A steep productivity growth slowdown has been underway in emerging and developing economies since the global financial crisis, despite the largest, fastest, and most broad-based accumulation of debt since the 1970s. These circumstances add urgency to the need to rebuild macroeconomic policy space and undertake reforms to rekindle productivity. 

pdf Sub-Saharan Africa (159 KB) Regional growth is expected to pick up to 2.9% in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters. The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries. In South Africa, growth is expected to pick up to 0.9%, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers. Growth in Nigeria is expected to edge up to 2.1% as the macroeconomic framework is not conducive to confidence. Growth in Angola is anticipated to accelerate to 1.5%, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment. In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4%. In Kenya, growth is seen edging up to 6%.

World Economic Outlook Update: Tentative Stabilization, Sluggish Recovery? (IMF)

Trade policy uncertainty, geopolitical tensions, and idiosyncratic stress in key emerging market economies continued to weigh on global economic activity – especially manufacturing and trade – in the second half of 2019. Intensifying social unrest in several countries posed new challenges, as did weather-related disasters – from hurricanes in the Caribbean, to drought and bushfires in Australia, floods in eastern Africa, and drought in southern Africa.

Despite these headwinds, some indications emerged toward year-end that global growth may be bottoming out. Moreover, monetary policy easing continued into the second half of 2019 in several economies. Adding to the substantial support the easing provided earlier in 2019, its lagged effects should help global activity recover in early 2020. As discussed below, the 2019 global growth estimate and 2020 projection would have been 0.5 percentage point lower in each year without monetary stimulus. 

In sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020-21 (from 3.3 percent in 2019). The projection is 0.1 percentage point lower than in the October WEO for 2020 and 0.2 percentage point weaker for 2021. This reflects downward revisions for South Africa (where structural constraints and deteriorating public finances are holding back business confidence and private investment) and for Ethiopia (where public sector consolidation, needed to contain debt vulnerabilities, is expected to weigh on growth).

High Level Retreat on the Operationalization of the Peace FundThe Retreat (11-12 January) was expected to provide clarity and consensus on the following key issues (pdf)

How to ensure the revitalised AU Peace Fund is effectively and accountably managed in line with international best practice in fund management

How to ensure the Peace Fund delivers concrete results and impact

The roles and responsibilities of the AU Policy Organs (including a flow chart illustrating the roles and responsibilities of the PSC and other stakeholders)

The roles and responsibilities of the Peace Fund governance bodies detailing the key interface/relationship between the Peace and Security Council, Board of Trustees the Executive Management Committee and other Policy Organs

The decision-making process for financing activities under the AU Peace Fund and what procedures will guide access to the Fund?

How the budgeting process for the AU Peace Fund will work

How to ensure that the Fund is not rapidly depleted. Beyond Member State contributions, what resource mobilisation strategy should be put in place?

The initial pilot activities that should be prioritised for financing in 2020, along with the management systems that will need to be in place to ensure that any funds allocated are effectively utilised.


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