tralac’s Daily News Selection
Special Session of the Regional Coordination Mechanism for Africa ( 24 February, Victoria Falls). The session will focus on leveraging the Decade of Action for the realization of the Sustainable Development Goals and Agenda 2063 in Africa. To that end, it will discuss among other things (pdf), the role of the UN Development System, AU organs and agencies and other stakeholders. The session will be held back-to-back with the sixth session of the Africa Regional Forum on Sustainable Development (25-27 February, Victoria Falls). The rationale for linking the two events is to facilitate the translation of the outcomes of ARFSD sessions into programmatic responses by the UNDS.
The 4th STC on Finance, Monetary Affairs, Economic Planning and Integration (9-14 March, Accra): Leveraging the 4th Industrial Revolution to address youth unemployment in Africa. The STC’s discussions will, inter alia, identify the drivers of change and their likely consequences over the next half century, and propose policy choices that will enable Africa to fulfil its potential in the years ahead. The STC will also add to the scant knowledge base on this topic for Africa and reflect the latest evidence from leading reports such as the Africa’s Development Dynamics, whose 2020 edition would focus on policy responses needed for a better “Future of Work” in Africa given the process of technological change, demographic, urban and green transition.
Selected STC side events, background documents (all pdf):
pdf A status update on Financing the Union (809 KB) : challenges of the 0.2% import levy
Only 17 countries out of the 55 member states are collecting from the levy. Though funds are being collected they are not remitted in full by some Member States. There is no enforcement mechanism to ensure that the money collected is actually transmitted.
Some countries, such as Seychelles and Mauritius have undertaken a zero tariff commitment at the WTO on almost 95% of their imports. Imposing the levy on the remaining goods would only yield less than is required to pay to AU. Similarly, doing so would be in breach of GATT Article II on schedules of commitments. Similarly, a number of Small Island States have raised concerns that their economies are small and not diversified, depending mainly on tourism. These countries have indicated that an increase in the tariffs on the small quantity of imports could potentially weaken their economies.
Other Member States are constrained by legal implications under their obligations to the WTO, especially with the Most Favored Nation principle. The MFN principle requires that WTO members apply the same tariffs on a like product imported from other WTO members.
African Union policy dialogue on the taxation of the digital economy (12 March, Accra). The Policy Dialogue is being held on the backdrop of the new proposals by the OECD Inclusive Framework to develop a global consensus-based solution to the tax challenges arising out of the digitalisation of the economy. Recently, many African countries have reported concerns about the tax challenges they face, as their economies become increasingly digitalised. Digitalisation enables multinational enterprises to carry out business in African countries, with no or very limited physical presence. This makes it difficult for African countries to establish taxing rights over the profits the MNE is making from the business activities it carried out. This is due to the current international tax rules only allocating taxing rights to a country where a non-resident enterprise creates sufficient physical presence in that country, i.e. creating a “nexus” in that country. Business models that enable an MNE to carry out business in an African country with no or very limited physical presence in that country, therefore, represent a significant risk to the tax base of African countries
High-level conference on the promotion of good governance and fight against corruption (12 March, Accra). The Conference is a joint initiative by the IMF’s Africa Training Institute and the African Union Commission. The specific objectives of the conference include: launching the AUC strategy and the IMF framework on governance and corruption; helping build consensus on macro-critical impact of poor governance and corruption and their transmission channels; and disseminating key IMF and AUC messages on governance and corruption issues.
Progress report on the establishment of the African Union Financial Institutions. The main challenges towards the establishment of the AUFIs include the slow ratification of the legal instruments. Since adoption in 2009 and 2014 for the AIB and AMF, respectively, none of the financial institutions has reached the requisite number of ratifications to enter into force. In addition, there is a shortage of financing for the establishment of the AUFIs, and this is particularly detrimental to the operationalization of the AMI, which is the first step toward the establishment of the ACB. Efforts of the AUC to speed up progress include:
pdf African regional integration: contribution to the acceleration of the digitalization in Africa (581 KB) . The African integration process presents a real coordination challenge. The RECs and the African Union are faced with duplication of activities and misperception of roles in the implementation of integration programs. In this regard, the RECs have programs that have so far failed to take into account the Continental Integration Agenda. This gives rise to different regional and continental objectives which reduce the efforts of actors at the continental and regional levels. One of the great challenges emanating from this lack of coordination is the coexistence of the AfCFTA and regional Free Trade Areas. A coordination mechanism is necessary so that the FTAs existing in the RECs can contribute to the operational success of the AfCFTA.
pdf Final report of the 10th meeting of AfCFTA AU ministers of trade (384 KB) (held in 14 December, Accra)
- Realizing Africa’s digital transformation through improved and integrated digital financial and payment systems
Revenue forecasts for 2020/21 financial year are projected to be E21.2 billion, indicating an 18.4% increase from the E17.6 billion in 2019/20 financial year’s collection. A number of factors underpin the expected increase in collection. In particular, SACU receipts are expected to be E8.34 billion which is a 32.5% increase from the E6.3 billion 2019/20 financial year amount. The positive trade balance amounting to E3.9 billion in 2019, is explained by a 16.2% rise in export receipts, largely dominated by the country’s export of soft drink concentrates, followed by sugar exports. On average, 67% of the country’s exports are destined to the South African market. Kenya, Nigeria and Mozambique have remained above the 1% market share, showing an increasing trend of our exports going to African countries. Also, partly contributing to the significant rise in export receipts is the weak Lilangeni against major global currencies which benefitted exporting companies. [Presented by the Minister of Finance, Nal Rijkenberg]
Nigeria: IMF staff concludes Article IV Consultation (IMF)
High fiscal deficits are complicating monetary policy. Weak non-oil revenue mobilization led to further deterioration of the fiscal deficit, which was mostly financed by Central Bank of Nigeria (CBN) overdrafts. The interest payments to revenue ratio remains high at about 60%. Under current policies, the outlook is challenging. The mission’s growth forecast for 2020 was revised down to 2 percent to reflect the impact of lower international oil prices. Inflation is expected to pick up, while deteriorating terms of trade and capital outflows will weaken the country’s external position. Nigeria’s border closure will continue to have significant economic consequences on the country’s neighbors. It is important that all involved parties quickly resolve the issues keeping the borders closed - including to stop the smuggling of banned products.
Violence in North and West Africa is increasingly targeting civilian and border regions as today’s conflicts involve non-state actors with diverging agendas, according to a new report (pdf) by the OECD’s Sahel and West Africa Club. The report uses granular data to assess the intensity and geographical distribution of violence in the region since 1997. It finds that the last five years have been the most violent recorded in North and West Africa, with more than 60,000 people killed between January 2015 and the end of 2019. More than 40% of violent events and fatalities occur within 100 km of a land border, and 10% of deaths from political violence occur less than 10 km from a border. Civilians are increasingly specific targets of violence, rather than just being caught in cross fire.
A monthly average of 11,500 people traveling from the Horn of Africa to Yemen last year made the so-called Eastern Route the busiest maritime migration path on earth, the UN migration agency said on Friday. Data collected by IOM’s Displacement Tracking Matrix revealed that over 138,000 people crossed the Gulf of Aden to Yemen last year, as compared to the more than 110,000 migrants and refugees who crossed the Mediterranean Sea to Europe during that same period. And this is the second year in a row that the Eastern Route reported more crossings than the Mediterranean. In 2018, roughly 150,000 people made the journey.
A global profile of emigrants to OECD countries: younger and more skilled migrants from more diverse countries (pdf, OECD)
The purpose of this paper is to answer some of these questions and to present the basic findings drawn from the updated DIOC 2015/16. The first section of this paper presents the Database on Immigrants in OECD Countries in detail, its key variables and country coverage. Section 2 describes migrant populations both by country of destination and country of origin in 2015/16, as well as the dynamics of international migration to OECD countries since 2000/01. Section 3 presents the evidence on overall emigration rates and emigration rates of the highly skilled at the regional and country levels. Finally, section 4 looks at age patterns in immigrant populations. Main findings:
The adult (15+) immigrant population of OECD countries has reached 120 million in 2015/16, up from 78 million in 2000/01. These immigrants account for 54% of the world immigrant population and represent 12% of the total population of OECD countries. Europe is the main region of origin of immigrants in OECD countries, with 41.5 million immigrants (about 35% of the total), followed by Asia (31 million, 26% of the total), Latin America (30 million, 25% of the total) and Africa (12 million, 10% of the total). North America and Oceania account together for only about 3% of immigrants living in OECD countries.
Two new UNCTAD reports, manuals:
UNCTAD’s updated 2019 guidelines to collect data on official non-tariff measures. During the last few decades, multilateral and regional trade negotiations and unilateral liberalization have substantially reduced tariff rates. Non-tariff measures (NTMs), however, represent a growing challenge for exporters and policy makers. The purpose of this manual (pdf) is to provide guidelines to data collectors to harmonize the NTM data collection process and to minimize uncertainty during the process of categorization and classification. In doing so, the manual presents the logic behind the classification of NTMs, and it explains how to choose the most appropriate code. This manual provides a large set of examples, and it is regularly updated to respond to queries and questions emerging during the data collection exercise.
Negotiating liberalization of trade in services for development. The services sector has been increasingly dominant in most economies. According to the International Labour Organization estimates for 2017, services are the main source of global employment with 48.5% share. The purpose of this publication is to assist trade policy makers, regulators and trade negotiators in considering their decisions regarding trade in services and services negotiations in the overall national development context. It could also be useful for other stakeholders involved or interested in services negotiations and policymaking, including the private sector, researchers and non-governmental organizations. The publication seeks to do so by providing a balanced, objective and sound analysis of the technical and policy issues about the rules and negotiations on trade in services and explore possible ways to address the above-mentioned challenge, especially under the General Agreement on Trade in Services (GATS) of the WTO. A brief analysis is also conducted regarding services negotiations in the regional integration context.