News

tralac’s Daily News Selection

tralac’s Daily News Selection

19 Feb 2020

Kimberly Ann Elliott: Would a US-Kenya trade deal throw African integration off course? (WPR)

But a bilateral deal with the US will make it harder to bring the AfCFTA to fruition. If Kenya lowers barriers for US exporters while its regional partners do not, those partners will likely erect barriers - rules determining the origin of imports - to prevent transshipment of American goods through Kenya. Washington will similarly insist on rules of origin that prevent exports from Tanzania or Uganda - members of the EAC - from passing through Kenya on their way to the US. That will mean border checks have to remain in place to enforce the rules of origin, and that will raise the costs of trade within the EAC, the exact opposite of what regional integration is supposed to achieve. So why go down this path?

A more development-friendly approach that also supports the goal of African economic integration would involve maintaining the African Growth and Opportunity Act indefinitely and pursuing reciprocal trade negotiations when the members of the AfCFTA are collectively ready for it. It is true that American leverage would be somewhat weaker in that case. But balancing the bargaining power at least somewhat - making the deal less one-sided, essentially, between a very powerful U.S. and a much smaller African country - would also help to ensure that the resulting agreement is less “America First” and more beneficial for both sides.

Michael R. Pompeo: Liberating Africa’s Entrepreneurs (State Department)

If there’s one thing you should know about our President, my boss, you should know that he loves deals. He wants more to happen. He wants more to happen between the United States and nations all across Africa. That’s why the United States launched our new Development Finance Corporation. I’m sure I’ll get a chance to talk more about this with Vera. It’s now just one month old, but it’s well-resourced, well-funded, and well-structured. The goal is very simple. The goal is to catalyze private sector investment in developing countries, focusing heavily on priority areas like agriculture, like energy, and infrastructure. $60bn of finance capacity, it will help here in Africa. And there’s more. The US under President Trump launched Prosper Africa – the Prosper Africa initiative, which is opening opportunities for businesses on both sides of the ocean. We are pushing forward, too, the W-GDP program, with the goal of economically empowering at least 50 million women by 2025. We expect more than half of those women to be right here in Africa. USAID, one of our traditional assistance mechanisms, is integrating the private sector into its core development work in ways that it’s never done before. We support the African Continental Free Trade Area, and we remain committed to our partnership with the African Union. [This speech was delivered this morning at the UNECA]

UK seeks trade pact with Rwanda, EAC (New Times)

In an exclusive interview with The New Times UK High Commissioner to Rwanda, Jo Lomas, said that they are looking to negotiate a trade deal somewhat similar to EAC’s Economic Partnership Agreement with the European Union. “We are looking to have a trade deal with the EAC, along the lines of what was agreed upon by the EU. Ultimately, we would like to be negotiating something more ambitious but we are keen not to disrupt trade,” she said. She said that, so far, they have commenced consultations with the EAC secretariat as well as EAC member states, including Rwanda. “We have started to consult with the EAC secretariat and the EAC states on how to take that forward. The Rwandan Minister for Trade was in London and we had an initial discussion,” she said. She noted that the lack of an EAC-EU binding economic agreement necessitated the negotiation of a new one. “If there was trade agreement with the EU already in operation, we would transition to one. At the moment, there is none. Our options are either EAC decides to implement it and we transition from that or we come up with a new agreement,” she noted. [UK government update: UK trade agreements with non-EU countries]


Selected AfCFTA updates

Nigeria

  • CNBC Africa interview with trade minister Niyi Adebayo: “Nigeria won’t ratify AfCFTA unless local industries are safe”

  • CNBC Africa interview with Tilewa Adebajo (CEO of CFG Advisory) and Mansur Ahmed (Manufacturers Association of Nigeria): Nigeria to review its trade policy ahead of AfCFTA

  • NOTN engages stakeholders on commitment in ‘services trade’. The Nigeria Office of Trade Negotiations has engaged key stakeholders and private sector operators to reach a common stand on the nation’s specific commitments for trade in services under the AfCFTA agreement. Speaking at the stakeholders meeting in Abuja on Monday, acting Director-General of NOTN, Victor Liman, said the move became necessary to get relevant input from industry players on the liberalisation of services sectors in accordance with the tenet of the continental trade pact. Liman, who listed the priority service sectors for liberalisation as financial, communications, transport, tourism and professional business service sectors, said decisions reached in the meeting be processed as Nigeria’s position and forwarded for harmonisation into a single schedule by ECOWAS.

Ghana

  • Ghana’s Minister for Trade and Industry, Alan Kyeremanten: ”The closure of the Nigerian border can be considered as a trade barrier and we have negotiated under the CFTA a protocol on dispute settlement, so unlike what exists in the current protocol, any country that feels aggrieved by an act or issue by another country that is part of the CFTA can file an action against that particular country or trading group. We are also required by the law to resolve to that matter so it’s not going to be business as usual as it currently exists.”

  • Ghana constitutes technical working groups to domesticate AfCFTA objectives. The seven TWGs, comprised over 100 technical experts from the various sectors of the economy, mandated to develop a comprehensive national action plan to boost intra-African trade and ensure the nation takes full advantage of the opportunities presented by AfCFTA to enhance economic growth. They are: trade policy, trade facilitation, enhancing productive capacity, trade-related infrastructure, trade finance, trade information and factor market integration. The TWGs are based on the seven clusters of the Boosting Intra-African Trade proposed by African leaders during the AfCFTA’s adoption. Mr Alan Kwadwo Kyerematen, minister of trade and industry, announced that a National Steering Committee comprising heads of the seven cluster TWGs would be established to coordinate the activities of the technical groups for effective implementation of the National Action Plan.

  • AfCFTA readiness assessment consultation begins in Accra. The consultation is focusing on six sectors of Association of Ghana Industries members who are in agri-business, food and beverages, pharmaceuticals and herbal, garment, textile and leather, plastics and hardware as well as hospitality and tourism industry sectors. “The stakeholder consultation with the private sector is very important as it would help in assessing their knowledge and understanding of AfCFTA, rules of origin, capacity to produce and export to other African countries as well as identifying the challenges that would impede their ability to take full advantage of the AfCFTA,” said Appiah Kusi Adomako, the country director for CUTS. But he added that a firm in Ghana which borrows on the average of 28% per annum cannot compete with firms in South Africa, Rwanda, Mauritius that borrow on an average of 7% per annum.


Trade between Egypt and Africa up by 2.03% (Ecofin)

Between January and November 2019, trade between Egypt and the rest of Africa slightly increased by 2.03%, reaching $131.35m against $128.74m against the same period in 2018. Data were provided by the Central Agency for Public Mobilization and Statistics. On the continent, Kenya was Egypt’s leading trade partner with a trade volume of about $17.69m at the end of November 2019 against $20.49m the same period in 2018 (-13.67% YoY). South Africa came second with a trade volume of $6.52m at the end of November 2019, against $4.64m at the end of November 2018 (+40.52 pct YoY).

Harnessing Malawi’s agricultural trade for sustainable development: Groundnuts, sunflower and soybeans (UNCTAD)

A decline in tobacco exports due to health concerns has made it imperative to identify other promising agricultural sectors as a means of increasing foreign exchange earnings to support development. This study analyses the three sectors in terms of opportunities derived from exports of primary and processed products, within a context of regional integration and LDC preferential access to developed country markets. It provides detailed information on the current and evolving trading regime between Malawi and its close regional partners, with a focus on both formal and informal trade, given that the latter accounts for a significant proportion of the country’s overall trade and notably involves female traders. The study notes that all three crops offer significant export opportunities:

  • Soybean is in great demand both for the production of protein-rich meals as well as for livestock feed. GMO-free soybean from Malawi already earns a premium in export markets.

  • Potential export earnings from groundnuts, grown by poor communities throughout Malawi, are estimated at around $48.4m, of which over half is as yet unrealised.

  • Demand for sunflower oil is growing in Malawi and foreign exchange constraints can encourage processors to source from domestic producers.

Profiled policy recommendations (pdf):

  • Speeding up processing of testing and certification for exporters by the MBS and promoting mutual recognition of regional test certificates: will significantly facilitate trade for the region’s exporters, and help firms integrate into regional value-chains. In particular, accelerated implementation of existing initiatives such as Malawi’s National Single Window for exporters, which allows a single entry point to fulfill all import, export and transit related regulatory requirements.

  • Exploring Special Economic Zones as an alternative to Export Processing Zones for export-oriented, value-added industries: could provide processing firms additional opportunities for integration into regional value chains, by tapping into domestic production and markets and sourcing raw materials from SADC and COMESA for processing and further re-export to earn foreign exchange. Implementation of SEZ initiatives already underway in Malawi could be further accelerated.

Avocados in Kenya: What’s holding back smallholder farmers (The Conversation)

Kenya is the world’s third largest producer of avocados. It’s also Kenya’s leading fruit export, accounting for nearly one-fifth of its total horticultural exports. But Kenya only exports 10% of its total avocado production. By comparison, Chile exports 55% and South Africa exports 60%. In a new study we surveyed 790 avocado-farming households in Kenya and analysed what factors get in the way of smallholder farmers participating in export markets. We then looked at the implications this has on their farming businesses. This included labour inputs – such as hired and family labour – farm yields, sales prices, and finally, incomes. Smallholder avocado farmers in Kenya face several big barriers to participating in export markets.

SWIFT’s annual African Regional Conference: API hackathon to foster innovation in cross-border payments in Africa

SWIFT will hold an open API hackathon at its annual African Regional Conference (21-23 April, Cape Town). The hackathon aims to identify new solutions to reduce costs in cross-border payments into and within Africa. Over two days, teams of developers will be given access to a combination of SWIFT and industry APIs in an open sandbox environment provided by SWIFT. They will be asked to develop solutions to concrete, real-world challenges currently facing the payments industry in Africa. The teams will then pitch their work in front of an expert industry panel at ARC.

The 14th WTO trade policy review of the European Union is underway in Geneva: the documentation can be accessed here.