tralac’s Daily News Selection
How emerging markets will shape Africa in 2020 (WEF)
In recent years, Sub-Saharan Africa has increasingly traded old friends, like the US and the European Union, for new ones in emerging markets. Since 2006, the region’s exports to the US have declined by 66%, while exports to countries such as Russia and Turkey have doubled and tripled respectively. This shift in partnerships comes as Africa embarks on a new era buoyed by the promise of the AfCFTA, the landmark free trade agreement that will become operational in 2020, as well as increased visa openness and harmonization of monetary policy through West Africa’s new Eco currency.
In 2020, it is imperative that African nations build on the foundations for strong partnerships established in recent years with their emerging market counterparts in Russia, India and the UAE. Given the IMF’s lowered African growth projections because of US-China trade tensions, Brexit and slowing Chinese growth, courting a wider network of partners will be critical for achieving the ambitious plans for 2020, 2025 and 2030 set out by countries from Ghana to Tanzania and the Ivory Coast – major economies in the region that all head to the polls later this year. [The authors, Isaac Kwaku Fokuo and Akinyi Ochieng, are attached to the Botho Emerging Markets Group]
EAC settles on 32% tax to lock out cheap imports (Business Daily)
Negotiators have agreed to raise the EAC upper tariff band to 32%, breaking a deadlock that has delayed review of the customs taxes for close to 10 years. At the moment, the region’s three-band common external tariff (CET) structure has an upper rate of 25%, which is blamed by the private sector for letting in cheaper goods from outside the bloc. The region currently charges zero percent on raw materials and capital goods, 10% on inputs and 25% on finished goods imports. In addition, there are a number of products such as maize, rice and textile which the EAC has put under the sensitive list to attract CET at rates between 35 and 100 percent because they can be produced within. The agreement implies that tariffs will be reviewed to charge import duty of 32% on all finished goods from non-EAC states. Through the years of negotiation, Kenya and Uganda have been pushing for a higher upper CET band of 35% “to protect the local industries from influx of cheap goods” while Rwanda has been keen on an upper limit of 30%. The new band will have to be ratified by the council of ministers before being presented to the Heads of States Summit later this month.
South Africa: Chicken could get pricier as soon as next week when Ramaphosa slaps tariffs on poultry imports (Business Insider)
South African chicken prices can increase from next week when the South African government introduces additional import tariffs, experts believe. President Cyril Ramaphosa during his State of the Nation Address last week said that the state will introduce a new poultry import tariff to support the local industry by the end of next week. FNB Agriculture information head’s Dawie Maree said they expect local poultry tariffs will increase to a maximum of 45%. “Price increases, if at all, on the local market will not be substantial [from the tariffs],” Maree told Business Insider South Africa. “Other factors influencing the consumer price will most probably have a bigger effect such as electricity and transport costs, feed costs, labour etc.”
Kenya: KAM protests easing of import rules (Business Daily)
Manufacturers say lifting stringent conditions that outlawed importation of uninspected goods will reverse gains made in blocking substandard and fake products into Kenya. Kenya Association of Manufacturers chief executive Phyllis Wakiaga said the high taxes that manufacturers pay this year as a result of higher sales could be lost if the new rules are operationalised. Last week, outgoing trade cabinet secretary Peter Munya sanctioned re-introduction of destination inspection as per the legal notice 183 of December 5, 2019. Mr Munya also reduced the value of non-conformity penalty on importation of uninspected goods from 20% to 5% of the value of goods. “Importation of prohibited goods by unscrupulous traders breeds corruption, increases complexity of clearance notwithstanding inadequate local inspection capacity,” she said.
Nigeria: Shippers Council, Customs partner to ensure compliance to e-Platform (The Guardian)
To boost Federal Government’s revenue drive, the Nigerian Shippers’ Council , and the Nigeria Customs Service, have partnered to ensure shippers complied with procedures at the seaports to curb unnecessary delays in cargo clearing. Executive Secretary of NSC, Hassan Bello, during a courtesy visit to on the Comptroller-General of Customs, Col. Hameed Ali (Rtd.), yesterday, in Abuja, pointed out that low compliance rate among shippers often caused a delay in cargo clearing, but the partnership among regulatory agencies would further ensure proper compliance.
New ICT project to support EAC farmers launched (Business Week)
Small-scale farmers from Uganda and Kenya, with support from development partners, have launched an integrated information communication technology project that will help farmers address the challenge of information flow related to agricultural products and the economic potential of the integration among the EAC Countries, majorly Uganda and Kenya. Under the project, code-named Kilimo Mart Application, an ICT application will be developed to aid farmers to share and access information related to markets for their products.
The MSME Voice: Growing South Africa’s small business sector (IFC)
This report follows The Unseen Sector, which was launched in 2019 and provided an in-depth assessment of the micro, small and medium enterprise landscape in South Africa, including the size of the sector, key barriers to access finance and markets. With The MSME Voice, IFC brings the voice of the small business owner and entrepreneur into the discussion. The report compiles insights from in-depth interviews with small businesses across South Africa, highlighting trends from access to finance and business infrastructure to use of cash and banking services, with the goal to inform the design of regulation, creation of tools and provision of financial services that will meet the needs of South Africa’s small businesses. Extract (pdf):
Uptake of formal finance and services is limited and impedes small businesses’ ability to develop and grow. The interviews found that 79% of informal businesses have never borrowed money, and of those that have, only 21% utilized a bank loan. Only 2% of informal businesses have borrowed money for their business in the last 12 months. 58% of formal businesses indicated that they have never borrowed money and 54% of those who have borrowed money for their business obtained a bank loan. Only 19% of formal businesses used a bank loan to start their business. Only 15% of informal businesses have access to a smartphone or tablet, only 9% have a laptop, 9% have an email address and 9% have a social media page. This suggests a low level of digital connectivity. As a result, access to electronic platforms are limited, making physical small business hubs preferable to digital assistance at this point.
Gender mainstreaming in AfCFTA national strategies: Why it matters for the SDGs (IISD)
In 2019, UNECA provided support to 15 African countries to develop national strategies for implementing the AfCFTA. Gender mainstreaming is central to the design of these national strategies. In particular, gender mainstreaming is guiding the development of gender-responsive policies and context-specific interventions to drive female empowerment in the AfCFTA. This in turn directly supports the realization of SDG 5 (gender equality) as a prerequisite for catalyzing progress across all the SDG and targets. Because women are known to invest most of their incomes (90% on average) back in their families (notably in education and health) and communities, identifying interventions to increase the economic power of women through employment can raise living standards for all. Higher living standards in turn contribute to SDG 1 (no poverty), as well as to improved nutrition (SDG 2), good health and well-being (SDG 3) and quality education (SDG 4) outcomes for women and those who depend on them.
Advancing women’s participation in agriculture under the AfCFTA directly supports increased agricultural productivity and food security targets in SDG 2. Likewise, drawing attention to gender-specific effects of export-oriented industrialization could support opportunities for women to hold higher-value addition employment in manufacturing. Raising gender-related concerns regarding the potential impact on women of trade in services liberalization supports the participation of women in higher-skilled services jobs. This in turn gives impetus to the decent work (SDG 8) and industrialization (SDG 9) agenda, as well as to SDG 10 (reduced inequalities). Highlighting the need for empowering women with the required ICT, technical education, skills development and training to access higher-skilled manufacturing and services jobs further contributes to providing education opportunities (SDG 4). [The authors: Nadira Bayat, David Luke]
MAN Lagos zonal AfCFTA sensitisation workshop: MAN insists on negotiation mandates, others for AfCFTA implementation (The Guardian)
Preparatory to the implementation of the AfCFTA, in July, the Manufacturers Association of Nigeria (MAN), has insisted that key technical concerns should be addressed with a strong commitment on the government’s part to enhance competitiveness. Such concerns include the crafting of robust national negotiation mandates, the Rules of Origin, phased liberalisation, the developing and less developed countries dichotomy, and the schedule of specific tariff items in the basket for Trade in Goods. According to MAN, while the implementation of the agreement is expected to drive the growth of the real sector, certain protectionist measures need to be deployed.
Kenya: State, ILO simplify EAC cross-border trade guide (Business Daily)
The government has moved to woo traders in border counties to use formal channels of trade with other EAC states. EAC and Regional Development Principal Secretary Kevit Desai said there was lack of awareness despite EAC member states benefiting from liberalised trade laws for micro and small-scale merchants. “Kenya in partnership with ILO has initiated the process of developing a simplified guide to EAC trade rules, regulations and procedures for cross- border traders and other service providers to assist them get all the relevant trade information,” he said. Mr Desai was speaking in Kisumu during a capacity building workshop which is aimed at sensitising cross- border women traders on the simplified guides to EAC trade rules and regulations to advance the gains of the EAC integration process.
Politics, lack of technical support slow down Igad and regional bodies: Mahboub Maalim, the former executive secretary of Igad, spoke to Victor Kiprop about the organisation’s reforms (Business Daily)
Q: What challenges did you face? A: The biggest was politics. It’s like the oil in the engine of a car. A lot of times when we have problems in regional institutions, it’s just bad politics. The second major challenge was commitment by member states. How much of what they approve do they actually support with ratifications, approvals, legislative and Cabinet approvals? How much of the in-country civil service would be available for technical support? Third, multilateral relationships between the international community and different countries that affect Igad.
Q: Some Igad member states are members of the East African Community, and others are pushing for the formation of a Horn of Africa Alliance. Where does that leave Igad? A: If we really want to get things right, then the bigger we are the better. As secretary general of Igad I am on record making a case for the collapsing Igad and the EAC into one entity. There’s no point of having two separate blocs when there’s overlapping membership. We should have started by collapsing the two and having a greater EAC or greater Horn of Africa, so that when we talk about business, politics and other commonalities that people can benefit from, we have a bigger market. We have prepared papers and presentations on this, but we haven’t reached consensus.
Guide for road safety opportunities and challenges: low- and middle-income country profiles (UN)
The World Bank’s Global Road Safety Facility presented the Guide for Road Safety Opportunities and Challenges: Low- and Middle-income Country Profiles (pdf) during the 3rd Global High-Level Conference on Road Safety in Stockholm. The guide gives a precise assessment on the magnitude and complexity of road safety challenges faced by low-and middle-income countries and helps policy makers understand the road safety framework in context of their own country systems and performance. LMICs are facing a major challenge in road safety. Each year, 1.35 million people are killed on the worlds’ roads, and a further 50 million are injured, with the vast majority of these (over 90%) occurring in LMICs.
One major barrier to improving this situation is a lack of understanding of the problem due to deficient information. Many vital metrics of road safety performance are not measured effectively in most LMICs, including the actual number of road crash fatalities and serious injuries. Measures of progress such as safety rating of roads, age and safety of vehicles, and safety behaviors such as helmet or seatbelt use are also commonly not known. This limits every aspect of road safety management and delivery, including resource allocation, advocacy, intervention selection, and prioritization of resources.