tralac’s Daily News Selection
10th EU-AU Commission-to-Commission: updates
Opening statement by President von der Leyen. Dear Moussa, when I first came to Addis, I told you that I came first of all to listen. And this is why we are all here today. After our first meeting, we have put together topics, a set of proposals – these will be the round tables today – the four main themes that we have chosen together.
It is first of all peace, security and good governance. Your initiative to silence the guns in Africa is something we are deeply impressed of, we want to support you as much as we can. It is a huge challenge, it is absolutely the right idea to silence the guns. So you have us at your side because this is of utmost importance for the development of this continent. And you rightly mentioned that Libya shows how natural it should be to join forces – we have met indeed in Berlin – but we know how difficult it is to implement afterwards. To keep everybody on board. But this is the essence of multilateralism. It is not only to sit down together to discuss things but it is also to implement them, to stay true to what you have accepted or what you have promised. So there is still a lot to do – we know it – and we count on you and your expertise to improve things knowing how hard this will be. So let us discuss how to best link your initiatives and our initiatives.
Second, on trade and investment. We all know the questions we have in front of us. How to make the most of your new Free Trade Area. How to bring investment to Africa. Indeed, as you mentioned, Europe is the largest investor in Africa and the largest trade partner to Africa. So there is a lot we have to share – a lot of technologies and expertise we can share. We would like to hear what you expect from our partnership, and how far you are willing to go.
Third, on the transition towards a cleaner, carbon-neutral and digital economy. I think no one understands climate change better than you. I just have to mention the growing desert. And all of us, in our continents, in Africa and in Europe, we see already and fear the consequences of climate change – the floodings, the draughts, the grief over losing species – we call it biodiversity. The knowledge that we have to profoundly change the way we produce and consume into a circular economy with respect to nature, live in harmony with nature. There is a lot we have to change, but also a lot of opportunities ahead of us we want to grasp – with new technologies and new opportunities. And the same goes, of course, for the digital age – I know that there is a thirst for digital skills in young Africans and young Europeans – let us join forces there, let us give them the technologies, let us give them the skills and, of course, frame the whole thing, because technology is neutral. So it is depending of us what we make out of it – whether it is going to be more positive or more difficult for our societies. And if I may say so, Africa does not have to repeat that same mistakes Europe did in the past. So you can take the fast track towards a more modern and more sustainable economy. Let us walk this path together, in our mutual interest.
Finally, on migration, human mobility and skills. I commend you for your initiatives on giving women full access to finance, full access to entrepreneurship, to create your own business – rightly so, I can only say. It is something where Europe also fights for, struggles with. We are still not where we want to be, we know these topics, but [and] we have improved and still, there is a lot to do. So I commend you on that. I commend you on your initiatives in investing in youth. We have achieved a lot in recent years, also on the topic of fighting smuggling and human trafficking, which disrespects the human dignity. So there, we join forces. And on the topic of voluntary returns: There is still a long way to go, yes. We must invest in what has worked over the years – so we have some experience. Over the last decades, we worked a lot together, we made mistakes, we had successes. So let us take this experience and move it forward. That what worked, we should extend, we should emphasise and intensify. And we must do more so that African youth can find a place within their own societies – through investment to education, health – these are the main topics we want to tackle.
Remarks by President von der Leyen at joint press conference with AUC chairperson Moussa Faki. We have been discussing the Free Trade Area, and I can only commend the African Union to this success. Because the two of us, we know that tearing down barriers between Member States for free trade is the best way to prosperity. And we agree that it is also a very interesting project on the level of the European Union and the African Union to open business opportunities and investment opportunities for investors from both sides. For example, for investors from Europe, it is of course more attractive to look at one entity, which is the Free Trade Area, and not to deal with 20 or 30 different regulations, but to have to do with one system of regulation. So the Free Trade Area – I am convinced – will boost a lot prosperity and business opportunities that are necessary. Indeed, the European Union is the largest investor and the largest trade partner, we want to maintain that and we are counting on the development of this Free Trade Area.
Related: EIB-UN Habitat Africa Day 2020 conference. A total of EUR 63 million new EIB financing that will enhance access to microfinance, support corporate investment and improve banking skills in Senegal and across Africa was formally agreed at Africa Day 2020. Werner Hoyer, European Investment Bank President: “The European Investment Bank, the EU Bank, is committed to enabling African entrepreneurs and business to harness new opportunities and expand. EUR 63 million of new cooperation with leading microfinance and development investment partners agreed today in Dakar will transform access to finance, create thousands of jobs and improve specialist banking skills here in Senegal and across the continent. The EIB looks forward to further strengthening cooperation with Baobab Senegal, Alterfin, DPI and Afreximbank that reflects our shared commitment to ensuring that African business can flourish, create jobs and contribute to sustainable development. Last year 60% of the European Investment Bank’s EUR 3 billion engagement in Africa supported new business investment.”
President and Chairman of the Export-Import Bank of the United States, Kimberly A. Reed, addressed a meeting of the President’s Advisory Council on Doing Business in Africa, highlighting how EXIM can help US businesses export their American-made goods and services to Africa. In her remarks, Chairman Reed underscored EXIM’s commitment to both PAC-DBIA and Prosper Africa, a whole-of-government economic effort to substantially increase two-way trade and investment between the United States and Africa. Chairman Reed offered support for the PAC-DBIA Keys to Success Report, which was adopted by the Council and highlights financing support available from EXIM. The meeting was presided over by the PAC-DBIA co-chairs, UPS President of Global Public Affairs Laura Lane and GE Africa President and CEO Farid Fezoua, while U.S. Deputy Secretary of Commerce Karen Dunn Kelley gave opening remarks.
Inside US Trade reports that the Trump Administration envisions an eventual network of bilateral free trade agreements with subSaharan African countries, a US Trade Representative’s Office official said yesterday.USTR recently announced plans to negotiate a bilateral FTA with Kenya – which would be Washington’s first with a subSaharan African country. Once the US-Kenya deal is completed, the Administration plans to approach other countries in the region, Michael Nemelka, special advisor to US Trade Representative Robert Lighthizer, told a meeting of the President’s Advisory Committee on Doing Business in Africa. The US-Kenya FTA will be the model for additional trade deals with African countries,eventually creating a network of FTAs, he said. The Administration is committed to making the US-Kenya FTA a “comprehensive, high standard agreement” that will give US business confidence, Mr. Nemelka said. [Heritage Foundation: Strengthening America’s economic engagement with Africa]
Related: The United States contributed $600,000 in 2019 (pdf) to help developing and least-developed countries participate effectively in global trade negotiations. This donation will finance training workshops for officials from WTO member governments to help them deepen their understanding of multilateral trade rules and strengthen their negotiating capacity.
Dangote Cement said on Wednesday it planned to start exports from its Congo Republic plants to neighbouring states after its Nigerian exports fell 41% in 2019 when Nigeria’s government closed its borders. Nigeria shut its land border in August to curb the smuggling of rice to neighbouring states where it sells for more and an illegal arms trade. The closure has also hurt other Nigerian businesses, including cement exports, and stoked inflation. Joseph Makoju, Dangote’s outgoing chief executive, said the border closure led exports to drop to 0.5 million tonnes in 2019 from 0.7 million tonnes in both 2018 and 2017. He said the company had exported to West and Central Africa from Nigeria.
South Africa: Cross-border trade and financial flows to be easier, Treasury says (Business Day)
The Treasury has announced the simplification of cross-border trade and financial flows, which it says will reduce the burdensome approval processes of the past. An annexure to the Budget Review released on Wednesday said that over the next 12 months, a new capital flow management system will be put in place. “All foreign currency transactions will be allowed except for a risk-based list of capital flow measures. This change will increase transparency, reduce burdensome and unnecessary administrative approvals and promote certainty,” the Treasury said. The detailed list of remaining capital flow measures will be published on the SA Reserve Bank website, but this will include the prohibition on SA corporates from shifting their primary domicile except under exceptional circumstances and with the approval of the minister of finance. Cross-border foreign-exchange activities will continue to be conducted through dealers authorised and regulated by the Reserve Bank.
The budget noted that with the development of an African free-trade area African countries have agreed to cut tariffs to zero on 90% of goods, which alongside other trade-facilitating measures is expected by the UN Economic Commission for Africa to increase intra-continental commerce by more than 50% over four years. “The free-trade area presents an opportunity to speed up development on the continent and represents a potentially large market for SA goods and services,” the Treasury said. [Note: SA’s Budget documentation can be accessed here]
South Africa: Government on a fresh drive to open up new export markets (Business Day)
According to budget documents, the department of trade and industry will assist and facilitate the participation of more than 2,000 firms in trade missions and other export promotion initiatives over the next three years. “These initiatives are aimed at increasing the participation of historically disadvantaged enterprises and individuals,” the documents state. To carry out these activities, just more than R751m is allocated over the medium term to the export marketing and investment assistance scheme.
The impact of the coronavirus on South Africa’s retail sector: two updates from Business Insider
Shoprite warns imports of blankets and heaters worth R100m could be hit by coronavirus. A spokesperson told Business Insider South Africa that, while the company is not foreseeing a “material impact on its operations”, turnover of R100m is at stake due to product orders from China being delayed by measures associated with attempts to control the Covid-19 virus. “Mainly shipments with winter products such as heaters and electrical blankets are affected,” a spokesperson said. Shoprite continues to monitor the situation and remains in daily contact with factories and suppliers.
Woolworths shoppers may start seeing ‘stock gaps’ in the next two weeks. Coronavirus-related disruption to Chinese manufacturing and exports is expected to have an impact on Woolworths in the next two weeks. The retailer has warned that some imported items may not be available as it prepares to stock clothing and other products for the winter season. “Whilst we have not seen any immediate direct impact on our South African business, we anticipate that the extended Chinese New Year will create stock gaps in certain categories from mid-March onwards,” a Woolworths spokesperson told Business Insider South Africa. [The maker of Corona (beer) has already lost sales of R4.3bn to the coronavirus]
The government that came to office following the 2018 elections adopted an agenda focused on macro stabilization and reforms. This was supported by a Staff Monitored Program from the IMF, adopted in May 2019, but is now off-track as policy implementation has been mixed. Notable reforms include a significant fiscal consolidation that has helped reduce the monetary financing of the deficit, the introduction of the new domestic currency in February 2019, the creation of an interbank FX market, and the restructuring of the command agriculture financing model to a public-private partnership with commercial banks. However, uneven implementation of reforms, notably delays and missteps in FX and monetary reforms, have failed to restore confidence in the new currency.
Reengagement with the international community continues to face delays. The Zimbabwean government has yet to define the modalities and financing to clear arrears to the World Bank and other multilateral institutions, and to undertake reforms that would facilitate resolution of arrears with bilateral creditors. This continues to constrain Zimbabwe’s access to external official support. As a result, the authorities face a difficult balance of pursuing tight monetary policy to reduce very high inflation and prudent fiscal policy to address the macroeconomic imbalances and build confidence in the currency, while averting a crisis. While the 2020 budget includes a significant increase in social spending, it is likely insufficient to meet the pressing social needs. Absent a scaling up of donor support, the risks of a deep humanitarian crisis are high.
Running out of time: East Africa faces new locust threat (Reuters)
“The second wave is coming,” said Cyril Ferrand, FAO’s head of resilience for Eastern Africa. “As crops are planted, locusts will eat everything.” The impact so far on agriculture, which generates about a third of East Africa’s economic output, is unknown, but FAO is using satellite images to assess the damage, he said. In Kenya, the region’s wealthiest and most stable country, the locusts are mostly in the semi-arid north, although some crops have been affected, said Stanley Kipkoech, a senior official at the Ministry of Agriculture.
In Ethiopia, the government can only afford to rent four planes for aerial spraying, but it needs at least twice that number to contain the outbreak before harvesting begins in March, Zebdewos Salato, director of plant protection at the Ministry of Agriculture, told Reuters. “We are running out of time,” he said. Ethiopia’s single pesticide factory is working flat out. The country needs 500,000 litres for the upcoming harvest and planting season but is struggling to produce its maximum 200,000 litres after foreign exchange shortages delayed the purchase of chemicals, the factory’s chief executive Simeneh Altaye said. FAO is helping the government to procure planes, vehicles and sprayers, said Fatouma Seid, the agency’s representative in Ethiopia. It is also urgently trying to buy pesticides from Europe.