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tralac’s Daily News Selection

tralac’s Daily News Selection

18 Mar 2020

The recently elected Secretary General of the AfCFTA Secretariat, Mr Wamkele Mene, will be sworn in tomorrow at the African Union.

Trump Administration notifies Congress of intent to negotiate trade agreement with Kenya (USTR)

At the direction of President Donald J. Trump, United States Trade Representative Robert Lighthizer today notified Congress that the Trump Administration will negotiate a trade agreement with Kenya. “Under President Trump’s leadership, we look forward to negotiating and concluding a comprehensive, high-standard agreement with Kenya that can serve as a model for additional trade agreements across Africa. Kenya is an important regional leader, a strategic partner of the United States, and a commercial hub that can provide substantial opportunities for U.S. trade and investment,” said Ambassador Lighthizer.

In officially notifying Congress, the US Trade Representative is following the procedures set out in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 – often referred to as Trade Promotion Authority – which requires ongoing consultations with Congress. These consultations ensure that USTR develops negotiating positions with the benefit of Congress’ views. USTR will also publish a notice in the Federal Register requesting the public’s input on the direction, focus and content of the trade negotiations. In accordance with TPA, the U.S. Trade Representative will publish objectives of the negotiations with Kenya at least 30 days before formal trade negotiations begin.


South Africa: Illicit financial flows briefing to the Finance Standing Committee

  1. pdf Presentation by SA Revenue Service (514 KB) : Focus on concerning compliance areas

    • Transfer pricing: per the Davis Tax Committee, between 2008 and 2011, more than R200bn left SA as service charge outflows. Our preliminary review, for 2017 shows approx. R93bn left SA in service charges, including R31bnin interest payments against loans

    • Assessed losses: carried forward by large corporates surged from +R130bn (2015) to +R280bn (2017)

    • Criminal and illicit economic activities: represents a serious problem to the economy. The prejudice to the fiscus by initial estimates well in excess of R100bn

    • Base erosion and profit shifting behaviours are of concern to SARS as it severely erodes the current and future tax base. In addition [through] aggressive transfer pricing practices, profits actually earned through key SA activities, end up in tax and favourable tax jurisdictions (i.e. Switzerland).

  2. pdf Presentation by the Inter-Agency Working Group on Illicit Financial Flows (593 KB)

  3. pdf Presentation by the SA Reserve Bank (611 KB)


Bagamoyo–Horohorolunga-Lunga–Malindi road project: AfDB appraisal report

The East African Coastal Corridor: Malindi – Mombasa – Lunga Lunga/Horohoro and Tanga - Pangani - Bagamoyo Road (454km) is a strategic component of the East African transport corridors network, connecting Kenya and Tanzania. The road project will boost regional integration by reducing transit times, facilitating trade and cross-border movement of people, opening up access to touristic attractions, linking the ports of Dar es Salaam, Tanga and Mombasa, and stimulating the blue economy. It is a spur-link to the Northern Corridor, which is a priority project under PIDA. This project is to be implemented in phases owing to the need for huge investment. The first phase, which is a subject of this report, involves the construction of 175 km road sections: 120.8 km Mkange - Pangani road section in Tanzania and 54 km Mombasa – Kilifi road section in Kenya. The project also includes trade and transport facilitation studies, capacity building, environmental and social monitoring services, and social complementary activities. The total cost of the project is UA 326.62 million. The project is co-financed by the Bank Group (78.7%), European Union (7.5%), the Government of Kenya (8.2%) and Government of Tanzania (5.6%). Parallel financing is also planned with GoT and JICA for Tanga-Pangani Road and Likoni Bridge respectively. The overall project implementation time is five years (2020 – 2025).

The Project will boost regional integration through reduction in transit times, enhanced trade and cross-border movement of people, opening up of access to touristic attractions including beaches and the Saadani National Park, providing a direct link between the ports of Dar es Salaam, Tanga and Mombasa, thereby providing alternatives for traders and enhancing competition and efficiency, boosting rural productivity and stimulating the blue economy. The Project will also reduce congestion, which has been blamed for causing significant tailback into the port of Mombasa. In so doing, the project will have spillover benefits for hinterland countries such as DRC, Burundi, Rwanda, Uganda and South Sudan that depend on Mombasa as a gateway to global markets.

The Lagos Chamber of Commerce and Industry has posted the report of its recent discussion: Land border closure and the Nigerian economy


African, global, responses to the widening impact of COVID-19: selected postings

  1. WTO DG welcomes G7 leaders’ statement on COVID-19. ”Rarely, if ever, has the world economy seen supply and demand shocks so sudden, so widespread, and so deep,” said the Director-General. “This is inevitably causing major disruptions to trade, as will be visible in our trade forecast for this year, which we are set to release in a few weeks.” Director-General Azevêdo added: “The top priority now must be to protect the health and safety of people at risk from COVID-19. Alongside these measures, maintaining open trade and investment flows will be critical to protect jobs, prevent supply chain breakdown, and ensure that vital products do not become unaffordable for consumers. And once recovery begins to take hold, trade will play a central role in returning economies to full speed. By allowing countries to tap into each other’s growth as it picks up, our economies will recover more quickly than if we try to act alone.”

  2. IATA media briefing on COVID-19: remarks by Alexandre de Juniac. The measures that governments have introduced to restrict travel are shrinking the size of passenger operations. That is also removing significant cargo capacity from the system - capacity that is vitally needed to help keep supply chains going, including the delivery of critical medicines and medical equipment. That is what was behind our calls yesterday for governments to do all that they can to ensure efficient cargo operations. That includes exempting crew -who do not interact with the public - from quarantine, granting temporary traffic rights where needed, keep air cargo excluded from travel restrictions, and other practical measures to keep cargo moving at this critical time. In these extraordinary times, we have also asked governments to take some extraordinary measures: [IATA chief economist, Brian Pearce: Airlines Liquidity Crisis (pdf)]

  3. The Rwandan government is currently monitoring the economic implications of the novel coronavirus outbreak to devise appropriate interventions. The monitoring is currently being overseen by a steering committee made up of officials from the public and private sectors. The steering committee, led by the Finance ministry, is assessing economic aspects affected and, to what extent, to formulate and design fiscal and policy interventions. The Minister of Finance and Economic Planning, Uzziel Ndagijimana, told The New Times that findings from the monitoring will pave the way for development and implementation of interventions depending on magnitude of problems. [Rwanda Convention Bureau assesses recovery strategies for conferences]

  4. The Nigerian government has banned foreign travels for all public officials. This was part of the resolution reached by the Presidential Task Force on COVID-19, chaired by the Secretary to the Government of the Federation, Boss Mustapha. Mr Mustapha briefed journalists on the resolutions of the meeting in Abuja. The taskforce also “strongly discourage(s) travel by Nigerians to affected countries except for essential trips.” The committee also rejected calls by many Nigerians to restrict travels from countries with high cases of coronavirus. Many countries, including African countries like Ghana and South Africa, have already put such restrictions in place to limit the importation of the disease from highly-affected countries. Rather than do that, the presidential committee “encourage(d) everyone returning to Nigeria from any country to self-isolate for 14-days.” [Nigeria, Ghana, Uganda, among African countries that have imposed travel bans, restrictions]

  5. Kenyan banks offer relief to borrowers as traders warned on hiking costs. In a meeting with President Uhuru Kenyatta at State House on Wednesday, CBK Governor Patrick Njoroge said the deal reached with commercial banks will help reduce the economic pressure that individuals and businesses may encounter due to the coronavirus threat, which has already slowed down trade. Treasury and commercial banks chiefs were also present. Lenders and other financial institutions are expected to restructure their loans with customers in cases where borrowers are not able to honour their obligations on time, Dr Njoroge said. Under the deal, the banks will offer short payment holidays or reschedules on loans payments of up to one year. President Kenyatta said more fiscal measures are expected to be rolled out in the near future to cushion Kenyans against the economic pressure brought about by the outbreak. He also signalled the Kenyan economy is bracing for a wave of job losses as the outbreak disrupts business.

  6. Price hikes in Africa aggravate the coronavirus crisis. Teddy Kaberuka, an economist based in Kigali, says the price hike is due to a number of reasons. Sellers are trying to profit from the crisis. There is also an increase of demand owing to panic-buying by people who don’t know what tomorrow will bring. “Thirdly, it is connected to the global trade environment. Many commodities come from China and since the Chinese market was heavily affected since the beginning of the year, traders don’t travel to China anymore.” According to Angolan economist Carlos Rosado de Carvalho, in the long run, if the price of oil remains low, the national currency could devalue and the lives of Angolans would become more difficult, even if traders do not raise prices. “A barrel of oil in the neighborhood of $30 means the devaluation of the kwanza, leading to higher prices in Angola, raising inflation which naturally erodes purchasing power. If oil prices are low, this can create serious problems of a social nature,” he told DW.

  7. Olusegun Obasanjo, Hailemariam Deslagen, Emily van der Merwe, Greg Mills: Success comes from openness, not erecting barriers. We might be experiencing a temporary discontinuation of global integration, prompting us to think carefully about the world we live in and how we limit the spread of negative shocks, similar to what previous financial crises did. However, when this passes, as it surely will, African nations will need to reconsider their position in the world. Hans Rosling, the renowned Swedish academic, spoke of the world’s contemporary pin code being 1114: roughly 1-billion each live in Europe, the Americas and Africa, and 4-billion in Asia, to make a population of 7-billion. By 2050 it will be 1125, with Africa and Asia each adding 1-billion people. Africa has the largest population of young people in the world. While other regions continue to age, Africa will in the coming decades become the world’s energy centre — the human battery, if you like. To take advantage of worldwide shifts in production and economic activity it will have to take deliberate steps to enable its youth to enter the global economy. The temporary Covid-19 bywords might be isolation and insulation; Africa’s future prosperity - indeed, its very stability - depends on deepening global integration. We must not lose sight of this reform imperative.”

  8. In brief

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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to recipients across Africa and internationally, serving in the AU, RECs, national government trade departments and research and development agencies.

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