tralac’s Daily News selection
Kenya’s National Baseline Survey Report: Kenya loses over Ksh 100B in revenue to illicit trade (KBC)
Kenya’s Anti-Counterfeit Authority, today, released findings of the National Baseline Survey on the extent of counterfeit and other forms of illicit trade in Kenya. According to the study conducted between October 2019 and February 2020, the Government revenue lost in 2018 stood at Ksh 102.99 billion up from Ksh 101.23 billion in 2017. From the 16 sectors of the economy that the study concentrated on, building, mining and construction were heavily affected by counterfeiting with a share of 23.37% in value of total illicit trade, followed by energy, electrical and electronics with a share of 14.67% in 2018.
The sector with the most government revenue loss was food, beverage and non-alcoholic drinks with a share of 23.19%, followed by textile and apparel at 20.09%. Thirty per cent of the firms were aware that their products were being counterfeited and sold in the market, whereas 56.4% of the sampled firms were not aware that their products are being counterfeited and sold in the market. Between 2016 and 2018, 7,484 jobs were lost in Kenya due to illicit trade with counterfeiting accounting for 32.59% of the jobs lost. The study also cites piracy as a critical form of illicit trade. According to the findings, the loss of sales as a result of pirated products stood at Ksh 2.2 billion over the period 2016-2018. Although the trend depicts marginal decline between 2017 and 2018, the loss as a result of total sales is quite high ranging between 37.69% and 42.14%, which is a clear indication of how piracy is wiping profitability of the affected firms and individuals. [Note: Tweeted highlights from the launch can be accessed on #IllicitTradeKE]
Fake goods cost Kenya ‘Sh40bn’ yearly, says KAM (Daily Nation)
Counterfeits and substandard goods could be costing the country over Sh40 billion loss in revenue per year, the Kenya Association of Manufacturers has said. Association chairman Steven Smith said that such products have also exposed the local business people to unfair competition adding that some were a health risk to citizens. “Apart from unfair business competition, these counterfeits and substandard goods also affect the tax base of the country,” said Mr Smith, who is also the Eveready East Africa chief executive officer. He said that his association will push for the enactment of the Counterfeit Bill 2008 to protect local consumers and business community. “Enactment of the Bill will help us improve our capacity in business and protect the industry even in days to come,” said Mr Smith.
This 2020 edition of the report is updated with the results of new studies. In particular, the EPO-EUIPO IP Contribution study, first published in 2013 and updated in 2016, quantifying the ‘weight’ of IPRintensive industries in the EU economy was updated again in 2019; the IP SME Scoreboard was also updated in 2019, as was the IP and Youth Scoreboard (both of these studies were first published in 2016). These ‘baseline’ studies of the Observatory are generally updated every three years. In the area of IPR infringement, a new joint OECD-EUIPO study on counterfeit medicines was published in 2020. The sectorial studies estimating the impact of the presence of counterfeits in the EU marketplace have all been updated to reflect the most recent data available. Finally, two studies dealing with the infringement of digital content were published in 2019, one quantifying the consumption of pirated content in all Member States, and the other on the use of illegal IPTV across the EU. The results of those studies are also included (pdf).
BloombergQuint: The ticking debt bomb in Africa threatens a global explosion
Carmen Reinhart, incoming chief economist at the World Bank, predicts that any recovery will be slow and fraught with tension. Most debtor countries require multiple overhauls to stabilize their economies, and negotiations with private creditors typically drag on for four years or longer. “The restructuring process has this long back-and-forth,” Reinhart said at the June 1 World Bank web conference. “I look at the restructurings of the 1920s and 1930s, and of the 1980s and 1990s, and what I see is a decade-long process.”
The AfDB has posted its Sierra Leone Country Diagnostic Note 2020. This CDN analyzes Sierra Leone’s economic and social developments and identifies the key development challenges that may require the Bank’s intervention in that country. It thus aims to underpins the preparation of the 2020-2024 Country Strategy Paper. Extract:
Regional Integration: Sierra Leone maintains close links with its neighbors as an active member of ECOWAS and the Mano River Union. It is to be noted that Sierra Leone moved to a more restrictive trade regime in 2017 by introducing several tariffs on targeted goods such as beverages and tobacco products. Nevertheless, the government remains committed to promotion of intra-regional trade, including cross-border trade by making progress in applying the ECOWAS common external tariff. Movement of people within the ECOWAS region has improved tremendously but movement of capital remains limited.
Regarding external balance, imports have been and remain structurally higher than exports. In 2015, the year of the recession, imports totaled $1,347m, as against only $581 for exports. Imports declined slightly to $1,316m and $1183m in 2016 and 2017, respectively while exports climbed to $670m in 2016 and then dropped to $637m in 2017 due to reduced production and export of iron ore. The current account balance was -13% of GDP in 2017 and is estimated at -16.9% in 2018. The current account balance is projected to deteriorate further to -18.4% of GDP in 2019 and -20.8% in 2020. Current account balance is largely financed by foreign direct investment, remittances from abroad and drawing down on reserves. Most of the exports are unprocessed commodities such as gold, diamonds, iron ore, rutile, fish, cashew nuts, while the bulk of imports include food items such as rice, petroleum, and machinery. One notes that the Sierra Leone’s trade flows have a low exchange rate elasticity. According to this economic structure, the country has not benefited from the depreciation of the Leone over recent years as the depreciation should typically encourage exports and discourage imports, thereby improving the country’s external balance position. The top ten major trading partners for Sierra Leone are China, Belgium, the USA, Romania, Turkey, Australia, the Netherlands, Japan, UK, and Singapore.
Ghana’s trade in ECOWAS: re-aligning a history of incoherent trade policies to post-covid scenarios. For local players, the best protection is in easing the cost of doing business locally. Apart from lower and less beneficial terms in accessing finance for trading, the cost of doing business in Ghana is high and this reduces the profitability due to the limited scale of operations. The advantage that could be presented in easing the cost of doing business will facilitate better outcomes. The world is going to change, and in the COVID-19 dispensation, insights from current commercial activities will refine interactions among traditional trading parties. Recommendations (extracts):
A policy guiding improved data collection on retail activity will better align trade objectives and data transparency and have a clearer register of foreign players in the retail market with a view to ensure better regulatory and statutory compliance along the areas of business registration and taxation.
To conform to ECOWAS Trade Liberalisation Scheme (ETLS) requirements along the lines of free trade and common tariffs, the Ghana Investment Promotion Centre (GIPC) should prioritize the creation of a common interoperable platform of nationally approved classes of goods and services that could be tradable under a free movement regime which would then be taxed according to optimal local laws to still meet revenue targets. The market provenance guideline in the ETLS protocol policy should be activated and pursued aggressively.
Trade certification schemes should be designed along the national approval systems to adopt a more intra-regional set of standards for trade in goods and services. Pilots should be made on low hanging fruits such as manufactured foods and other products that are fast moving consumer goods and very visible categories. This can later be expanded to encompass retail commerce. It will allow for better data towards industrial self-sufficiency in the region. The GIPC should look very earnestly into expanding its scope into digital goods and services. [The author, Selorm Branttie, is vice president for technology and communication at IMANI and global strategy director for mPedigree. This a background article for IMANI-Atlas Global Voices Project.]
Doing Business Reform Advisory: Ten year results (World Bank)
The Sub Saharan Africa region has been the most active in terms of engagement and in the number of reforms. To date, 43 of the 48 countries in the region have engaged with DBRA and almost half of the reforms supported by DBRA in the world were implemented in SSA (322 in total). Reforms have mostly focused on the areas of business start-up, construction permitting, the protection of minority investors, property registration and insolvency frameworks. Over the last 10 years, Côte d’Ivoire, Kenya, Togo, Niger, Rwanda and Senegal improved the most on the overall ease of Doing Business. Notably, Rwanda implemented reforms supported by DBRA over six consecutive years and has been recognized as a global top ten reformer three times. Extract from the SSA analysis (pdf):
Thirty-seven SSA countries implemented 85 reforms between 2008 and 2018 aimed at streamlining business start-up. Burdensome regulations and out-of-date fee schedules have long affected the business creation process in the region. In 2008, the average time to create a business in SSA client countries was 55 days. In 2018, it only took 23 days. One notable way the time was reduced was through the creation of One-Stop-Shops or online registries. With DBRA assistance, 11 countries in the region created OSS or online registration platforms. For example, in 2013, Guinea launched a OSS which helped reduce the time to register a business from 40 to 12 days. In the first 5 months of its creation, 750 businesses were registered.
The time to start a business has been halved and the cost has been cut by four in SSA. In 2008, the average cost to start a business in SSA amounted to 185% income per capita, double the worldwide average of 91% in 2008. This average cost was reduced to 46% of income per capita in 2018, albeit still twice as high as the worldwide average cost to start a business.
COVID-19 is reducing domestic remittances in Africa: What does it mean for poor households? (World Bank)
While much work has gone into tracking international remittances, less is known about remittances sent by migrants within countries. This gap limits informed assessments of these remittances’ trends and impacts, especially at a time of crisis when the information would be extremely important. Tracking internal remittances is crucial for several reasons. Initial analysis further stresses the importance of domestic remittances for poor households in SSA. A few things are apparent from analyzing domestic and international remittances among households in Ghana, Nigeria, and Sierra Leone:
The percentage of households receiving domestic remittances is much higher on average than the percentage receiving international remittances.
The poorest households don’t benefit directly from international remittances as much as they do from domestic remittances. [The author: Samik Adhikari]
The World Economic Forum partnered with the Bahrain Economic Development Board and a Steering Committee-led project community of organizations from around the world to co-design the Roadmap for Cross-Border Data Flows (pdf), with the aim of identifying best-practice policies that both promote innovation in data-intensive technologies and enable data collaboration at the regional and international levels. Creating effective policy on cross-border data flows is a priority for any nation that critically depends on its interactions with the rest of the world through the free flow of capital, goods, knowledge and people. Now more than ever, cross-border data flows are key predicates for countries and regions that wish to compete in the Fourth Industrial Revolution and thrive in the post COVID-19 era. Despite this reality, we are witnessing a proliferation of policies around the world that restrict the movement of data across borders, which is posing a serious threat to the global digital economy, and to the ability of nations to maximize the economic and social benefits of data-reliant technologies such as artificial intelligence and blockchain.
UN calls on governments to help landlocked neighbours: UN multi-agency statement
When borders around the globe close, every country suffers, but those without territorial access to the sea are affected in unique ways, said a UN statement urging governments to provide smooth transit transport for landlocked neighbors. Issued by six UN agencies, the statement warned that economic and social conditions in many landlocked developing countries (LLDCs) – often the poorest in their regions – are worsening rapidly due to COVID-19 lockdown measures and international restrictions on the movement of goods and people. The heads of UN agencies called for:
Governments to refrain from any unjustified restraints on traffic and goods in transit to make sure that goods, medical equipment and basic goods and commodities can depart from and reach the LLDCs when needed, without delay or hinderance.
LLDCs and neighbouring countries to make use of trade facilitation standards and digital technologies that limit physical checks in transit, physical contact at borders and protect the health of workers, such as electronic exchange of information, electronic tracking, automation of customs procedures and other paperless solutions. The implementation of international conventions on trade and transport is of utmost importance.
Governments around the globe to respond to this pandemic not only by minimizing disruptions to international transport but also by viewing the crisis as an opportunity to reorient international freight transport operations towards a more sustainable path.
The strengthening of global and regional cooperation on transport connectivity.
Today’s Quick Links:
AfDB Project Appraisal Report: Support project for G5 Sahel member countries to combat the coronavirus pandemic