Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: IRU

Call for Papers: AfDB/UNECA/UNDP African Economic Conference 2020 for young African researchers

Request for Proposals: Undertake feasibility study, design, establish and provide advisory services for the African Union Development Fund

A mini-African summit will be held tomorrow (Tuesday) to continue discussing the disputes around the Grand Ethiopian Renaissance Dam, Sudanese Irrigation Minister Yasser Abbas stated on Friday. The summit is part of the recent African Union-brokered negotiations aiming to resolve the near decade-long disagreements between Egypt, Sudan and Ethiopia over the mega-dam. [Egypt Parliament delays session on mandating Sisi for military intervention in Libya to today]

Towards Intellectual Property Harmonisation in Africa: Africa IP Network workshop report

In conclusion, the panellists discussed questions around the expected system of settling Intellectual Property disputes under AfCFTA, National government to prioritize Intellectual property right and the possibility of PAIPO or AfCFTA increasing the number of intellectual Property application in Africa. Mr Million Habte believed from the current circumstance and the way things are going is very clear that AfCFTA can be a good fit for more IP application in Africa given that AfCFTA has achieved a significant number of ratification by the member states. Mr Denis Bohoussou in his concluding remark indicated that the issue is not about the fragmentation of the IP system because the IP system is, by definition, fragmented. He, therefore, stated that the main issue is on how the IP system can be more efficient for Africa.

Mr Fernando Dos Santos pointed out that having a single IP framework will be problematic in Africa. He referred to the challenge Africa is having with TRIPS agreement because it is a single framework that does not allow Africa to customize the system to meet its objective. He further illustrated that Africa has to build an IP system that works for Africa and to achieve this objective Africa has to initiate a phrasing mechanism, by having a unifying IP policy framework, as well as continental IP norm-setting and having an administrative institution that targets the interest of Africa. Mr Sand Mba Kalu proposed a private sector continental-wide IP network (pdf) that will consider membership and participation from the English, French, Portuguese, Swahili, etc. Speaking countries. He said the network should be open to all Africans who are interested in having an IPRs system that works for Africa.


Central Africa Economic Outlook 2020: Coping with the COVID-19 pandemic (AfDB)

The prospects for medium-term economic growth in Central Africa were favorable before the coronavirus pandemic. The pre-COVID-19 real GDP growth rate for the region was projected at 3.5% in 2020 and 2.9% in 2021, supported by the continuing implementation of the reforms embarked upon, dividends from key investments, development of economic diversification and debt management efforts made. However, the prospects are now gloomier since the onset of the pandemic. In the latest macroeconomic projections that factor in the disease’s potential impact, AfDB has projected a growth rate of -2.5% for the region in 2020 in a best-case scenario where the situation is controlled in the short term, i.e. a drop of 6.1 percentage points compared with its original pre-COVID-19 projection of 3.5%. In a worst-case scenario, where the pandemic is more slowly contained, the estimated growth rate for 2020 is -4.3%, i.e. a drop of 7.8 percentage points compared with pre-COVID projections.

A job structure analysis for Central Africa with a focus on the informal sector and precarity reveals different dynamics, depending on the main economic activity of the country concerned. The ‘agricultural’ countries (Cameroon, CAR, DRC and Chad), the majority of whose jobs are in agriculture have low unemployment rates but very high rates of underemployment, informality and vulnerability. Conversely, the ‘oil’ countries of the region (Congo, Gabon and Equatorial Guinea), have relatively high unemployment rates but with less informality and precarity. Furthermore, the combination of informal jobs and self-employment (generally in agriculture or petty trading) appears to be a source of employment vulnerability in the region. Extracts:

On the regional demand side, household consumption was the main contributor to nominal GDP representing 62.4% in 2019 (Figure 8). This percentage remained stable throughout the entire 2015-2018 period. Investment contributed 25.6% in 2019, while net exports were accompanied by a negative contribution of -1.4%. In 2019, household consumption was the largest contributor to nominal GDP in all the countries except for Congo (Figure 9). Household consumption contributions varied between 38.1% in Gabon and 83.4% in CAR. However, in Congo, government consumption contributes most to nominal GDP representing 66.2%, and the contribution of net exports is negative at -25.9% of GDP. In relative value, household consumption also contributed most to the region’s real GDP growth in 2019 (Figure 10). At regional level, with 1.2 percentage points, household consumption to increased demand exceeds the contribution of investments (+0.8 percentage point), net exports (+0.6 points) and government spending (+0.2 points). In 2018, investments contributed most to demand-driven growth

Concerning the external sector, the region’s current balance should further deteriorate. The Bank’s initial projections forecast a current balance deficit for 2020 equivalent to 2.8% of GDP for the region. The revised postCOVID-19 projections indicate that the current balance deficit would dip further by 3.8 or 6 additional percentage points to 6.7% or 8.8% of GDP depending on a best- or worst-case scenario. This trend is attributable to a deterioration in the terms of trade, a decline in exports and a possible increase in imports and could result in a sharp deterioration in foreign exchange reserves. The drop in export revenue could also affect the country’s ability to honor its external debt service payments. This underscores the relevance of measures taken by the IMF to grant a moratorium on debt servicing to certain countries and proposals from certain G20 governments and multilateral institutions to reschedule or cancel debts.

With the outbreak of the pandemic, the slowing global economy and falling commodity prices will affect Central Africa. Falling global demand, especially in China, could affect economic growth, investments and exports in the region. The drop in the price of a barrel of oil would have a severe impact on export revenue, public finances and the growth of the region’s heavily oil-dependent economies (Gabon, Equatorial Guinea, DRC, and Chad). China remains Gabon’s leading client (33.2% of exports in 2018) and third largest supplier (10% of imports in 2018). In Equatorial Guinea, China is the second leading export (13.5%) and import (12.8%) partner. In the case of Congo, over half of all exports are shipped to China (53.8%), while China is the second largest supplier (15.4%). In Chad, China is the second largest supplier (15.7% of imports) and the third leading client (15.1% of exports). In CAR, China is the fourth largest supplier (6.6% of imports) and the third leading client (7% of exports). Accounting for 23.9% of exports, the ‘Middle Empire’ is the leading client of Cameroon and largest supplier (18.5% of imports). In DRC, China is the leading client (35.3% of exports).

East Africa: “Trade must become more fluid” in post-pandemic era (The Africa Report)

Intra-Community trade within the EAC represents only 20% of its total trade (as opposed to 70% in Europe). Several factors are to blame for this, including the poor quality of infrastructure, complex administrative procedures, low competition in the carrier industry, and a lack of interconnectivity between the various modes of transport. For example, clearing a container takes eight days in Mombasa, less than two days in Mauritius and barely ten minutes in Europe. These differences are even more pronounced when it comes to transport corridors. According to TradeMark East Africa, it takes twelve days for a shipment from Djibouti to travel the 850 km to Addis-Abeba. That is four times longer than Asian averages for the same distance.

Another sign of the lower resilience of continental circuits is the inflation differential per product (imported or not). In Kenya, conflict and subsequent delays at the Tanzanian border have tripled the price per kilo of onions. It is certainly difficult to determine which issues are caused by supply problems, and which are caused by locust invasion, flash floods and recurring inflation during Ramadan. However, those African businesses that have been surveyed confirm that local supply has suffered greater disruptions than the others. [The authors, Christian Yoka and Gaëlle Balineau, are attached to the French Development Agency in East Africa]

Kenya: Trade suffers at borders (Daily Nation)

The government says it will enhance surveillance on the Covid-19 pandemic at the country’s border points as it balances between minimising disruption of trade and keeping people healthy. Health Cabinet Administrative Secretary Rashid Aman, while raising concerns that the regions have become hotspots for transmission of the virus, assured traders Friday that they will not be adversely affected. “The sudden spike of cases is forcing us to put in place urgent but necessary measures to safeguard the lives of those involved and promote safe trade,” Dr Aman said in Busia.

Cross-border small-scale traders raised concerns that Covid-19 had caused them huge losses and adversely affected their livelihoods. The chairlady of the Busia Cross-Border Cooperative, Ms Mariam Babu, said the banning of border trade has adversely affected over 7,000 traders: “Over 80 per cent of informal cross-border traders are women. This has caused strife in many families as women are unable to sustain their needs.”

South Africa: Domestic economic developments, First Quarter (SA Reserve Bank)

Real exports of goods and services decreased by 0.6% in the first quarter of 2020, following a similar increase in the fourth quarter of 2019. The exports of both mining products (including gold) and services contracted, while that of manufactured products increased alongside a sharp acceleration in the growth in agricultural exports. The decline in total mining exports reflected lower export volumes of precious metals (including gold, PGMs and stones) as well as base metals and articles, while travel services weighed down total services. By contrast, strong growth in the export volumes of chemical products as well as vehicles and transport equipment boosted manufacturing exports, while vegetable products boosted overall agricultural exports.

The real imports of goods and services contracted further in the first quarter of 2020 as the import volumes of all the major goods and services components declined, reflecting weak demand amid the recessionary environment (pdf). The lower domestic demand for mining products was broad-based, in particular for precious metals (including gold, PGMs and stones). Contractions in the real import volumes of machinery and electrical equipment; prepared foodstuffs, beverages and tobacco; and chemical products weighed down the real value of manufactured imports, while the decline in vegetable imports reduced overall agricultural imports. The contraction in the total real imports of services was compounded by lower travel services, impacted by global travel restrictions following the outbreak of COVID-19.

Real net exports contributed 4.6 percentage points to real GDP growth in the first quarter of 2020 as real net manufacturing and agricultural exports added 4.6 and 0.6 percentage points respectively. The real net exports of machinery and electrical equipment contributed the most to overall manufacturing exports at 2.2 percentage points. In the mining sector, the contribution of the real net exports of mineral products was more than fully countered by the detractions of the real net exports of precious metals (including gold, PGMs and stones) as well as base metals and articles.

Egypt working on setting up e-commerce platforms targeting African market: trade minister (Ahram)

Egypt is working on setting up number of online platforms for e-commerce that aim to boosting trade exchange with countries that have trade agreements with Egypt, especially in Africa, Minister of Trade and Industry Nevine Gamea said. Gamea made her comments on Thursday during a virtual monthly meeting organised by the American Chamber of Commerce (AmCham).

pdf G20 Finance Ministers and Central Bank Governors meeting: communiqué (376 KB) (G20)

The pandemic has reaffirmed the need to enhance global cross-border payment arrangements to facilitate lower-cost, faster, more accessible and more transparent payment transactions, including for remittances. We welcome the Committee on Payments and Market Infrastructures’s stage two report (pdf), which sets out a comprehensive set of “building blocks” to enhance cross-border payment arrangements by addressing long standing frictions. We look forward to the G20 roadmap to enhance global cross-border payment arrangements to be delivered by the FSB, in coordination with IOs and SSBs, by our meeting in October 2020, which will include practical steps and indicative time frames needed.

We support the Anti-money laundering (AML)/Counter-terrorist financing (CFT) policy measures detailed in the Financial Action Task Force (FATF)’s report on COVID-19, and we reaffirm our support for the FATF, as the global standard-setting body for preventing and combating money laundering, terrorist financing and proliferation financing. We reiterate our strong commitment to tackle all sources, techniques and channels of these threats. We reaffirm our commitment to strengthening the FATF’s global network of regional bodies, including by supporting their expertise in mutual evaluations, and call for the full, effective and swift implementation of the FATF standards worldwide. We ask the FATF to remain vigilant with respect to emerging financial technologies that may allow for new methods of illicit financing and commend its enhanced focus on those technologies’ potential to support AML and CFT efforts.

We emphasize our ongoing support for the G20 Compact with Africa (CwA) initiative and underline the importance of enhanced cooperation between all partners, particularly in these challenging times.

World Bank Group President David Malpass: I urge you to extend the time frame of the Debt Service Suspension Initiative through end 2021 and commit to give the initiative as broad a scope as possible. We’ve made a great deal of progress with DSSI in a short period of time, but more needs to be done. Eligibility of official bilateral claims should extend to all external long-term public and publicly guaranteed debt, including the external debts of SOEs with either explicit or implicit government guarantees. To maximize much needed support to eligible countries, all official bilateral creditors, including national policy banks, should implement the DSSI in a transparent manner. For example, full participation of the China Development Bank as an official bilateral creditor is important to make the initiative work. [IMF MD urges further action to secure a resilient recovery]

Later this week: G20 Digital Economy Ministers will hold a ministerial meeting under the Saudi G20 Presidency on 22-23 July


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