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

Diarise: South Africa’s June 2020 merchandise trade statistics will be released on Friday. ABSA forecasts a merchandise trade surplus “due to a combination of weak domestic demand, favourable terms of trade and seasonal factors.”

Profiled forthcoming EAC Secretariat events:

  • 2nd Regional Committee on Trade in Services Meeting to consider the Regulatory Audit Reports, 29-31 July

  • EAC – UK senior officials meeting, 13-14 August

  • Economic Affairs Subcommittee of the MAC to discuss Common Market Scorecard, 17 August

The UN Secretary-General, António Guterres, has appointed the director of UNCTAD’s division on international trade and commodities, Pamela Coke-Hamilton, as the new executive director of the International Trade Centre.

AfCFTA Investment policy advisor: In order to complete outstanding issues on the phase two investment protocol and prepare a successful implementation of the agreement, the AU Commission Department of Trade and Industry requires assistance in the form of a technical expert on investment.

WTO report shows members moving to facilitate imports even as trade restrictions remain high (WTO)

While import-restrictive measures introduced by WTO members continued to affect a growing share of global trade, the Director-General’s latest mid-year report on trade-related developments presented to members on 24 July also indicates a shift towards import-facilitating measures, including products related to the COVID-19 crisis. Between mid-October 2019 and mid-May 2020, WTO members implemented 363 new trade and trade-related measures, 198 of them trade-facilitating and 165 trade-restrictive. Most of them, 256 (about 71%) were linked to the pandemic.

The new import restrictions covered traded merchandise worth an estimated $423.1bn, the third-highest value since October 2012. WTO estimates indicate that the cumulative trade coverage of import-restrictive measures implemented since 2009, and still in force, amounts to $1.7 trillion or 8.7% of world imports. This figure has grown steadily since 2009, both in value terms and as a percentage of world imports. The trade coverage of non COVID-19 related import-facilitating measures was estimated at $739.4bn, which is significantly higher than the USD 544.7 billion recorded in the previous report (from mid-May to mid-October 2019) and represents the second-highest figure since October 2012.

African Confidential: A state of disconnect. African treasuries are putting a positive spin on their own finances, but the message from the markets is grim. Something has to give. “Meanwhile, the AU’s plan to set up a continent-wide special purpose vehicle to convert debt into longer-term instruments, has obtained little support. Although some have detected more G20 support for commercial lenders to offer concessions...Yet discussions on private-sector debt restructuring have scarcely moved:

Botswana: SACU revenue surpasses tourism receipts (Southern Times)

The Bank of Botswana (BoB) says money from the SACU has overtaken tourism to become the country’s second largest revenue earner after diamonds. In a media briefing last week, the media on the latest economic developments recently, BoB director of research and financial stability, Dr Tshokologo Kganetsano, said Botswana was earning roughly P3,5 billion (approximately $303m) very three months in SACU revenue. However, Botswana’s monthly import bill is around P5,5 billion (or $470m) monthly. “What we are receiving every three months (from SACU receipts) is lower than what we need every month,” said Dr Kganetsano, emphasising the need to move away from overreliance on diamonds, more so at a time the mining sector has been negatively affected by COVID-19. “With no revenue from diamonds, we are faced with an increasingly worrying situation. Hence economic diversification is more urgent than ever before,” he said. Dr Kganetsano attributed a sharp decline in economic growth to weak performance of the diamond industry the previous year. He said growth in mining output decelerated mainly due to the slow expansion of the diamond industry, which went from 3,2% to 2,1%.

Ghana: 2020 mid-year budget statement (pdf, MoF)

External sector performance was mixed in the first quarter of 2020, reflecting in a higher trade surplus and improved current account balance on one hand, and a deceleration in inflows into the financial account on the other. For the first five months of the year 2020 (January - May), total exports decreased by 8.1% to $6,205.42m. The decrease was attributed to a fall in export receipts mainly from oil, non-traditional exports, timber and aluminium. The import bill for the same review period amounted to $5,162.13m compared to $5,576.24m in the corresponding period of 2019. This was driven by a fall in the demand for oil and non-oil imports.

Estimated oil imports declined by 21.22% to $815.44m from $1,035.04m recorded in 2019. The total value of non-oil merchandise imports was provisionally estimated at $4,346.69m, down by 4.28%, compared to an outturn of $4,541.20m recorded in the same period in 2019. This was attributed to a fall in demand for capital and intermediate goods. As a result, the trade balance recorded a surplus of $1,043.29m compared to a surplus of $1,178.26m in the corresponding period of 2019.

The trade balance is projected to record a surplus of $1.76bn in 2020 (pdf). On the other hand, the services, income and transfers account is projected to deteriorate as a result of a projected drop in remittances. Net remittance inflows are projected to significantly decline from $3.39bn in 2019 to $1.92bn in 2020. Consequently, we project the current account balance to record a higher deficit of 3.6% of GDP at the end of 2020 compared to a deficit of 2.8% recorded at the end of 2019. The capital and financial account is projected to record net inflows of about $2.80bn compared to $3.07bn recorded in 2019, on account of a projected decline in foreign direct investment and projected outflows in portfolio investments as a result of maturities not being rolled over. Overall, we project the balance of payments to record a surplus of $350m compared to $1.34bn surplus in 2019. This should boost gross international reserves at the end of 2020 to $8.77bn, sufficient to provide 4.1 months of import cover.

Charles Cormier: Regional electricity trade, key to unleashing West Africa’s power (World Bank Blogs)

Thanks to strong leadership from regional bodies and sustained financial support from international donors, substantial progress has been made in developing cross-border transmission lines to pave the way for regional trade. About $5bn has been invested by various donors in cross-border transmission lines over more than one decade. The World Bank’s International Development Association alone has provided $1.8bn in financing toward completing primary interconnections and regional infrastructure. There are currently 4,000 kilometers of transmission lines under development, and their imminent completion will allow electrons to flow all the way from Abuja in Nigeria to Dakar in Senegal, opening up vast opportunities for every single country along the way. However, realizing the gains from a regional power market requires more than infrastructure.

While the physical infrastructure is an indispensable foundation, it will take concerted policy and institutional reforms for that infrastructure to deliver its full potential. In West Africa, many barriers exist for countries to build trust in trade. Exporting countries need to be sure that they will be paid in a timely manner for electricity sales, and importing countries need to be able to rely on the delivery of quantities of electricity when they need it. As in any trade, there needs to be a clear mechanism to secure and enforce trading contracts, which are currently wanting. And while a regional approach is essential, it is not enough. Achieving regional trade goals also rests on addressing deficiencies at the national level. As we look ahead, there are grounds for optimism. The region has come together to put in place several critical reforms that countries would need to undertake at a national level and in a coordinated fashion to facilitate regional trade in the region.

Noble Banadda: How smart investments in technology can beef up Africa’s economy (The Conversation)

There is no shortage of technological innovations designed to boost animal agriculture in Africa. These range from GPS tracking systems which identify and trace pastoralists’ herds to livestock vaccine SMS services that alert farmers to disease outbreaks. But to unlock the economic potential of the sector as demand for meat and milk swells threefold towards 2050, countries must invest in the critical areas that will improve quality across the whole value chain. That is increasing productivity and quality from the breeding of the animal throughout the production process to the end product. This includes safe storage, handling and sale. My native Uganda offers some useful lessons from its use of smart investments in technology and farmer organisation. These have made it the only East African country that is self-sufficient in milk.

As highlighted by a new report from the Malabo Montpellier Panel on which I sit, the same can be achieved elsewhere. It can also benefit other livestock commodities, to give Africa food sovereignty across animal-sourced foods and greater access to international markets. The report makes 11 recommendations for Africa’s livestock sector. These range from technological innovations and supportive policies to addressing trade barriers and challenges specific to each commodity. [The author is professor and Chair of the Department of Agricultural and Bio Systems Engineering, Makerere University. Download: Meat, Milk & More: Policy innovations to shepherd inclusive and sustainable livestock systems in Africa

When the well runs dry: Finding solutions to COVID-19 remittance disruptions

Even when the global economy begins its recovery, steep transaction costs will eat into meager remittances and lengthen the return to pre-crisis levels. Compared to other regions, SSA remains the most expensive destination for remittances, hence the region will clearly benefit from reduced transaction costs during the COVID-19 crisis and beyond. Lowering remittance costs will likely save Africa billions of dollars, while increasing the disposable income of millions of households. The classification of money agent services as essential would facilitate the process of sending and receiving remittances. Promoting and amplifying the use of digital technology (mobile and electronic payments) to process transfers could also ease the process; digital payments also eradicate the concerns many people have of COVID-19 transmission through the handling of cash. Governments should encourage increased competition among services providers and promote the increased use of digital payment systems. Migrants and their families also suffer under too-strict regulations. Designed to reduce money-laundering, stiff rules hurt real people who send remittances of about $200 a month to their families. Loosening anti-money-laundering measures needs to be embraced so the region can recover more quickly from this economic crisis.

Only swift action will achieve an African maritime renaissance (ISS Africa)

Good ocean policies can unlock new sources of wealth and transform Africa’s security, development and governance prospects. A new study commissioned by the High Level Panel for the Sustainable Ocean Economy shows that investing in oceans yields benefits five times higher than the initial outlay. Over the next 30 years, the report says, these actions could provide net global returns of between $8.2 trillion and $22.8 trillion – as long as they are underpinned by blue economic principles and values. The value of the blue economy concept is that it provides a way to sustainably develop ocean resources while ensuring the health of maritime ecosystems. This is why the idea has rapidly found favour in Africa and globally. The blue economy is now an integral part of the sustainable development discourse and has acquired significant political importance. To reinforce this message, Africa and the AU need to focus in 2020 on moving from plans to action. The continent has many maritime strategies but implementation is lagging. Capacity constraints are part of the problem and could worsen as pressures to address COVID-19 intersect with enduring challenges such as the effects of climate change on the oceans. This intersection is arguably creating a ‘perfect storm’ for African decision makers. They need to decide how to transition to blue economies while buffeted by unfavourable political, economic and environmental conditions. [The authors: Timothy Walker, Denys Reva]

pdf Trucking: A performance assessment framework for policymakers (1.77 MB) (World Bank)

There is a global need to better understand the inner workings of trucking markets and how these relate to performance. Despite the critical role that trucking plays as a dominant mode in most countries’ freight transport task, and as a key determinant of both private logistics costs and economic externalities, remain insufficiently understood and under-studied. This report starts from the basic definition of actors as comprising trucking service providers on the supply side, shippers and beneficial cargo owners on the demand side, and the public sector, broadly defined, on the side of the public interest that is reflected in issues of import to society at large. But it is critical to delve deeper to reflect the way trucking operations are conducted in practice, by disaggregating these main actor types into further dimensions of supply, demand, and public interest factors to arrive at a more realistic view of performance. The report is structured as follows. Chapter 1 describes the organizational structure of the trucking industry in the international experience. Chapters 3 through 5 subsequently describes the interests and typical decision-making motivations for each type of actor, and what ‘performance’ means to each of them. Chapters 5 concludes.

Africa’s governance response to COVID-19: preliminary report (APRM, African Union)

The report also examines the processes whereby measures are imposed and implemented by AU member states at national levels. AU member states have either deployed existing legal and institutional mechanisms or established new ones to respond to the pandemic. The mechanisms thus introduced focus on i) legal and institutional measures; ii) disease prevention and containment measures, iii) social and humanitarian measures; and iv) fiscal and monetary measures. The report investigates the effectiveness of these measures, in terms of the following (pdf): ensuring desirable outcomes, impacting the enjoyment of human rights, ensuring equal treatment of citizens, and facilitating the accountability of government to the public. At the continental and sub-regional levels, the report examines how Africa has responded to COVID-19, including the “Africa Joint Continental Strategy for COVID-19 Outbreak”, centralised provision of technical support, multilateral approaches to resource mobilisation, and peace and security governance. As regards the sub-regional level responses, the report provides a detailed account of the multilateral measures implemented by the – AU and RECs: ECOWAS, IGAD, EAC, SADC, COMESA.

Today’s Quick Links:

Maetin Owuor: As a sovereign state, Kenya has right to negotiate trade deal with US

WCO project to build border security capacity in West and Central Africa comes to an end

UK, India agree deeper trading relationship at cabinet level summit

Australia’s spot as China’s top source for iron ore under threat as new mega ports open door for Brazil, Africa

Sweden, Korea fund UNCTAD to, inter alia, assess the impacts of the coronavirus pandemic on e-commerce

Why wind and solar would offer the DRC and South Africa better energy deals than Inga 3


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