Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Salahaldeen Nadir | World Bank

Diarise: This event (30 July) will introduce Women and Trade: The Role of Trade in Promoting Women’s Equality – a joint report by the World Bank Group and the WTO. The report marks the first major effort to quantify how women are affected by trade through the use of a new gender-disaggregated labor dataset. Stephen Karingi (Director, Regional integration and trade division, UNECA) will be one of the speakers.

The Northern Corridor Transit and Transport Coordination Authority executive committee meeting began yesterday and will conclude tomorrow. The theme: “Towards a Resilient, Smart & Responsive Corridor for Trade & Transport Logistics“.

Witney Schneidman, Brionne Dawson: The US and Kenya launch negotiations on a free trade agreement. Will they succeed? (Brookings)

Trade agreements can take several years to negotiate. In just over three and a half months, the U.S. will hold its presidential elections. As we saw in the transition from the Obama to the Trump administrations, trade negotiations can be scuttled. If Biden wins in November, will his administration continue the negotiations with Kenya? The strong bipartisan support that has existed in Congress over the course of four administrations for programs in Africa suggests that there will be continuity on this initiative. Another challenge is that Trade Promotion Authority (TPA)—the law that lays out parameters for consultations between the administration and Congress and ensures an up-or-down vote on the final deal—will expire in July 2021. Without TPA, the eventual implementing bill could be amended by Congress, potentially unraveling it. Another potential complication is that President Kenyatta’s second term ends in 2022. He sees the FTA as a legacy issue. Will it be completed by then?

2020 Synthesis Report on the State of Food and Nutrition Security and Vulnerability in Southern Africa. The report, released today by SADC (pdf), has revealed that close to 44.8 million people in urban and rural areas across 13 members states are food insecure. While the effects of COVID-19 on malnutrition are not yet to be fully known, it is projected that the multi-dimensional impacts of COVID-19 could increase acute malnutrition across the region increased by 25% or more over the remainder of 2020 and into 2021. With these considerations, some 8.4 million children are likely to suffer from acute malnutrition across the region in 2020, and of these some 2.3 million children will require life-saving treatment for severe acute malnutrition. In the light of the findings from the report, SADC is putting forward wide-ranging recommendations to support those member states suffering from increased food insecurity.

COMESA COVID-19 food security response plan underway. The COMESA Secretariat has developed a draft COVID-19 Regional Food and Nutrition Security Response Plan to improve agricultural productivity, enhance access to competitive markets and trade in agri-food commodities in the region. Implementation of the Plan is expected to create synergies and complement existing initiatives in the region and member states, targeting specific commodities and value chains that are critical for both regional and national food security and nutrition, and with strong linkage to smallholder agriculture. Agriculture and environment experts from COMESA countries attending the 7th Joint Technical Meeting on Agriculture, Environment and Natural Resources conducted virtually, Tuesday 28 July 2020 were informed that the draft plan has been shared with their respective governments for further inputs.

Selected Permanent Secretaries from the Zambian Government, their representatives and members of the civil society have been sensitized about the COMESA Early Warning System Vulnerability Assessments strategy and the Continental Structural Vulnerability and Resilience Assessment. Zambia’s Minister in the Office of the Vice President Olipah Phiri indicated that the government is on course to undergo a voluntarily structural vulnerability assessment in line with the African Union resolution.

ECA’s Office for Central Africa meets performance objectives for Q2 of 2020. Adama Coulibaly: “This quarter, we have supported Cameroon in the formulation of its national AfCFTA strategy, provided member states with a succinct report on the role of mobile telephony in e-commerce, and supported countries with COVID-19 impact analysis and response strategies. Our report on the role of mobile telephony in e-commerce in Central Africa is a major contribution towards the development of the sector in the subregion.”

Streamlining tax, revenue management and digitization of customs administrations in five ECOWAS countries: project appraisal report (AfDB)

The main objective of the project is to provide technical assistance and capacity building to the Customs Administrations in five ECOWAS countries, namely Liberia, Mali, Niger, Sierra Leone, and the Gambia. The support will enable the streamlining of tax, revenue management, management of transit cargo, digitisation and automation of services including electronic management of customs data. The expected outputs for the target countries are:

  1. simplified, harmonized and coordinated customs documentation and processes

  2. strengthened capacity for the customs taxes administration

  3. improved electronic management of transit cargo in Mali, Niger and the Gambia

  4. improved customs capacity for the regional trade initiatives i.e. the ECOWAS Trade Liberalisation Scheme; and

  5. upgraded information technology and automated systems for customs data Liberia and Sierra Leone.

ECOWAS launches Improved Business and Investment Climate in West Africa Project website. View the ECOWAS Investment Climate Monitoring Platform

Bilateral trade and investment: Egypt-Switzerland (Daily News)

Economically, Egypt is our most important export market in Africa and our fourth most important bilateral trading partner in the MENA-region. According to the Swiss Federal Customs Administration, the volume of trade between the two countries for the first quarter (Q1) of 2020 is CHF 410m, compared to CHF 383m in Q1 of 2019, which is a remarkable increase considering the difficult situation. According to FCA data for 2018 and 2019, Egypt has been Switzerland’s biggest trade partner in Africa and will certainly remain one of the biggest trade partners in 2020. Switzerland was Egypt’s tenth biggest trade partner in fiscal year 2018/2019. In 2019, the total trade volume between the two countries amounted to CHF 1.3bn. It has increased by 14.2% from 2018, with a significant boost in Swiss exports to Egypt (+24.7%) and a decrease in imports (-52.2%). This is due to the decrease of imported precious metals and gemstones including gold. Furthermore, some Swiss companies re-export from Egypt to other countries, which is a direct contribution to Egypt’s economy. Our Free Trade Agreement with Egypt still offers much potential. The agreement abandoned all tariffs on industrial products between our two countries as of 1 January 2020.

South Africa: Guide to the Economy, July 2020 (pdf, Nedbank Economic Unit)

On the bright side, the country’s balance of payment position improved significantly in early 2020. The current account recorded a surplus for the first time in 17 years in the first quarter. The surplus amounted to 1.3% of GDP. This was a result of a much narrower deficit on the services, income and transfers account, due to poor corporate earnings and therefore lower dividend payments. A doubling in the trade surplus to R208bn also contributed. Exports rose by 3.3% q-o-q, while imports declined by 4.9% ─ the third consecutive quarterly contraction ─ due to weak consumer demand and shrinking fixed investment. The terms of trade (the ratio of export prices to import prices) improved by 3.8%, primarily reflecting the implosion in global oil prices in late March. The current account is likely to remain in surplus for the remainder of this year. The local recession is forecast to subdue dividend payments and imports by more than the global recession and any Covid- related disruptions will undermine exports and tourism receipts. The terms of trade will remain supportive in the months ahead (pdf). Further substantial improvements are, however, unlikely as oil prices have recovered some lost ground in recent months. We expect a current account surplus of 1.3% this year ─ the first surplus since 2002.

Ghana: Fiscal deficit estimated to expand to 11.4% of GDP by the close of the year - BoG (GhanaWeb)

The Monetary Policy Committee of the Bank of Ghana has noted that the COVID-19 pandemic has pushed public finances out of the path of fiscal consolidation. The Committee at its sitting on Monday, July 27, said the fiscal deficit is estimated to expand to 11.4% of GDP by the close of the year. The huge financing gap brought about by the expanded deficit could exert pressure on public debt, with long term implications for the economy. While government stimulus package for various sectors of the economy, including micro, small and medium-sized enterprises is in the right direction to boost economic activity, the Committee’s view was that going forward (pdf), the 2021 budget should be focused on instituting measures to return to the fiscal consolidation path with the view to building resilience and strengthening the pillars of the economy for a return to macroeconomic stability. The Bank of Ghana’s latest forecast shows that inflation is currently above its upper limit, driven mostly by food prices.

Turkey considering establishment of logistics centres in Ghana - Ambassador (GhanaWeb)

The Turkish government is considering the establishment of a bilateral chamber of commerce in Ghana to facilitate sustainable trade between the two countries. The Turkish Ambassador to Ghana, Özlem Gülsün Ergün Ulueren, who announced this, said Ghana was one of the major trade partners of Turkey in the Sub-region and the move would further strengthen the bilateral relationship between the two countries. She was speaking during a virtual conference dubbed, Turkey-Ghana Interconnected Business for captains of industries of the two countries. It was put together by NIM Global, a Ghanaian business promotion firm in collaboration with the Foreign Economic Relation Board of Turkey and the Association of Ghana Industries.

Ugandan e-commerce platforms power recovery from COVID-19 crisis. Uganda has seen a boom in e-payment solutions in recent years. Between 2015 and 2019, mobile money transactions in Uganda more than doubled in value, from about $9bn to $20bn, according to the country’s central bank. COVID-19 has amplified the uptake of e-payments and growth of local fintech solutions. Among the beneficiaries of the growth is Xente, an e-commerce and financial services mobile app with more than 50,000 subscribers. It allows people to buy goods from marketplaces using methods such as mobile money, credit cards or bank transfers, and to access loans within the app. Following the COVID-19 outbreak, the company waived set-up and commission fees for small businesses for three months. This saw it record a 10% increase in business-to-consumer transactions and a 200% jump in business-to-business turnover, said its chief executive officer, Allan Rwakatungu. The company also launched a new service to ease online and mobile transactions and payments for micro, small and medium enterprises hardest hit by COVID-19.

International trade in services 2020 Quarter 1 (pdf, UNCTAD)

With the Covid-19 pandemic in Q1-2020, global services trade dropped heavily, by -7.6% year-on-year, measured in current US$. In seasonally adjusted terms, the quarter-on-quarter decline is estimated at -7.3%. As expected, the hardest hit service sector ws travel that slumped by -24.4% year-on-year. Transport dropped by -8.6%. Other services, many of which can be traded remotely, resisted the crisis better and fell by -2% year-on-year.

Four recent trade analyses from Commonwealth Trade:

  1. The potential impact of COVID-19 on Commonwealth trade, recovery and resilience (pdf). Table 2 presents the expected change in sectoral value-added for Commonwealth countries. The most affected sectors are textiles and apparel (-5.9%) and re-import & re-export of services (-5.9%). Hotels and restaurants also shows losses (-4.4%), which is especially important for Commonwealth small island developing states that rely on tourism. The results are in line with the WTO, which suggests that the shutdown of the transport sector will affect merchandise trade whereas travel restrictions will have severe impacts on tourism. The Commonwealth is not a formal trading bloc. However, member countries share historical ties, familiar legal and administrative systems, a common language of operation (English) and large dynamic diasporas, which help make trade and investment more convenient and efficient. This ‘Commonwealth Advantage’ enables member countries to trade up to 20% more with each other, while bilateral trade costs are 21% lower, on average (Commonwealth Secretariat, forthcoming). [The authors: Hubert Escaith, Sangeeta Khorana, James MacGregor, Brendan Vickers, Salamat Ali]

  2. Commonwealth Greenfield Investment: Stylised facts and the effect of Commonwealth membership. This issue examines the effect of Commonwealth membership on greenfield investment. Estimates suggest that Commonwealth membership is associated with 19% more greenfield investment, but this study finds this effect to be only weakly significant. It finds that the presence of common legal origins is a significant determinant of both intra- and extra-Commonwealth greenfield investment, along with membership of goods trade agreements and common historical antecedents for the latter. Geography has a negative bearing on both. No single factor consistently explains the Commonwealth’s greenfield investment into the rest of the world, though the effect of geography and bilateral investment treaties is negative. [The authors: Anirudh Shingal, Akshaya Aggarwal]

  3. COVID-19 and tourism: Charting a sustainable, resilient recovery for small states

  4. Leveraging digital connectivity for post-COVID competitiveness and recovery


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