Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Kenya targets China imports in new tax evasion crackdown (The East African)

Chinese imports are set for tighter scrutiny as President William Ruto’s government intensifies a purge on entities and individuals who undervalue products shipped from the Asian nation, denying Kenya billions of shillings in tax revenue. The Treasury in its revenue strategy for the medium-term plans to deploy the Kenya Revenue Authority (KRA) for special partnerships with its counterpart agencies in other jurisdictions to determine the true value of imports shipped in from China.

Kenya imports most of its finished goods—from electronics to clothes—from China. However, the government reckons that the value of most of these products—especially electronics such as mobile phones and computers — have not been accurately priced, leading to tax leakages running into billions of shillings.

As part of its revenue administration measures that will be implemented in the strategy period, the Treasury said the government will be working with other tax authorities in determining the true value of “high-risk imports from China”, in what is aimed at addressing the problem of misinvoicing. Trade misinvoicing involves manipulating the price, quantity, or quality of a good or service on an invoice so as to shift capital illicitly across borders.

In 2022, Kenya imported goods valued at Ksh452.6 billion ($3.1 billion) from China, an increase from Ksh441.4 billion ($3 billion) the previous year, data from the Kenya National Bureau of Statistics (KNBS) show.

Land compensation issues delaying Ibadan Dry Port (ZAWYA)

Speaking during a visit to the Oyo State Ministry of Trade and Investment, the Director, SouthWest Zone and National Coordinator of the Presidential Port Standing Task Team, Mr. Moses Fadipe, stated that, “One of the germane issues surrounding this visit is the compensation to the land owners at the Inland Dry Port site at Olorisa-Oko, Moniya, Ibadan. Responding on the land compensation delay, the Permanent Secretary, Ministry of Trade and Investment, Dr Bunmi Babalola, said paucity of funds led to delay in completing compensation to the land owners.

ECOWAS to commence Lagos-Abidjan highway construction in January, 2024 (Nairametrics)

The Commission of the Economic Community of West African States (ECOWAS) has indicated that construction of the 1028-kilometer Abidjan-Lagos highway project is set to commence in January 2024, beginning with the procurement for the main construction and the actual construction work. At a workshop convened in Lagos by the project implementation Unit of the Commission’s Spatial Development Initiative to exchange ideas and comprehensively assess the highway project’s physical, economic, and social aspects.

Ebere Izunobi, the chairman of the Spatial Development Initiative, revealed that experts from five member countries, namely Nigeria, Ghana, Togo, Benin Republic, and Cote D’Ivoire, were convened to discuss the project aimed at transforming the lives of people living along this corridor. He emphasized that transport infrastructure has been accorded top priority in the ECOWAS commission’s programs.

Furthermore, he disclosed that the project was deliberated upon and approved during the meeting of the Heads of state. The highway, known as the “Abidjan-Lagos Corridor Highway,” spans approximately 1028 kilometres, connecting major cities and traversing an area with significant economic potential.

Comesa Ministers Link High Transport Cost to Inadequate Infrastructure (Kenyan Wallstreet)

Inadequate rail, road, air and waterways network is driving up the value of exports by as much as 70 per cent for the landlocked countries within the Comesa region. Ministers of infrastructure from the COMESA region are calling for mobilization of funds from national resources, public private partnerships, foreign direct investment and development partners to close the rising infrastructure gap.

Since the onset of the COVID-19 pandemic, the infrastructure gap has increased as resources were shifted towards the needs of the pandemic. It is estimated that African infrastructure gap increased in the year 2020 to between $59 billion and $96 billion.

Rwanda Minister of State in the Ministry of Infrastructure, Patricie UWASE, noted that despite the positive efforts of Member States, regional infrastructure is still lacking in terms of its quantity and quality. In addition, she noted, national policies sometimes hinder ease of trade, mobility and logistics. “Inadequate networks of road, rail, air and waterways make transport costs in Africa to be among the highest in the world. For the landlocked countries, these costs account for as much as 70 percent of the value of exports,” she added. She called on the ministers to provide policy guidance to facilitate development and adoption of practical solutions to mitigate the infrastructure challenges to ensure adequacy of the infrastructure in relation to current and future demand.

AfCFTA offers massive investment opportunities to the transport sector (African Business)

The 2030 Agenda for Sustainable Development has mainstreamed sustainable transport across many SDGs and targets, particularly those related to food security, health, energy, economic growth, infrastructure, and cities and human settlements. Experts agree that Africa needs a seamless and efficient transport sector to deliver on the trade boom envisaged with the operationalisation of the African Continental Free Trade Area (AfCFTA); in other words, transport drives trade.

Estimates show that the African Continental Free Trade Area (AfCFTA) will increase the demand for road, rail, maritime and air transport by 50%. This is a huge undertaking, calling for a similar roll-out in requisite infrastructure for Africa to be able to transport massive amounts of cargo and support the intra-African exchange of services and movement of people.

The effect of the full implementation of the AfCFTA on transport in the movement of goods and services is provided in a report by the UN Economic Commission for Africa (ECA): Implications of the African Continental Free Trade Area for Demand for Transport Infrastructure and Services. The report says that integrated planning of trade and transport will bring more benefits to AfCFTA signatories as a result of growing demand for different modes of transport.

“Currently, intra-African freight transport demand is heavily skewed towards road transport, with a nearly zero share for rail transport. We know that this distribution on the transport terrain can improve, with efforts to improve African transport policies to expand the rail network, combined with trade policies to implement the AfCFTA,” says ECA’s infrastructure expert and lead author, Robert Lisinge.

African ministers commit to accelerate infrastructural development to boost Africa’s competitiveness and participation in global market (AU)

Recognizing the urgent need to address the persistent barriers affecting the provision of universal infrastructure services on the continent including policy, regulatory, financial, technical and capacity challenges in addition to the urgency required to respond to new challenges impacting Africa’s development including climate change, Russia-Ukraine crisis, and disruptions in global supply chains, African Ministers of Transport and Energy have adopted far-reaching decision to accelerate project implementation in the sectors.

At the just concluded 4th Ordinary Session of the Specialized Technical Committee on Transport, Transcontinental and Interregional Infrastructure, and Energy, the ministers forged solutions for Member States and Regional Economic Communities (RECs) to harmonise strategies, strengthen cooperation and accelerate implementation of projects to facilitate access to modern, sustainable, climate-resilient and universal access to infrastructure services to achieve the goals of the AU Agenda 2063 for continental integration, prosperity and peace.

The cost of transportation in Africa is on average 50 – 175% higher than other parts of the world as a result of poor infrastructure. About 60,000km and 100,000km of new roads are required to provide effective intracontinental connectivity in Africa by 2030. The current pace of infrastructure development in Africa cannot keep up with rising demand from communities and markets, subsequently having an impact on Africa’s competitiveness and participation in global markets. The poor state of infrastructure has led to the reduction of national economic growth by 2% annually in most African countries and as much as 40% reduction in industrial productivity.

To accelerate implementation of commitments and projects supporting transcontinental and Interregional Infrastructure, the ministers made emphasis on the importance of designing climate resilient and smart infrastructure projects and the importance of digital solutions and new emerging technologies in designing and enhancing efficiencies of transport and energy infrastructure projects and services.

Trade Policy Review: Central African Economic and Monetary Community (CEMAC) (WTO)

Of the six countries of the Central African Economic and Monetary Community (CEMAC), five are Members of the WTO and are covered by this report prepared for their second joint trade policy review, namely Cameroon, the Republic of the Congo, Gabon, the Central African Republic (CAR) and Chad. The sixth country, Equatorial Guinea, submitted its request for accession to the WTO in 2007 and the process is still ongoing.

The regional economy has a very low degree of diversification and depends heavily on natural resources, including oil and timber. Oil activities attract the majority of private investment, including foreign investment, in the region, with the exception of the Central African Republic. Oil accounted for around a quarter of CEMAC's gross domestic product (GDP), some two thirds of total exports and 42% of budgetary revenues in 2019, figures which were down compared to 2012. Most of the oil production occurs in Congo (40.4%), Gabon (21.5%) and Equatorial Guinea (16.7%). With the exception of Chad, timber remains the most important export of the other countries. A lack of investment means that other natural resources are underexploited.

The sharp drops in oil revenues, caused by falling prices and production over the last decade, have weakened the regional economy and contributed to lower foreign-exchange reserves. The consequences of the COVID-19 health crisis and the war in Ukraine have also played a role in slowing CEMAC economic activity and fuelling inflation. However, CEMAC's trade balance has remained in surplus, oil exports continue to be substantial, and exports of timber and gold, particularly to Asia, have increased significantly. As for intra-CEMAC trade, it remains low (3.5% in 2019) due, in part, to the structure of exports, the countries' weak industrial fabric, underdeveloped transport and communication infrastructure, non-tariff barriers, and the States' failure to implement certain Community provisions.

The services sector accounts for close to 50% of the GDP of CEMAC, followed by the mining and energy sector (nearly 20%), the agricultural sector (around 12%) and the manufacturing sector (11%).

Positive growth continues albeit fragile and with persistent inflation posing a key risk (OECD)

The global economy was stronger than expected in the first half of 2023, but the growth outlook is weak, inflation is proving persistent and there are significant downside risks, according to the OECD’s latest Interim Economic Outlook. With monetary policy working its way through economies and a weaker-than-expected recovery in China, the Outlook projects global growth of 3.0% in 2023 and 2.7% in 2024.

“Our projections in today’s Interim Economic Outlook are broadly in line with our previous forecasts. Further significant stress in financial markets has been avoided so far, after the turbulence due to bank failures earlier in the year. That said, the global economy continues to confront the challenges of elevated inflation, low growth and comparatively weak trade,” OECD Secretary-General Mathias Cormann said. “The priority for macroeconomic policy is to reduce inflation and re-build fiscal buffers. In parallel, in order to lay the groundwork for stronger and more sustainable growth longer term, policy action is needed to enhance competition, accelerate investment in low-carbon research and development and reduce rather than increase trade barriers.”

Carbon Prices Should Be 20-Times Higher, The Two Congos Say (Bloomberg)

Carbon credits produced in Africa and used by companies to offset pollution by paying for forest conservation on the continent should be at least 20 times more expensive than current prices, two presidents of Congo Basin nations said. A higher price would reduce the appetite for resource extraction and spur development in poorer countries, particularly those in Africa, according to Democratic Republic of Congo’s Felix Tshisekedi and Republic of Congo’s Denis Sassou Nguesso.

Themes of the Africa Climate (Finance) Summit: Loans, Taxes, Credits (tralac)

Europe’s Carbon Border Adjustment Mechanism to establish new rules of global trade (African Mining Market)

The Carbon Border Adjustment Mechanism (CBAM), a policy that will require producers of goods imported into the European Union (EU) to pay an emissions levy, should fast-track decarbonisation efforts, but also result in prices rising across several sectors sharply – according to the latest Wood Mackenzie Horizons report. The new report titled Playing by new rules: how the CBAM will change the wor

Adopting Landmark Declaration, General Assembly Calls for Strengthening High-level International Coordination to Improve Pandemic Prevention, Preparedness, Response (United Nations)

World leaders adopted a  pdf Political Declaration (258 KB) yesterday calling for stronger international collaboration and coordination at the highest political levels to better prevent, prepare for and respond to pandemics, as the General Assembly held its first ever high-level meeting on the subject.

In the wide-ranging document, the Assembly committed to work to make access to pandemic-related products — such as vaccines, diagnostics and therapeutics — timely, sustainable and equitable, while calling on the World Health Organization (WHO) to coordinate this with relevant partners.

Opening the day-long debate — convened under the theme “Making the world safer: Creating and maintaining political momentum and solidarity for Pandemic Prevention, Preparedness and Response” — Assembly President Dennis Francis (Trinidad and Tobago) described the COVID-19 pandemic as “one of the most pressing global challenges of our time”, adding that its impact on economies and health systems would last for years to come.

UN sets out bold solutions to rescue SDG finance (UN News)

The big objective of the major UN General Assembly meeting is to unlock innovative and practical solutions to close the widening divisions between rich and poor. The UN Department of Economic and Social Affairs which drives the UN’s effort on SDG financing, notes that although fiscal challenges are mounting, “there is a window of opportunity if we act now.”

Most developing countries suffer from severe debt problems. And one in three countries around the world is now at high risk of suffering a fiscal crisis, according to the UN. These countries cannot fund progress on the SDGs if they are facing exorbitant borrowing costs and paying more on debt servicing than on health or education.

“Developing countries face borrowing costs up to eight times higher than developed countries – a debt trap”, warned UN Secretary-General António Guterres, “and one in three countries around the world is now at high risk of a fiscal crisis. “Over 40 per cent of people living in extreme poverty are in countries with severe debt challenges”.

Developed economies urged to accelerate climate action (SAnews)

Reform the international financial architecture – President Ramaphosa (SAnews)

African leaders take bold stand for sustainable development at UN Assembly (UN News)

A recurring theme in speeches delivered by the Presidents of Seychelles, Namibia, Ghana, Angola, Sierra Leone and Liberia was the urgent need to rebuild trust and rekindle global solidarity in the face of complex changes. They expressed unwavering support for the 2030 Agenda and its Sustainable Development Goals (SDGs), emphasizing that the current trajectory falls short of ambitions, further exacerbated by the COVID-19 pandemic. In their addresses, leaders also highlighted the need for reform of the Security Council to make that 15-member body more representative and effective.

President João Lourenço of Angola also highlighted the need for the United Nations to strengthen its role and its capacities to formulate the most appropriate responses and thus be able to face the many challenges. “It is essential that we do everything in our power to continuously promote respect for and observance of the values set out in the UN Charter and international law, so that we can correct the dangerous trajectory that the world took after the fall of the Berlin Wall,” he said.

Speakers Stress Link between Historical Injustices, Africa’s Current Socioeconomic Woes, Urge Bridging of North-South Divide, as General Assembly Debate Continues (United Nations)

Fragile States Need Customized Support to Strengthen Institutions (IMF)

Fragile and conflict-affected states have been among the worst hit by the pandemic, Russia’s war in Ukraine, the increase in energy and food prices, climate change, and intensified political instability. Each new crisis aggravates underlying fragilities and creates spillovers that can destabilize entire regions.

Conflicts forcibly displaced a record 108.4 million people last year, many of them refugees hosted in neighboring countries where fiscal conditions are already tight and growth prospects are weak. Fragility and conflict drive fragmentation and can cause reversals in trade, capital flows, and investment. Therefore, supporting fragile states by strengthening their economic and fiscal institutions is a global public good, as all countries can benefit.

The economic fallout from the pandemic hampers policymaking in these countries, which have endured large economic losses compared to pre-pandemic projections. The 39 fragile and conflict-affected states experienced a large loss in economic growth rates between 2019 and 2023 compared to pre-pandemic projections.

Africa needs skills and infrastructure to grow trade (Freight News)

Africa needs to confront its stifling non-trade barriers, and countries must home-grow or import skills if they want to develop and raise the level of intra-continental trade and reap the benefits of the African Continental Free Trade Area (AfCFTA). Fouche said this could be done by spending ten years to develop skills locally or by importing them under stringent conditions to establish a new industry as successful countries like New Zealand, Australia, Canada and the United Kingdom have done with their immigration policies.

SA to host US-Africa trade summit despite Russia spat (Times LIVE)


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