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tralac’s Daily News selection
The selection: Tuesday, 5 January 2016
The Brookings Africa Growth Initiative’s Foresight Africa 2016: review
Sub-Saharan Africa will fall behind for many reasons. First, the preferential access offered through the TPP will lead to relatively higher tariffs for trade with Africa. A second reason is, as Meltzer argues in his brief, new, tougher labour, environment, and health and safety standards enshrined in the TPP will become de facto global standards, and African businesses may struggle to meet them. African trade may also suffer because of its growing dependence on the services sector and new rules around global supply chains, on which Meltzer elaborates in Foresight Africa this year. These changes will happen despite the fact that the African Growth and Opportunity Act was reauthorized in 2015 and extended to 2025.
Yes, AGOA is the cornerstone of the US-African trade relationship, but in this evolving trade environment and the so-far “underutilization” of AGOA, sub-Saharan African will still fall behind. In fact, Foresight Africa viewpoint contributor Africa Growth Initiative Non-resident Fellow Witney Schneidman describes the legislation as an “underutilized resource,” as the legislation provides duty-free access to many manufactured goods – notably textiles. Indeed, this underutilization also hurts manufacturing jobs, the percentage of which lies around 6%, a figure that has remained unchanged in decades. Without country-led efforts to create AGOA strategies, beneficiary countries won’t be able to truly capitalize on the advantages the legislation offers.
Rick Rowden: 'Africa’s boom is over' (Foreign Policy)
Given this situation, the logical conclusion is still seldom spoken in polite company: African leaders who are serious about pursuing industrialization will have to back-track, renegotiate, and re-design their previous international trade commitments, and refuse to sign new ones that put them at a disadvantage. Offending more powerful trading partners and big foreign investors would likely invite serious short-term consequences, including lawsuits, threats to cut off foreign aid and trade preferences, and possibly lower foreign investment. But the longer-term consequences of not doing so may be far worse. In Johannesburg, I recently asked the Chairperson of the African Union, Nkosazana Clarice Dlamini-Zuma, how Africa could expect to industrialize if it signs on to the European Union’s Economic Partnership Agreements. Her reply: “We’re going to have to renegotiate some of them.”
J Peter Pham: 'Looking out for Africa in 2016' (The Hill)
AGOA: South Africa may lose US trade benefit after target missed (Bloomberg)
About 78% of South Africa’s agricultural exports to the US under AGOA come from the Western Cape, the only one of the nine provinces not controlled by the country’s ruling African National Congress. “The agricultural issues are vital for us and the sector is already under enormous pressure,” Alan Winde, the province’s economic development minister, said by phone. “I am angry that the Department of Trade and Industry has not concluded these negotiations.”
Related: South Africa on outstanding AGOA issues (the dti), SA tries to avert trade own goal in extra time (Business Day), US baffled at lack of progress in removing poultry barriers (Business Day)
Swaziland: 2015 Article IV Consultation (IMF)
Swaziland’s export structure has experienced sizable changes over the past 15 years. The share of textile exports has halved, and the expiration of trade benefits under AGOA implies that the share of textile exports would decline further. In contrast, the importance of sugar exports have increased substantially, and also (though to a lesser extent) for miscellaneous edibles (which includes the all important Coca-Cola concentrates). Relatedly, EU’s share of Swaziland’s exports has increased and the US market’s share has declined. At the same time, the overall export-to-GDP ratio has declined from 56% in 2000 to 43% in 2014.
El Niño lowers early production outlook in Southern Africa (FAO)
Wholesale maize prices are up 50% from a year earlier in South Africa, while retail maize prices have doubled in Malawi and Mozambique. As households are already reeling from the previous poor harvest devote more income to basic needs, their access to critical farm inputs – such as seeds and fertilizers – is jeopardized. Beyond southern Africa, GIEWS analysis of El Niño-related conditions also points to agricultural stress in northern Australia, parts of Indonesia and a wide swathe of Central America and Brazil. El Niño’s effect is also being felt elsewhere in Africa, with FAO field officers in Ethiopia reporting serious crop and livestock losses among farmers and pastoralists. [Downloads]
Ressano Garcia border crossings hit record levels over festive season (Club of Mozambique)
According to figures released by the National Migration Service, the Ressano Garcia border post recorded 333045 persons entering and leaving the country in the period from December 11 to last Sunday. The borders at Machipanda and Cuchamano in Manica and Tete with Zimbabwe registered 22172 and 16581 crossings respectively. The border with Malawi at Zóbwè in Tete recorded 10222, while Maputo International Airport had 18481.
Zambia’s economic tumble offers important lessons for East Africa (Daily Monitor)
Many African counties have continuously negated the agricultural sector through dismal budget allocations and little support towards value addition. If Zambia had a vibrant agricultural sector as a fallback position, perhaps the economic impact from the crush of copper prices could have been cushioned. Uganda, like the rest of African countries, needs to support local investors. What we continuously see is favouritism of foreign investors at the expense of local manufacturers and producers. We need to create a special window to support local business people with great potential to build strong enterprises. Perhaps a return to some protectionism for certain sectors would help build local capacity, encourage healthy competition and build truly national businesses. [The author, Nathan Were, manages a large-scale financial inclusion program for Sub-Saharan Africa]
Nigeria: New cars importation declines 67% on auto policy, falling Naira (ThisDay)
TNL said 15,031 new vehicles were imported into the country by various dealers in 2015 as against 45,618 new cars imported in 2014. Giving an insight into the figures, Head of Marketing, Toyota Nigeria Limited, Mr Andrew Ajuyah attributed the drop to the federal government’s full implementation of the automotive policy and the free fall in the value of the naira against international currencies, especially the US dollar. The federal government had in the last quarter of 2013 introduced the Nigerian Automotive Industry Development Plan, which raised the import tariff on cars to 70% from 22% and on buses and other commercial vehicles to 35%.
Kenya: GDP and balance of payments Third Quarter 2015 (KNBS)
In the money market, the Kenyan Shilling strengthened against the Euro, Yen, South African Rand, Ugandan Shilling and the Tanzanian Shilling but weakened against the US Dollar and the Sterling Pound during the third quarter of 2015 compared to a similar period in 2014.
Related: Rottok Chesaina: 'Has shilling finally outsmarted rand in the currency race?' (Business Daily), Lower oil prices set to ease Kenya’s import bill in 2016 (Business Daily), Balance of payments boost cuts the shilling’s exposure to shocks (Business Daily), Kenya urged to focus on security as trade rises (Daily Nation)
Nigeria: 'Transport sector’s 1.41% contribution to GDP unacceptable' (ThisDay)
The Minister of Transport, Mr. Rotimi Amaechi, has said 1.41% aggregate contribution of the sector to Nigeria’s GDP is unacceptable. He admitted however that the maritime sector’s contribution could be appreciable but its potential had been largely untapped. “Among the bills that is ready for legislative action is the National Transport Commission Bill - an act to provide for the establishment of a National Transport Commission as an independent multi-modal economic regulator and other related matters. He said the bill among others have been approved by the Federal Executive Council in March 2014.”
Direct flights from Kenya to the US to begin by May (Daily Nation),
Air France-KLM eyes Mozambique route (Club of Mozambique)
DRC/Burundi/Rwanda: Ruzizi III hydropower project appraisal report (AfDB)
The Ruzizi III Hydropower Plant Project which is part of the Programme for the Development of Infrastructure in Africa concerns Burundi, the Democratic Republic of Congo and Rwanda. It entails the construction of a run-of-river dam (on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower dam), a 147 MW power plant and a distribution station. Burundi’s current total capacity will double, while Rwanda’s will increase by half. DRC’s share will contribute to raising supply in the Eastern region currently not connected to the interconnected network, while also significantly reducing the percentage of energy of thermal origin.
Industrial parks and globalization: experience sharing between China and Africa (NexGen Global Forum)
On 18 December, NexGen Global Forum worked with Tsinghua University and the UNDP to co-host a symposium on industrial park development in Africa. The purpose of the symposium was twofold: to facilitate knowledge sharing between policy makers, zone developers, investors and researchers from China, Africa and other parts of the world; and to examine issues and challenges during the construction of industrial parks in Africa and other developing countries. [Download]
Outward investment agencies: partners in promoting sustainable development (UNCTAD)
The Investment Promotion Agency Observer, No 4 describes how partnerships between OIAs in home countries and inward investment promotion agencies in host countries could be beneficial to both institutions in the promotion and facilitation of SDG investment projects. The document includes case studies from OIAs in the Netherlands, South Africa (the DBSA), and the United States of America.
Institutional and policy adjustments to implement Free Trade Agreements with the EU: a developing country perspective
This report reviews the international experiences with institutional and policy adjustments needed to implement FTAs with the EU, as seen from a developing country perspective. It focuses on three issues: investment, competitiveness, and competition, including state-owned enterprise reform. [The author: Kenneth Baltzer]
Egypt's BoP deficit hit $3.7bn in Jul-Sept 2015: CBE (Ahram)
Angola's kwanza pain continues: falls most since 2001 to record in devaluation (M&G Africa)
Tanzania’s Human Development Report 2017: concept note - 'Social policy in the context of economic transformation' (ESRF)
Mozambique: Regular transport of coal to Nacala-a-Velha this month (Club of Mozambique)
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This post has been sourced on behalf of tralac and disseminated to enhance trade policy knowledge and debate. It is distributed to over 300 recipients across Africa and internationally, serving in the AU, RECS, national government trade departments and research and development agencies. Your feedback is most welcome. Any suggestions that our recipients might have of items for inclusion are most welcome. Richard Humphries (Email: This email address is being protected from spambots. You need JavaScript enabled to view it.; Twitter: @richardhumphri1)
