This Trade Hot Topic explores the possibility of incorporating gender issues into multilateral trade negotiations at the WTO, as well as discussing the likely implications for least developed countries (LDCs), small, vulnerable economies (SVEs) and sub-Saharan African (SSA) countries.
Representatives of West African countries are gathering in Burkina Faso to consider their e-commerce future and what needs to be done to realise it.
Burkina Faso, Senegal and Togo need far-reaching reforms of their infrastructure and legal systems to benefit from e-commerce, new studies of the West African countries by UNCTAD have revealed.
The reports will be presented at a regional e-commerce workshop organized by UNCTAD and the Economic Community of West African States (ECOWAS) in Ouagadougou, Burkina Faso, on 9-10 October.
“Studies carried out by UNCTAD show that vast reform projects are needed for Burkina Faso, Senegal and Togo to seize fully the development opportunities offered by e-commerce, and that they will require ambitious actions on the part of governments. UNCTAD is here to help them,” UNCTAD Deputy Secretary-General Isabelle Durant said.
“This is a win-win strategy, which must be pursued because e-commerce is now a key gateway to foreign markets.”
The workshop, the first step in the preparation of a regional plan, will be inaugurated by Ms. Durant in the presence of the ECOWAS agriculture, water resources and the environment commissioner Jonas Gbian and Daouda Ouedraogo, a representative of Burkina Faso’s commerce, industry and handicrafts ministry.
While taking account of each country’s specific circumstances, the UNCTAD evaluations highlighted the common obstacles they face.
Although each is committed to building a digital ecosystem, none currently have a dedicated e-commerce strategy. And low-levels of internet accessibility and service quality, due to a lack of competition in the telecommunications sector, is a significant obstacle to the digital growth.
Weak and costly hard infrastructure, and logistics services that are not well integrated by operators, make deliveries of consumer good bought or sold online to “the last mile” often impossible.
Despite increased dynamism in the development of electronic payment systems, competition remains limited and online payments remain marginal. Cash payments on delivery are standard.
Although legal frameworks comply with ECOWAS regulations, their implementation remains insufficient and takes little account of the emerging aspects of the digital ecosystem.
Meanwhile, a significant gap remains between the needs of businesses and the knowledge of students, with schooling oriented towards traditional commerce.
Finally, Burkina Faso, Senegal and Togo share difficulties accessing finance to support e-commerce ventures.
Burkina Faso: starting start-ups
The assessment found that e-commerce expansion is taking place mainly in the informal economy, through private classifieds sites and social networks, while a small number of professional operators have developed platforms covering sectors such as agribusiness, clothing, IT and household appliances.
“Burkina Faso must capitalize on the strengths identified by the study: the process towards the digitalization of public services, a competitive telecommunications sector, the development of broadband internet infrastructure, a science park and dynamic start-ups. The proposed roadmap will enable us to accelerate the country’s digitization,” said Burkina Faso’s commerce, industry and handicrafts minister Harouna Kabore.
Under the aegis of Burkina Faso’s Plan National de Développement Économique et Social, the “Burkina Start-Ups” programme financially supports start-ups. But their growth and structuring as companies often remain uncertain.
Senegal: relatively dynamic
Dakar has become a laboratory of tech start-ups. Fintech players are already trying to penetrate the local market by forming strategic partnerships.
The e-commerce sector in Senegal is relatively dynamic, compared to many of its West African neighbours. Internationally renowned firms, such as Jumia, have established a strong presence by relying on the local market and the Senegalese diaspora abroad. Others, on a smaller scale, are trying to find a place in a market destined to grow.
However, apart from a small number of operators, e-commerce is developing mainly in the informal economy, through private classified sites, aggregator sites and social networks.
“The impact of the development of e-commerce in the structural transformation of the Senegalese economy is well established. This is why, thanks to UNCTAD’s assessment of Senegal’s readiness for e-trade, efforts will be more focused on mobilizing stakeholders, the state, the private sector and eTrade for all partners to remove obstacles, identify and implement its flagship recommendations,” Senegal’s investment, partnerships and teleservices minister Khoudia Mbaye said.
Several factors have contributed to the development of e-commerce: broadband internet (mainly in the big cities), a legal framework set up in 2008, electronic means of payment via mobile telephony, and people trained in information and communications technologies. However, there are several logistical and financial challenges to overcome before these favourable conditions can be exploited.
Togo: powerful potential
The potential for the development of e-commerce in Togo is limited: there is a weak internet infrastructure, few online payments, and it is difficult to make or receive deliveries outside of the capital Lomé. However, tech start-ups are bursting with innovative solutions that make it possible to work around existing problems.
“My ministry is strongly committed to making e-commerce a powerful engine for economic growth, inclusive trade and job creation in Togo. This new assessment has identified the development of e-commerce as one of the strategic sectors that should promote trade and remove barriers to trade,” said Togo’s commerce minister Essossimna Legzim-Balouki.
eTrade for all
The German government funded the Rapid eTrade Readiness Assessments as part of its support to UNCTAD’s eTrade for all initiative.
This initiative provides countries with capacity-building solutions for e-commerce and optimizing synergies between different partners.
It has 29 partners, seven of whom will participate in the Ouagadougou workshop: the World Bank Group, the African Development Bank, the United Nations Economic Commission for Africa, the International Trade Centre, the World Trade Organization, Universal Postal Union, and the Africa Civil Society for the Information Society.
UNCTAD has conducted e-commerce assessments for developing countries since 2016, recognizing that policymaking will need to move quickly if least developed countries are to capitalize on rapidly changing economics.
The AfCFTA will provide a number of opportunities for the Indian firms and investors to tap into a larger, unified, simplified and more robust African market. It is critical for India to view Africa not just as a destination for short-term returns but as a partner for medium and long-term economic growth. An important component affecting the volumes of trade with Africa is the “third-country fabric” provision. Various Asian countries’ traders and investors, including those from India, are reaching out to the African markets as a market of “choice”. This is often perceived as a way to indirectly take advantage of the preferential trade programmes offered to the African countries by the third parties. A case in point is the African growth and Opportunities Act of the US, under which some African countries are eligible to source raw materials from third countries like India and China, to make clothes and then export to US duty-free. Such provisions help to shield African industries such as textiles and apparel, which have benefitted from huge amounts of Indian and Chinese investments in African export processing zones. Therefore, to establish a long-term partnership with Africa, India should not target African markets only for its unilateral preferences granted by the third parties.
To mitigate the expected trade losses for the African countries resulting from the establishment of MRTAs, especially the RCEP, India and Africa must build a solid partnership to boost their bilateral trade and investment flows. To this end, India’s active support towards Africa’s ongoing continental integration efforts can serve as basis for negotiations aimed at reciprocal market access and investment opportunities. It is important to note that positive outcomes for the India-Africa trade and investment partnership are hinged on Africa having sufficiently integrated markets, enhanced regional and continental connectivity, and improved infrastructure facilities. These will, in turn, help the African countries to address the supply-side constraints, remove bottlenecks, and move up the regional value chains. The African Trade Policy Centre of the ECA and CII must continue to work closely to identify the sectors that offer opportunities for development in Africa in the context of AfCFTA reform. [The author: Abhishek Mishra; Related ATPC, CII study: Deepening Africa-India trade and investment partnership]
Ethiopia’s investment body has announced a decision to admit foreign investment into the country’s logistics sector, local media portals have reported.
The move by the Ethiopian Investment Board means the sector is no longer reserved for nationals. Foreigners are also able to own 49% or less in joint venture arrangements.
A document clarifying the news and widely cited by the media read in part that the areas being looked at include: the provision of bonded warehouse, consolidation and de-consolidation services, and allow joint venture participation of international logistics service providers holding up to 49% or less stakes.”
Article 3.1(b) of Ethiopia’s investment regulation previously said: “packaging, forwarding and shipping agency services” are “exclusively reserved for Ethiopian nationals.”
The development forms part of the government’s economic reform efforts. Prime Minister Abiy Ahmed since taking office in April 2018 has undertaken a series of reforms with a key plank being the opening of Ethiopia’s economy to a certain amount of private investment.
Much has been written on the escalation of the trade dispute. What hasn’t been discussed is what will be the impact on developing nations who rely on trade as an engine of economic growth for ending poverty. As tariffs are beginning to be imposed, my team analyzed the impact of these new tariffs and the potential for tariff escalation in developing countries in a new World Bank working document. We found that the new trade tariffs will depress bilateral trade, disrupt global supply chains, and increase demand for substitutes from developing countries.
In the current uncertain global business environment, all countries need to act to retain investor confidence and avoid the disruption of trade flows and global supply chains. Countries can improve the credibility of future policies by deepening their commitments in multilateral fora such as the WTO and regional trade agreements. The timely and clear communication of all future changes in trade policy are important to minimize policy uncertainty.
Despite recent softening, global economic growth will remain robust at 3.1 percent in 2018 before slowing gradually over the next two years, as advanced-economy growth decelerates and the recovery in major commodity-exporting emerging market and developing economies levels off, the World Bank said.
“If it can be sustained, the robust economic growth that we have seen this year could help lift millions out of poverty, particularly in the fast-growing economies of South Asia,” World Bank Group President Jim Yong Kim said. “But growth alone won’t be enough to address pockets of extreme poverty in other parts of the world. Policymakers need to focus on ways to support growth over the longer run—by boosting productivity and labor force participation—in order to accelerate progress toward ending poverty and boosting shared prosperity.”
Sub-Saharan Africa: Growth in the region is projected to strengthen to 3.1 percent in 2018 and to 3.5 percent in 2019, below its long-term average. Nigeria is anticipated to grow by 2.1 percent this year, as non-oil sector growth remains subdued due to low investment, and at a 2.2 percent pace next year. Angola is expected to grow by 1.7 percent in 2018 and 2.2 percent in 2019, reflecting an increased availability of foreign exchange due to higher oil prices, rising natural gas production, and improved business sentiment. South Africa is forecast to expand 1.4 percent in 2018 and 1.8 percent in 2019 as a pickup in business and consumer confidence supports stronger growth in investment and consumption expenditures. Rising mining output and stable metals prices are anticipated to boost activity in metals exporters. Growth in non-resource-intensive countries is expected to remain robust, supported by improving agricultural conditions and infrastructure investment.
Completely opening up the EU market to African goods would help reduce migration, German Development Minister Gerd Müller has said. In particular, he wants barriers to agricultural trade taken down.
The European Union should completely open its market to products from Africa in order to promote development and stem migration flows, German Development Minister Gerd Müller said Wednesday.
"Open the market for all African goods," he told Die Welt newspaper in an interview.
Agricultural products from Africa must be able to enter the EU without tariffs and quotas in order to provide work for millions of people on the continent, Müller said.
The EU currently has separate trade agreements with African countries or regional economic blocs. In addition to tariffs and quotas, agricultural products face a hurdle being exported due to the EU's strict sanitary and phytosanitary standards.
Müller also suggested that as part of an agreement with the EU, African countries should take back migrants who entered the bloc without proper approval. In return, the EU should open up avenues for Africans to come to the EU for legal employment.
Only around 1,000 out of 3.5 million German companies are active in Africa, Müller said, highlighting the massive potential in the continent of 1.2 billion people. On the other hand, China, Russia and Turkey have aggressively entered the Africa market.
Support from coalition, farmers
Müller, a member of the Christian Social Union (CSU), the Bavarian sister party of Chancellor Angela Merkel's Christian Democratic Union (CDU), received support for his ideas from the Social Democrats (SPD).
SPD agriculture spokesperson Bernd Westphal told the daily Berliner Zeitung on Thursday that opening the EU's agriculture markets would improve employment prospects in Africa and reduce migration pressures.
The German Farmers Association also supported the idea of duty- and quota-free African agriculture exports to the EU. At the same time, the association's general secretary, Bernhard Krüsken, said processed and value-added agriculture products should be encouraged because they provide more employment and wealth creation.
EU Africa Commissioner
Müller also called for a new EU Africa commissioner position to be created to coordinate and expand policy towards the continent. In addition, at the EU level more money should be spent implementing the bloc's Africa policy, he said.
cw/sms (AFP, dpa)
Sierra Leone has become the latest country to subscribe to the trade treaty seeking a unified African market. President Julius Maada Bio appended his signature to the African Continental Free Trade Area (AfCFTA) agreement in the Mauritanian capital, Nouakchott on Monday, State House in Freetown disclosed. President Bio, in office for just four months, was making his maiden appearance at the 31st Ordinary Session of the African Union General Assembly.
The theme was: ‘Winning the Fight Against Corruption: A Sustainable Path to Africa’s Transformation.’
President Bio is the head of the AU’s Committee of Ten on the Reform of the United Nations Security Council, a position he inherited from his predecessor Ernest Bai Koroma.
He is also chairman of the AU Peace and Security Council, under which he chaired several sideline meetings. AfCFTA promises to break the cross-border trade barriers to ensure productive economic activities among member countries. It specifically aims to create a single continental market for goods and services, with free movement of business people and investments, and thus paving the way for accelerating the establishment of a continental customs union.
The deal initially requires members to remove tariffs from 90 per cent of goods to allow free access to commodities and services across the continent. AfCFTA's overall goal is to bring together the 54 African countries with a combined population of more than one billion people and a gross domestic product of more than $3.4 trillion, the AU says.
If successfully implemented, analysts say, it could increase the economic diversification and intracontinental trade significantly. And a study attributed to the UN Economic Commission for Africa (UNECA) notably says that AfCFTA could lead to a 52 per cent increase above the baseline in intra-African trade flows by 2022.
The agreement, which was first unveiled at an extraordinary summit of the AU Heads of State and Government in the Rwandan capital, Kigali, earlier in March, will create what has been described as potentially the largest free-trade area in terms of participating countries since the formation of the World Trade Organisation.
Sierra Leone was in the middle of its elections at the time which ushered in a new government.
Freetown State House said Monday in a statement that President Bio’s ascension to the agreement signifies his commitment to his “ambitious agenda” to ensure that it has access to the rest of the continent’s market and use trade and investment to revitalise its economy.
The agreement had been signed by 44 member countries in Kigali.
Kenya, Ghana and Rwanda were first to sign and ratify the agreement.
It requires 22 ratifications by members for the treaty to come into effect.