Nigeria Determined to Fully Implement AfCFTA Terms and Commitments, Industry Minister
Lagos, Nigeria, December 5, 2019 (ECA) – Nigeria is determined to fully implement the terms of the African Continental Free Trade Agreement (AfCFTA) and uphold its commitments on trade and regional integration, the country’s Industry, Trade and Investment Minister, Mr. Adeniyi Adebayo, said Monday.
In remarks to a two-day national AfCTA forum that opened Monday in Lagos, Mr. Adebayo said Nigeria, however, will not allow smuggling and other predatory trade practices to continue unchecked in the country as this undermines the nation’s development efforts and destroyed local industries, leading to job losses.
“We also will not allow rogue traders to manipulate the rules of origin and disguise goods from outside the continent as made in Africa so as to qualify for duty free passage,” he said, adding for a successful implementation of the AfCFTA, his government had constituted the National Action Committee to coordinate a wide range of actions at the domestic, regional and continental levels
From the studies done so far, the Minister said, Nigeria has established that the AfCFTA can facilitate economic growth and diversification through preferential access to Africa’s market for manufactured goods and services.
This can be done through upping the country’s production capacity, retooling and upscaling existing businesses and assisting sectors that will be negatively impacted to migrate to new areas; prioritizing the resolution of bottlenecks that hinder competitiveness in trade, including hard infrastructure such as power and logistics as well as policies and regulations; and enforcement of trade rules without compromising the country’s efforts on trade facilitation and ease of doing business.
“Whilst we have rightfully been wary of the risks posed by the AfCFTA to Nigeria, we ought now to look at it with significant optimism,” the Minister said, adding the Nigerian Export Promotion Council had mapped out goods and services where the country has strong potential to export to Africa.
President Muhammadu Buhari signed the AfCFTA agreement in July after what his government said were comprehensive consultations with the private sector and in-depth consideration of its potential impact on the Nigerian economy.
The forum, running under the theme Effective Implementation for Industrialisation and Inclusive Economic Development in Nigeria is also a platform to actively engage with and consult intra-African actors across a diverse range of different sectors to better understand how the agreement can shape more inclusive economic development in Nigeria.
The AfCFTA entered into force on 30 May 2019 and implementation starts in July 2020. The historic agreement provides an opportunity for Africa to create the world's largest free trade area, with the potential to unite 1.3 billion people, in a $2.5 trillion economic bloc, ushering in a new era of development.
The forum was co-organized by the United Nations Economic Commission for Africa (ECA), the European Union, the Manufacturers Association of Nigeria (MAN), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and in collaboration with the African Union Commission (AUC).
Click here for the report.
Following the introduction, the structure of the report is as follows: section II focuses on trade integration; section III on productive integration; section IV on macroeconomic integration; section V on infrastructure integration; section VI on migration and the free movement of people; section VII on governance, peace and security; and, to close, section VIII offers a conclusion and recommendations
Profiled side events (9-10 December): Governing the interface between the AfCFTA and RECs’ Free Trade Areas: issues, opportunities and challenges; Review and validation of the methodological approach to produce the AfCFTA Country Business Index; Africa’s Services Trade Liberalization and Integration under the AfCFTA; Towards a common investment area in the AfCFTA: levelling the playing field for intra-African investment.
Click here for paper update.
The Specialized Technical Committee recommendations were adopted during the AU Summit in February 2019, which gave a concrete mandate to the African Union Commission, in cooperation with African Union member States, ECA and all relevant stakeholders, to develop a comprehensive African Union Digital Trade and Digital Economy Development Strategy, to be presented for adoption during the summit scheduled for January 2020.
In 2020, it is planned that the sub-programme will scale up its pilot project on informal cross-border trade and apply the methodology to other corridors and regions on the continent, with the ultimate goal of developing a single continental framework for informal cross-border trade data collection in the context of implementation and monitoring of the Agreement Establishing the African Continental Free Trade Area.
In 2020, sub-programme 2 proposes to explore the possibility of a research project on the structural and policy underpinnings required to facilitate the emergence of an African Customs Union to support the implementation of the Agreement Establishing the African Continental Free Trade Area.
A new work programme that is focused on assessing the human rights and inclusivity implications of the trade and climate change nexus will be launched in the context of the partnership of ECA with OHCHR and the Friedrich-Ebert-Stiftung. In the context of the AfCFTA, this work stream will further focus on strategies for green industrialization and technological leapfrogging to ensure a low carbon and sustainable growth trajectory for member States. The findings are expected to provide cutting-edge and innovative contributions to the climate change policy debate and the United Nations Climate Change Conference – 26th Conference of the Parties in 2020.
The digital trade and digital economy work stream will engage more deeply in the themes of e-commerce in free trade agreements and support the implementation of the African Union Digital Trade and Digital Economy Strategy. The work stream will also support preparations across the continent for multilateral and plurilateral e-commerce negotiations through a study on the practical issues of e-commerce entrepreneurship to identify African interests and possible negotiating positions.
Nigeria, which signed the landmark African Continental Free Trade Agreement in July, is this weekhosting its national AfCFTA Forum on the "Effective Implementation of the AfCFTA for Industrialization and Inclusive Economic Development".
The Forum, which runs from 5-6 December 2019 in Lagos, is being co-organized with the United Nations Economic Commission for Africa (ECA), the European Union, the Manufacturers Association of Nigeria (MAN), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and in collaboration with the African Union Commission (AUC).
This AfCFTA Forum will bring together the private sector in Nigeria to afford them the opportunity to learn how to best leverage the opportunities within the AfCFTA. The role of the private sector is critical in its implementation," says Mr. Adeyinka Adeyemi, Senior Advisor with the African Trade Policy Centre at the ECA.
The forum is also a platform to actively engage with and consult intra-African actors across a diverse range of different sectors to better understand how the agreement can shape more inclusive economic development in Nigeria.
The AfCFTA entered into force on 30 May 2019 having been ratified by the required 22 countries. Currently, 54 countries have signed, and 27 countries have ratified the AfCFTA. The historic agreement provides an opportunity for Africa to create the world's largest free trade area, with the potential to unite 1.3 billion people, in a $2.5 trillion economic bloc, ushering in a new era of development.
The agreement has the potential to generate a range of benefits for Nigeria through supporting trade creation, structural transformation, productive employment and poverty reduction.
Nigerian President, Mr. Muhammadu Buhari, signed the AfCFTA agreement in Niamey at the African Union Summit in July after what his government said were comprehensive consultations with the private sector and in-depth consideration of its potential impact on the Nigerian economy.
Following this, the National Action Committee for the implementation of the AfCFTA under the chairmanship of Mr. Otunba Niyi Adebayo, the Minister of Industry, Trade and Investment, was created, signalling its readiness to implement the agreement.
In meeting these objectives, the AfCFTA will become a key engine of economic growth, industrialization and sustainable development in Africa in line with the African Union’s Agenda 2063 for "The Africa We Want".
This Forum is part of a comprehensive project, supported financially by the European Union, aiming to deepen Africa's trade integration through effective implementation of the AfCFTA. The ECA has been working with its partners including the African Union Commission (AUC), International Trade Centre (ITC), United Nations Conference on Trade and Development (UNCTAD) and a selection of independent trade experts to ensure effective AfCFTA implementation strategies.
The UN Economic Commission for Africa and the ECCAS General Secretariat have convened National experts from the eleven ECCAS Member States to a three-day regional workshop to prepare the subregion’s comprehensive lists of services to be tabled for unhampered trade once borders open up under the African Continental Free trade Area regime by July 2020.
The exercise which will run from 3 to 5 December in Douala Cameroon will be presided over by the Assistant Secretary-General of ECCAS in charge of the Department of Physical, Economic and Monetary Integration (SGA-DIPEM).
It is meant to technically support the ECCAS Member States in the drafting of convergent regional specific lists of commitments, consistent with the regulatory frameworks, in the African Union’s five priority sectors of services (financial services, transport, telecommunications / ICTs, professional services and tourism). The lists would be submitted to the AU by the start of 2020.
More specifically, the meeting will:
1- Promote the appropriation by the Member States of the techniques and tools for negotiation on trade in services within the framework of the AfCFTA;
2- Accompany ECCAS Member States in the definition of convergent positions which would be reflected in the creation of a free-trade area for services in Africa;
3- Build capacity and technically support ECCAS Member States to develop specific lists of commitments that are consistent with relevant regulatory frameworks.
This is considered a serious exercise as African countries are expected to be get fully integrated the exchange of services by July 2020 following the conclusions of the AU Summit of July 2019 in Niamey during which the operational phase of the AfCFTA was launched. This prospect is likely to materialize, on the basis of the AfCFTA Protocol on Trade in Services, the commitment of AU Member States to begin liberalization of trade in services at continental level through a process of specific commitments backed by harmonious regulatory frameworks in the five priority sectors.
However, owing to the methodological and technical requirements inherent in the preparation of such lists, the ECCAS Secretariat General is supposed to accompany and support its Member States in this exercise, in order to allow them at the end of this regional workshop, to come up with convergent regional lists of specific commitments in the five priority sectors of AfCFTA, consistent with the relevant regulatory frameworks.
ECA is working side by side the ECCAS General Secretariat, as well as all other statutory AU Regional Economic Communities, to compile these specific lists of commitments for continental trade in services.
Specifically, the conference will give African stakeholders, youth representatives and political leaders the opportunity to: provide their insights and thoughts on the debate on youth jobs, skills and entrepreneurship capacities; assess the impact of past and current reforms and initiatives to address youth jobs challenges in Africa; and discuss the feasibility of proposed innovative policy options to reap the benefits of Africa’s youth bulge and address the challenge of youth skills mismatch in the labor market. [Twitter updates: #AEC2019]
The Sustainable Development, Sustainable Debt: Finding the Right Balance conference is underway in Dakar. The opening address was delivered by the IMF’s managing director, Kristalina Georgieva. A backgrounder by the IMF’s Abebe Aemro Selassie: Africa’s Infrastructure Gap and Debt
The midterm review on the implementation of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014–2024 takes place later this week in New York. Downloads include National Reports and three regional preparatory reviews. UNCTAD compiled this backgrounder.
German companies in Kenya less optimistic about their business (AHK Eastern Africa)
German companies are still confident about their business in Kenya but optimism has decreased in the last six months, as indicated in the Autumn 2019 World Business Outlook Survey, released by the Delegation of German Industry and Commerce for Eastern Africa (AHK Eastern Africa) in cooperation with the German Business Association in Kenya. According to the survey results, the business expectations of companies in the next twelve months now stands at 62% expecting higher/better. This is down from 71% in the Spring 2019 survey results. In addition, interest in expansion of existing employee base has fallen to 38%, down from 45%, while 48% remained constant in their desire to maintain their current employee numbers. However, the German business community in Kenya still sees many opportunities for bilateral trade relations and economic growth, including employment opportunities. 57% of responding companies, up from 42%, indicated their current situation is likely to remain constant. In addition, 33%, up from 19%, still maintain constant positive business expectation for the next 12 months. The highest increase is 33% expecting better/higher economic growth for their organization, up from 29%, while 52%, up from 42%, expect their economic growth to remain constant.
South Africa’s merchandise trade statistics: October surplus
The South African Revenue Service, on Friday, released trade statistics for October 2019 recording a trade surplus of R3.09bn. The trade surplus is attributable to exports of R123.35bn and imports of R120.26bnn. Exports increased from September 2019 to October 2019 by R13.09bn (11.9%) while imports increased by R14.53bn (13.7%). The year-to-date (1 Jan - 31 Oct) trade surplus of R5.32bn is an improvement from the R3.70bn deficit for the comparable period in 2018. Exports increased by 2.8% year-on-year whilst imports for the same period showed a decrease of 4.3%. The top 5 countries for exports during October: China (10.1%), Germany (9.1%), US (6.8%), Mozambique (5.0%), UK (4.7%). Top 5 countries for imports: China (18.6%), Germany (10.1%), US (7.0%), India (4.8%), Nigeria (3.9%). [Related: SA’s tourism trade balance edges lower]
The National Council of Province is scheduled to consider the BMA Bill on Tuesday. This will bring to finality deliberations on the Bill and once adopted, will be referred back to the National Assembly which will then consider it for submission to the President before it becomes law. In the meantime, the BMA project management team has been busy finalising the technical work required to establish the BMA. I have directed the BMA project management office to focus their initial efforts in strengthening the borderline between Limpopo and Zimbabwe, Mpumalanga and Mozambique and KwaZulu-Natal with Mozambique.
On the e-Visa pilot: The department is testing the new system with Kenya. As part of the pilot, a team of DHA immigration and IT officials visited Kenya. This team is scheduled to return to Kenya next week, on 09 December 2019. The first Kenyan tourist who applied for a visitors’ visa on the new e-Visa system arrived yesterday afternoon and more are expected this week as part of the pilot. We are continuously monitoring this pilot process to ensure that user experience is not compromised. In early 2020, we’ll include China, India and Nigeria to the pilot which will run until March 2020.
The 39th Meeting of the EAC Council of Ministers has approved the final draft Cotton, Textiles and Apparels (CTA) Strategy and its implementation roadmap. The strategy makes a critical analysis of the CTA sector along the following key levels of the value chain: cotton seed (production); seed cotton (ginning); cotton lint (spinning); yarn (weaving/knitting/printing/dyeing/finishing), and fabrics (garments/apparels/fabrication/manufacturing) level. The Council further approved the Final Draft Leather and Leather Products Sector Strategy and its Implementation Roadmap.
The Council directed the Sectoral Council on Agriculture and Food Security to develop a strategy to boost the production of cotton in the region. In their deliberations, the Ministers observed that the seed cotton sector was constrained by low and declining production, low productivity, low quality and fluctuating farm gate prices. Textile mills were further constrained by outdated technology; low spinning capacity, availability of cotton lint, high cost of energy and low skill levels.
The Council also approved the draft EAC Export Promotion Strategy 2020 – 2025 for implementation. The EPS 2020-2025 contains the following strategic interventions: Stimulate exports through acquired market intelligence for enterprises and improved visibility on international markets; Improve market access and conditions for EAC export; Strengthen export competitiveness through interventions like improved access to finance and technology for enterprises, in particular SMEs, and; Strengthen the trade support institutions and partnerships.
The Council referred the request for admission to the EAC from the Democratic Republic of Congo to the 21st Summit of the EAC Heads of State for consideration.
The EU and COMESA have signed an €8.8m contribution agreement to increase private sector participation in sustainable regional and global value chains through improved investment/business climate and enhanced competitiveness in the COMESA region. This was one of the activities conducted during the opening of the 40th Meeting of the Council of Ministers that took place in Lusaka. The funds will be used to implement the Regional Enterprise Competitiveness and Access to Markets Programme (RECAMP), focusing on agro-processing, horticulture and leather products. RECAMP will also support pre-selected value chains based on the potential to generate value addition, jobs creation and attraction of investments to the region.
Rwanda, DRC begin joint border services (New Times)
The Rwanda-DR Congo border of La Corniche, popularly known as Grande Barrière, on Saturday started operating as a OSBP, according to the Directorate General of Immigration and Emigration. Grande Barrière is one of the busiest border crossings on the continent. Construction of the OSBP linking Rubavu in Western Province to the border city of Goma in eastern DR Congo was launched in late 2014, with the project’s construction, worth $9m (about Rwf6 billion), financed by the Howard G. Buffet Foundation.
2020 Africa-France Summit: African technical consultation meeting in Lusaka (AU)
African experts have convened in Lusaka to deliberate on regional priorities in preparation for the 2020 Africa-France Summit, billed for 4-6 June 2020 in Bordeaux, France on the theme of “Better Cities, Better Lives” co-hosted by the AUC, the ECA and UN-Habitat. With Africa having the world’s highest rate of urban growth (3.58%) and its urban population doubling between 1995 and 2015 and projected to almost double again by 2035, the Summit presents an opportunity for African countries to further reinvigorate commitments to advance sustainable urbanization through innovative solutions, and strengthen international cooperation in this regard. Mr Apollinaire Nkeshimana (Ministry of Minister of Local Government of Public Works, Infrastructure and Urban Planning of Burundi) and the representative of the Chair of the Sub-committee on Human Settlement and Urban Development of the AU-STC8, emphasized that the Africa-France 2020 Summit aims to develop new long-term partnerships within the framework of Africa-France cooperation.
Since 1998, WTO members have periodically taken decisions at Ministerial Conferences to continue their practice of not imposing customs duties on electronic transmissions. Recognizing the potential implications on certainty and predictability for business and consumers from the moratorium lapsing prior to the next Ministerial Conference, we propose an extension of the moratorium until the 12th Ministerial Conference and to continue the work under the Work Programme on Electronic Commerce during this period. We note that the moratorium is without prejudice to Members’ right to impose internal taxes, fees or other charges in a manner consistent with WTO Agreements. We propose that the General Council adopts a decision to this effect at its meeting in December 2019 and we will submit a draft decision in the near future.
Draft General Council Decision (pdf). The General Council decides as follows: Members agree to continue the work under the Work Programme on Electronic Commerce, based on the existing mandate as set out in WT/L/274. Members agree to maintain the current practice of not imposing customs duties on electronic transmissions until the 12th Ministerial Conference. The General Council shall report to the 12th session of the Ministerial Conference. [Note: Both documents circulated by: Australia, Canada, Chile, Colombia, Costa Rica, Georgia, Guatemala, Hong Kong, China, Iceland, Israel, Korea, Mexico, New Zealand, Norway, Panama, Paraguay, Singapore, Switzerland, Thailand, Uruguay]
Global Sugar Alliance committed to stamping out export subsidies (Queensland Country Life)
Members of the Global Sugar Alliance have reaffirmed their commitment to use all avenues available to stamp out export subsidies and remove trade-distorting domestic price supports. Meeting in London last week to celebrate 20 years since the alliance of countries was formed, government ministers and industry representative organisations discussed the sugar price supports and export subsidies being paid by the Indian government, and India’s alleged violation of its commitments to the world community made in the WTO. Canegrowers chairman Paul Schembri said Australia, Brazil and Guatemala remain 100% committed to the action they have launched with the WTO. “We do know that a dispute panel has now been formed,” Mr Schembri said. “These things do take time but we’re confident we will get a result in 2020. This is going to be a defining year for us.”
Mr Schembri said this was not just an action against India: “This is also sending a signal from Australia and other countries that aren’t subsidised, that if we think any country is breaking WTO rules, we will ferociously protect our patch to ensure that producers get a fair go and access to a fair world price.” The action in the WTO comes after the Indian government approved an export subsidy equal to a staggering A$216/tonne in August. The unprecedented subsidy is designed to enable India to export more than 6 million tonnes of sugar over the next year, a move which will flood global markets.
Commerce and Industry Minister Piyush Goyal on Saturday said India was looking at introducing a “border adjustment tax” on low cost imports from free trade partner countries, which will bring level playing field between such imports and locally produced goods. The proposed tax is perfectly compliant with the WTO’s rules on multilateral trade, Goyal said in his address to industry leaders at the Economic Times Awards for Corporate Excellence, 2019, on Saturday in Mumbai. The proposal for a “border adjustment tax” came up from a domestic steel maker at a recent meeting on ‘Make In India’, the minister said. Goyal emphasised that India’s trade policy rests on national interest as well as on the interests of its people and the industry, which will guide all government engagement with the rest of the world. “The interest of our people and industry are paramount. That is the terms of India’s engagement with the rest of the world. No more will India stand with weak knees or play on the backfoot,” the minister said, adding that India walked out of the Regional Comprehensive Economic Partnership deal earlier this month when the country’s concerns were not adequately addressed.
Author: Basssem Aly
Egypt signed two memoranda of understanding (MoU) this week with Djibouti and Angola covering bilateral relations in terms of investments and cooperation in agriculture, tourism, industry, infrastructure, mining, construction and health, respectively.
The two agreements were signed during the Investment for Africa Forum (IAF) held in Egypt’s New Administrative Capital earlier this week. Organised by the Ministry of Investment and international cooperation, the forum brought together government representatives and individuals from the private sector, civil society, and international financial institutions to talk about inclusive and sustainable growth in the African continent.
The forum was just one sign among many of increasing volumes of business taking place between countries on the African continent.
According to Egypt’s Central Agency for Public Mobilisation and Statistics (CAPMAS), the government statistics agency, total trade exchanges between Egypt and the African countries increased to $3.2 billion during the first eight months of 2018, around $700 million more than the year before.
The value of Egyptian exports reached $2.8 billion between January and August of 2018. The value of imports to Egypt from the African countries during the same period was $1.3 billion.
Egypt “is located at a strategic north-eastern position on the African continent, indeed at the ‘crossroads’ to both the Middle Eastern Gulf countries as well as the European states along the Mediterranean,” Harry Broadman, chair of the emerging markets practice at the Berkeley Research Group in the US told Al-Ahram Weekly.
“It thus provides a natural, and advantageous, outlet to those important markets for African countries located in the middle and southern portions of the continent who wish to export northwards to Europe and the Middle East.”
This week’s forum was not only about Egypt’s economic ties with Africa, however, but also focused on enhancing intra-African trade and business activities.
In a speech at the event, President Abdel-Fattah Al-Sisi called for finding “solutions based on regional integration to transform Africa into a global industrialisation hub to provide job opportunities for African citizens and attract foreign investments.
“Africa’s success in achieving the UN Sustainable Development Goals requires accelerating the pace of infrastructure development through cross-border projects, which are among the priorities of the African Union, including the project linking Cairo to Cape Town, the north-south electricity-linking project, and linking the Mediterranean Sea to Lake Victoria,” Al-Sisi added.
A major initiative that could help to bring Africa closer together is the African Continental Free-Trade Area (AfCFTA), which entered into force on 30 May. As a result, many of the “restrictions and barriers hindering intra-African trade are being dismantled, which means that investors can go into the continent without difficulties,” Obi Emekekwue, global head of communications at the Afreximbank, said.
AfCFTA will lead to the “opening up of the entire African market as a single market,” he said.
“As one of the most advanced economies in Africa, Egypt’s investors stand a unique chance to benefit from expanding into other African countries because Egyptian industries can more cost effectively meet the needs of many of these countries in terms of many of the products they currently import from outside the continent,” he added.
Emekekwue emphasised the increasing consumption potential of the continent because of the “increasing growth and expansion of the African middle class”.
Broadman agreed on AfCFTA’s potential, saying that if free-trade rules were implemented across the continent, this would vastly open up flows of intra-African trade and investment.
“Unlike in other regions of the world, most African countries trade more with countries outside the continent than between each other at the moment,” he said.
According to the UN Conference on Trade and Development’s (UNCTAD) Economic Development in Africa Report 2019, AfCFTA could generate welfare gains of $16.1 billion and boost intra-African trade by 33 per cent in its transition phase alone.
Bineswaree Bolaky, a co-author of the report, told the Weekly in July that the removal of tariffs, supplemented by trade facilitation in the African Continental Free Trade Area, could lead to intra-African trade increasing by 52.3 per cent or $34.6 billion in 2022.
However, Andy Mckay, University of Sussex economics professor who previously gave policy recommendations to governments of developing countries, is skeptical about the extent to which AfCFTA will be really implemented, saying that the past record on this has been poor.
“Countries have signed up to many free trade agreements and regional integration arrangements, but actual implementtaion, in terms of really liberalising trade has been limited,” Mckay pointed out.
“There has been a bit more progress recently in the East African Community but countries have been very reluctant to liberalise trade because they fear some of their industries will lose out,” he said.
African countries are also hopefull AfCFTA will help attract more attention to Africa from investors in other parts of the world.
According to a report in the Gulf newspaper Gulf News, the United Arab Emirates is seeking to leverage its expertise in construction, shipping, logistics, tourism and energy to persuade the world that it is a suitable entrance gate to Africa.
The Gulf country annually organises a Global Business Forum to discuss investment and business opportunities in Africa.
South Africa’s Central Energy Fund (CEF) said earlier this month that it expected to produce more than 300,000 barrels of crude oil a day thanks to a refinery that will be established along its east coast.
The project, announced in January, will start operating in 2028, creating the region’s largest refinery. It is a partnership between South Africa and Saudi Arabia’s Aramco, the world’s biggest oil company, in further evidence of external business interest in Africa.
AfCFTA could also be a way for Africa to withstand global economic challenges, including the so-called “trade war” between the United States and China.
African Development Bank (AfDB) President Akinwumi Adesina told the news agency Reuters on Monday that the African states had to diversify their exports and add value to raw materials in order to avoid the fallout from economic tensions between the world’s two largest economies.
“Many African countries export... raw materials to China. If China’s economy weakens, [then] demand for raw materials from Africa weakens,” he said.
He also underlined the fact that “Africa trades quite a lot with Europe but also with the UK,” and this could be disrupted by the upcoming Brexit. He called on Africa to focus on the “most important things” and “what works for it,” in other words, a free-trade area for Africa.
But challenges persist to AfCFTA’s success. On 14 November, Nigeria, Niger and Benin, all signatories to AfCFTA, decided to establish a joint border patrol to combat smuggling across neighbouring states in West Africa.
Nigeria partially closed its borders in August to fight smuggling, and in October it indefinitely stopped trade through its land borders.
Developing infrastructure in Africa is another concern, as the African countries need it to both attract local and foreign investment and to facilitate the development of their societies.
A 2015 report prepared by the World Bank and the UN Economic Commission for Africa concluded that “adapting infrastructure planning and design… has great potential to reduce climate-change impacts in drier areas and to take better advantages of higher water availability in wetter areas” in Africa.
In his address to the IAF, President Al-Sisi called on regional and international institutions and Africa’s development partners to participate in achieving their goals and ambitions through financing the needs of development in Africa and the necessary infrastructure.
Egypt was highlighted during the event as an example of how infrastructure could serve development. Prime minister Mustafa Madbouli told those present that the private sector would not have invested in the New Administrative Capital, if it had not been for the government’s efforts in preparing the infrastructure for private developers.
He added that overhauling the infrastructure and energy sectors would encourage the private sector to pump new investment into the economy.
Harmonising airspace is one of the issues that the East Africa Business Council will discuss during the East African Business and Investment summit slated to take place in Arusha later this week. Denis Karera, vice chairman of the Council, said the summit seeks to address the most pressing issues challenging business in the region, especially cross border trade. “Non-tariff barriers impede cross border trade. One of the key things we want to raise, again, is domestication of airspace so that our airlines can move easily and quickly and tickets can become cheaper as well.
He said that non-harmonized and heavy duties imposed on airlines landing at different African airports drives up the flight ticket prices. “You have to wonder why flight tickets are expensive in the region. Rwanda charges taxes, Kenya charges taxes, and Uganda charges taxes among others on handling services for every landing. We have to deal with this and domesticate airspace as it is happening elsewhere. We want to advocate so that governments slash such heavy taxes. We have been discussing this for so many years and now we need harmonization of the airspace.” He cited an example of some airlines that charge $800 for a passenger flying from Kigali to Nairobi for one hour. “This impedes movement of people. A flight ticket price could go for $110 but due to heavy taxes, it rises,” he said.
India and South Africa have adopted a tough stand against the current moratorium on levying customs duties on electronic transmissions at the World Trade Organization, forcing the US to come to the negotiating table for the first time, said trade envoys. The existing moratorium will expire at the end of next month, unless it is extended for another six months. The moratorium has been extended since 1998 on a biennial basis at every WTO trade ministerial conference. At a meeting of the WTO’s informal General Council on Monday, the US offered a quid pro quo for extending the e-commerce moratorium by six months until the World Trade Organization’s twelfth ministerial conference in Nur Sultan, Kazakhstan, in June 2020.
In return, the US has indicated that it will agree to organise a workshop early next year, as demanded by India and South Africa, for assessing the scope and potential revenue implications of electronic transmissions, said a trade envoy, who asked not to be quoted. Previously, the US had vehemently opposed a proposal from India and South Africa for organising a workshop by experts drawn from the UNCTAD (United Nations Conference on Trade and Development), the ECIPE (European Center for International Political Economy) and the Paris-Based OECD (Organization for Economic Cooperation and Development) to present their conflicting assessments on what would constitute the e-commerce transmission and their potential revenue implications.
Work programme and moratorium on electronic commerce: Communication from Chad on behalf of the LDC Group
The following communication, dated 14 November 2019, is being circulated at the request of the delegation of Chad on behalf of the LDC Group: As the expiration of the e-commerce decision approaches at the end of 2019, the LDC Group calls n the four designated bodies under the Work Programme, to delve deeper into the benefits and costs of e-commerce for LDCs. LDCs are interested in both aspects of this platform and the relevance of e-commerce in improving trade for LDC traders and consumers. The LDC Group appreciates the submissions of others in the context of the Work Programme over recent years, including those on data flows and on the customs duties moratorium. In its interventions regarding the Work Programme at the Council for Trade in Goods and the Council for Trade in Services, the LDC Group has identified some challenges for LDCs in the utilization of e-commerce for consideration in the WTO e-commerce Work Programme including the following:
Limited knowledge among enterprises, government players, and regulators of e-commerce;
Lack of mechanisms to start up enterprises in e-commerce business;
Concerns about possible adverse effects of e-commerce and how to mitigate them;
Limited existence of and affordable information technology (ICT) infrastructure (noted above, e.g., internet, broadband coverage, electricity, telecommunications infrastructure and services);
Access to credit cards (the main vehicle for on-line payments) and high incidence of unbanked consumers or limited experience with on-line payments;
Adequate facilities for physical delivery of purchases online;
User mistrust of quality and effectiveness;
Inadequate online payment facilities;
Trade finance for LDC e-commerce enterprises;
Limited skills among enterprises desiring to use e-commerce and ICTs strategically for B2B, B2C, or B2G buying and selling goods and services;
Lack of statistical data on electronic commerce in LDCs;
Weak legal and regulatory frameworks where needed for example consumer protection laws;
Lack of clarity on the nature of electronic transmissions and the ability of LDCs to apply internal taxes versus customs duties, where appropriate.
ATAF 4th International Conference on tax in Africa: Outcome statement
The conference (19-21 November, Kampala) was held on the theme: Innovation – digitization and harnessing technology to improve tax systems.
Extract: Participants recognised that private sector players in Africa including the African Industries Tax Association, need to understand the global tax debate of taxing the digitalised economy. Therefore, participants required African governments and ATAF to include African Industries in the discussions as businesses can add a lot of practical business inputs and systems expertise.
Participants at the 4th ICTA expressed outrage with regard to a moratorium by the WTO on imposing customs tariffs on e-commerce transactions. They observed that a temporary or permanent ban results in more significant revenue losses for African countries that are net importers, quoting research that shows that revenue losses due to the moratorium are significantly larger than the revenue losses for developed economies.
The meeting highlighted that African countries seek to expand their revenue base and domestically expand the economies. However, participants were concerned that a permanent moratorium would limit their options to protect domestic products and services traded online. They urged policymakers to actively challenge the moratorium based on these key arguments, both individually through their missions, or through the African Union. They welcomed the objective of the OECD’s “Unified Approach” of allocating taxing rights to market jurisdictions, and were particularly supportive of the following details of the Unified approach;
The meeting agreed that as a result of digitisation, African countries should be able to apply VAT/GST on digital services acquired by their citizens from suppliers outside their jurisdictions. As the norm in international trade for VAT/GST systems is the destination principle, participants agreed that countries should apply the destination principle to services and intangibles acquired from overseas businesses. Additionally, similar to South Africa’s application of VAT on digital services, participants felt that African countries should require foreign suppliers of digital services to VAT in their countries. Nonetheless, participants acknowledged the potential challenge of enforcing collection of such VAT; hence, the need for investing in technologies to track the transactions digitally.
It was observed that as countries introduced VAT, revenue shot up and immediately went down as a result of more significant trading through e-commerce, which existing VAT legislation had not previously foreseen. While e-commerce has resulted in decreased VAT revenue collections, it has provided authorities with an opportunity to enhance the audit trail through the use of data-driven methodologies. It was, therefore, up to tax administrations to take advantage of this opportunity to strengthen audit capabilities, mainly where countries are willing to procure effective systems.
As a result of the various changes in policy and law brought about by digitisation, participants called on African governments and tax administrations to improve engagement with the private sector. Although the private sector is deemed in many countries as being on the other side of the fence, participants recognised that they are essential stakeholders in the tax collection process, and their involvement provides policymakers with a business perspective of the issues which is invaluable to policy design. The engagement of private actors will also reduce the uncertainty that may harm business decisions.
Participants recognised that private sector players in Africa including the African Industries Tax Association, need to understand the global tax debate of taxing the digitalised economy. Therefore, participants required African governments and
ATAF to include African Industries in the discussions as businesses can add a lot of practical business inputs and systems expertise.
The meeting observed that based on the current digital debate, in 2020 the world will decide on new taxing rules that will drastically change the international tax system. Therefore, participants called on African countries to mobilise mainly through the African Union by Heads of States and Finance Ministers the pursuit of African tax interests on the global stage. Concern was expressed that if Africa doesn’t act now, it will be too late to influence the outcomes.
Ambassador Muchanga addressed the 2019 Annual Retreat of the African Group of Ambassadors in Geneva on WTO issues. Ambassadors were invited to lobby for the support of the African Union renewed application for observer status at the WTO, which was formally submitted recently.
Addressing the 2019 Annual Retreat of the African Group of Ambassadors in Geneva on WTO issues, WTO Director General Ambassador Roberto Azevêdo reiterated the WTO's readiness, within its ability, to extend support for the implementation of the AfCFTA.
Ethiopian Prime Minister Abiy Ahmed, Alibaba Group founder Jack Ma, and Alibaba Group Director and Ant Financial Services Group Chairman and CEO Eric Jing witnessed the signing of three Memoranda of Understanding between the Ethiopian Government and Alibaba establishing a eWTP Hub in Ethiopia. Speaking after meeting with him, Prime Minister Abiy indicated that the platform will support the country’s national digital transformation strategy, PM Office said. “I am quite pleased to welcome Jack Ma, Founder of Jack Ma Foundation and Partner of Alibaba Group, to Ethiopia,” the Prime Minister noted. His visit follows our meeting at Alibaba HQ in Hangzhou earlier this year, Abiy added.
The eWTP (electronic world trade platform) Hub is intended to enable cross-border trade, provide smart logistics and fulfillment services, assist Ethiopian small and medium-sized enterprises (SMEs) to reach China and other markets, and provide talent training. “We will continue to support the creation of a more inclusive, digitally-enabled global economy, where small businesses can participate in global trade. We look forward to working together with entrepreneurs and SMEs from Ethiopia and other African nations to seize the opportunities provided by the digital era,” Jack said.
The University of Pretoria’s Future Africa campus, in partnership with the US Chamber of Commerce’s US-Africa Business Center and Microsoft, recently hosted a multi-partner forum on digital drivers that could grow Africa’s digital economy. The forum, themed “Digital Drivers: Enabling the Growth of Africa’s Digital Economy”, aimed “to bring together government, policy and industry experts, academics and innovators to stimulate and foster discussion on relevant topics, with the aim of highlighting the policy issues and recommendations needed to effectively address the challenges.” The event was the second in the US-Africa Business Center’s Digital Transformation Series, launched last year in Nairobi with Kenyan President Uhuru Kenyatta, where a report was delivered on the evolution of digital economy development across Africa and the best ways in which African economies can maximise the benefits of implementing the technology.
WTO’s new Trade Monitoring Report: Trade restrictions among G20 economies remain at historic highs
The WTO’s new Trade Monitoring Report (pdf) issued on 21 November shows that G20 economies from mid-May to mid-October 2019 introduced import-restrictive measures covering an estimated USD 460.4 billion worth of traded merchandise. This represents a 37% increase over the previous period going back to mid-October 2018, and is second only to the $480.9bn coverage of import-restricting measures reported between mid-May and mid-October 2018. The report notes that with restrictions accumulating over time, the share of global trade covered by such measures has soared. WTO Director-General Roberto Azevêdo called on G20 economies to de-escalate trade tensions to spur investment, growth and job creation. “The report's findings should be of serious concern for G20 governments and the broader international community. Historically high levels of trade-restrictive measures are having a clear impact on growth, job creation and purchasing power around the world. We need to see strong leadership from G20 economies if we want to avoid increased uncertainty, lower investment and even weaker trade growth. We have seen how world trade has stalled during the review period. The WTO downgraded its forecast for merchandise trade growth in 2019 to 1.2%, the slowest since the crisis a decade ago, much lower than April's estimate of 2.6%. New trade restrictions and increasing trade tensions will only add to the uncertainty that is dragging down growth in the world economy. This trend needs to be reversed.”
Foreign ministers from the Group of 20 major economies agreed Saturday that it is “urgent” to reform the World Trade Organization, Foreign Minister Toshimitsu Motegi said, amid an escalating U.S.-China tit-for-tat tariff trade war. Motegi, serving as the chairman of the G20 foreign ministers gathering in Nagoya, also said at a news conference that ongoing negotiations on a sprawling Asia-Pacific free trade agreement should be concluded by all the original 16 member states, including India, which pulled out of the agreement earlier this month. “As trust in the multilateral framework is now being undermined, the G20 has shared the view that the WTO should be reformed so that it can address several current issues,” Motegi said after the end of the two-day meeting. At the gathering, the foreign ministers discussed reforms to the WTO, as Japan, the United States and other countries are pushing for the Geneva-based organization to improve its dispute settlement system — a point touched on in a declaration issued by G20 leaders after their summit in Osaka in June. US Secretary of State Mike Pompeo, however, did not participate in the G20 meeting, apparently reflecting Washington’s lack of interest in multilateral economic and financial policy dialogue. [Statement delivered by SA's Deputy Minister Mashego-Dlamini]