ATPC DAILY DIGEST 21 JANUARY 2020
INTERNATIONAL
Africa and the United Kingdom: challenges and opportunities to expand UK investments – This report highlights the opportunities and challenges facing UK firms when investing or conducting business in Africa, with a particular emphasis on the non-extractive sector. It highlights the mutual benefits for Africa, in terms of economic transformation and growth, and for the UK, in diversifying investments in rapidly expanding markets. The study draws from data on UK investments in Africa, and information provided by more than 75 UK companies operating in Ghana, Kenya, Nigeria and South Africa. Currently, UK foreign direct investment (FDI) in Africa is heavily focused on the extractive sector and in South Africa. The low penetration of UK FDI beyond mining and financial services and in other countries suggests that there are opportunities as well as challenges to increase the role of British investors in boosting African economies.The increasing population and growing middle class in Africa – expected to account for over 40% of the population by 2030 – bring growth and increased sophistication in consumption, presenting substantial opportunities in sectors where the UK has a strong comparative advantage, including financial services and insurance. (ODI)
Key Words: ODI, UK, Africa, Investment Policy
Global investment flows flat in 2019, moderate increase expected in 2020 – Global foreign direct investment (FDI) totaled US$1.39 trillion in 2019, slightly less than a revised $1.41 trillion for 2018. But flows are still expected to rise moderately in 2020, according to an UNCTAD Investment Trends Monitor published on 20 January. The United States remained the largest recipient of FDI, attracting $251 billion in inflows, followed by China with flows of $140 billion and Singapore with $110 billion. FDI flows to North America remained flat at $298 billion. But flows to developed economies as a group decreased by 6% to an estimated $643 billion – just half of the peak amount recorded in 2007. “The trend for developed economies was conditioned by FDI dynamics in the European Union,” the monitor says, “where inflows declined by 15% to an estimated $305 billion.” UNCTAD found that flows to developing economies remained unchanged in 2019 at an estimated $695 billion, meaning that these countries continued to absorb more than half of global FDI. Analysis of the different developing regions showed the highest growth for Latin America and the Caribbean, at 16%. Africa continued to register a modest 3% rise while flows to developing Asia fell by 6%. (UNCTAD)
Key Words: UNCTAD, Trade, Africa
WTO and World Bank showcase updated version of Services Trade Policy Database - An updated version of the Services Trade Policy Database, jointly developed by the WTO and the World Bank, was presented at the WTO on 16 January. The database now contains new information on the services trade policies and regulations applied by 68 economies and incorporates data on 23 sub-sectors, including financial services, telecommunications, distribution, transport and professional services. The database can be accessed via I-TIP Services, which also provides information on WTO members' commitments under the General Agreement on Trade in Services, services commitments in regional trade agreements, and services statistics. The database was developed in response to the growing global demand for information on services trade policies and regulations in both developed and developing economies. The data increases the transparency of regulatory frameworks and provides critical information for national policy reforms, international trade negotiations and research on services. Entry requirements for services providers, licensing conditions and cross-border data flow restrictions feature among the data available. (WTO)
Key Words: WTO, World Bank, Trade Policy
Online tool to remove trade barriers in Africa goes live – An online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa became operational on 13 January. Traders and businesses moving goods across the continent can now instantly report the challenges they encounter, such as quotas, excessive import documents or unjustified packaging requirements. The tool, tradebarriers.africa, will help African governments monitor and eliminate such barriers, which slow the movement of goods and cost importers and exporters in the region billions annually. An UNCTAD report shows that African countries could gain US$20 billion each year by tackling such barriers at the continental level – much more than the $3.6 billion they could pick up by eliminating tariffs. “Non-tariff barriers are the main obstacles to trade between African countries,” said Pamela Coke-Hamilton, director of UNCTAD’s trade division. “That’s why the success of the African Continental Free Trade Area depends in part on how well governments can track and remove them,” she said, referring to the agreement signed by African governments to create a single, continent-wide market for goods and services. The AfCFTA, which entered into force in May 2019, is expected to boost intra-African trade, which at 16% is low compared to other regional blocs. For example, 68% of the European Union’s trade take place among EU nations. For the Asian region, the share is 60%. (UNCTAD)
Key Words: UNCTAD, Trade, Africa
UK-Africa summit: Wooing Africa after Brexit – After Brexit, the UK wants to boost business trade with Africa, but as a major UK-Africa business summit starts in London, Matthew Davies asks if there really will be new opportunities for the continent. Trade is tricky. Trade agreements are trickier. Trade negotiations to get those agreements are exponentially more complicated. And the road that the Brexit can has been kicked down for so long is rapidly running out. Once the UK leaves the European Union at the end of January, it has 11 months to come up with a trade deal with the European Union to avoid reverting to WTO rules. rime Minister Boris Johnson and his Leave supporters have always expounded the virtues of being outside the EU, including the ability to negotiate its own trade deals on its own terms for the benefits of its own citizens. Being part of a big gang has its advantages and disadvantages. Yes, you have to make compromises and adapt your goals to match commonly-agreed policies. But you also get the power of the bloc behind you in trade negotiations. The UK's International Development Secretary, Alok Sharma, is, as one would expect, very optimistic saying that Britain's relations with Africa will be "turbo-charged", with trade, business and investment deals being struck left, right and centre. The UK government seems to be taking it seriously. The UK-Africa Investment Summit can be seen as evidence of that but any potential change in actual trade conditions is some way off. Possibly years. (BBC)
Key Words: UNCTAD, Trade, Africa
What the UK can learn from China about running an Africa Summit? – The United Kingdom is hosting its first Africa summit today (Jan. 20), welcoming around 15 heads of state to London. The UK-Africa Investment Summit 2020 is the latest in a series of what are coming to be known as “Africa-Plus-One” summits, referring to the idea of several African countries plus one non-African country. The first summit of this kind kicked off with France back in 1972, followed by Japan in 1993, and the US tried one in 2014 during Obama’s presidency. Most recently even Russia had an Africa summit last October. However, none of these have matched the scale and interest of the China-Africa summits, which kicked off 20 years ago. At the last one in 2018, twice as many African presidents attended the Beijing summit as attended the United Nations General Assembly in New York. If other countries, including the UK, are interested in generating the kind of interest that Chinese summits produce, there are three important lessons they could learn from the world’s second largest economy’s evolving relationship with Africa. The first lesson is that summits are only the shiny jewel-in-the-crown of years of hard work and engagement. When China’s summits started in 2000, China’s various foreign ministers had been making trips to three to five African countries every year for 10 years. (Quartz Africa)
Key Words: UK, China, Africa Summit
DDG Wolff: It is time to update the WTO rulebook for agriculture – Addressing a group of agriculture ministers at the 12th Global Forum for Food and Agriculture in Berlin on 18 January, Deputy Director-General Alan Wolff highlighted the need to harness the power of multilateral trade agreements to meet the complex challenges facing the agricultural sector. In the run-up to the 12th Ministerial Conference in June, ministers need to work together, he said, to reform WTO rules. This would not only result in increased production in a sustainable manner but would also have a positive impact on the environment. This is what he said: “As we come to the close of the second decade of the second millennium, the challenges to agricultural policy, never inconsiderable, are of a different nature and magnitude than those faced by prior generations. Among these are major changes in weather patterns, emerging environmental constraints and the increasing use of trade measures to deal with geopolitical objectives. The technological context in which agricultural policies will be set is evolving rapidly. The global economy is well on its way to becoming to a large extent digital. While less understood, artificial intelligence will play an increasingly stronger role.” (WTO)
Key Words: WTO, Trade, Agriculture
Global Economic Prospects: Slow Growth, Policy Challenges – Global growth is expected to recover to 2.5 percent in 2020—up slightly from the post-crisis low of 2.4 percent registered last year amid weakening trade and investment. Nevertheless, downside risks predominate, including the possibility of a re-escalation of global trade tensions, sharp downturns in major economies, and financial disruptions. Emerging market and developing economies need to rebuild macroeconomic policy space to enhance resilience to adverse shocks and pursue decisive reforms to bolster long-term growth. Growth in almost all EMDE regions has been weaker than expected, reflecting downgrades to almost half of EMDEs. Activity in most regions is expected to pick up in 2020-21, but the recovery will largely depend on a rebound in a handful of large EMDEs, some of which are emerging from deep recessions or sharp slowdowns. Risks for all regions remain to the downside. (World Bank)
Key Words: World Bank, Investment Policy, Global Economic Growth
PAN AFRICAN
Africa ready for trade- Kagame – President Paul Kagame has said that Rwanda and African countries are ready to engage in intra-Africa trade. Kagame was speaking in London on Monday at the UK-Africa Investment Summit. The President was on a panel session on trade and investment alongside presidents Peter Mutharika of Malawi and Alpha Condé of Guinea, as well as the UK Secretary for International Trade, Liz Truss. With months to the commencement of the operationalization of the Continental Free Trade Area (AfCFTA), set for July this year, President Kagame said that Rwanda and Africa have made ample preparations in readiness for the new era. Kagame said that the AfCFTA has now become a reality following the efforts and political commitment of African leaders who contributed to its fruition. “The AfCFTA has become a reality. That means political will on the part of the leaders who came together to put this in place. This came supporting the efforts and quest for regional integration that we have always sought to achieve,” he said. He said that there was optimism that the implementation of the agreement would change the tide for the continent and is expected to drive trade up by up to 50 per cent. “Statistics show that Intra African trade is going to go up by up to 50 per cent. This is a huge opportunity which Rwanda and other African countries have been prepared to benefit from as well as contribute to,” he said. (The New Times)
Key Words: Africa, Intra-Trade, AfCFTA
Lord Popat: We want the UK to be the investment partner of choice for Africa - The UK-Africa Investment Summit will be an opportunity to demonstrate to businesses worldwide the sheer scale of opportunities in Africa in areas they have prioritised such as protecting the environment and promoting the health and economic development of the people of Africa. The summit will help to create new lasting partnerships that will deliver more investment and jobs, which will benefit people and businesses in Africa and the UK. The summit also aims to showcase the UK and our world-famous City of London as the gateway for capital and investment into Africa. The UK-Africa Investment Summit couldn’t come at a better time. This year marks the beginning of a new decade. As we look ahead, we naturally examine the past and reflect. In the UK, Brexit has dominated almost all policy bandwidths. With the general election ‘s overwhelming result indicating a mandate to “get Brexit done”, the days of delays and indecision are soon to come to an end. We must now begin the important work of moving forward, repairing and rebuilding relationships within the EU, and importantly, with those outside the EU. I believe that, more often than not, the key to unlocking a stable future can be found in our past and the best place to begin is with our long-established and steadfast friends, the Commonwealth. Since Britain joined the EU in 1972, the EU has recorded average annual economic growth of just over 2%. But during the same period the economies in the Commonwealth have expanded twice as fast; by 4.4% on average each year. (Politics Home)
Key Words: UK, Africa, Investment
Equatorial Guinea Speeds Up Year of Investment Drive with Nigerian Investors – In line with its commitment to attract regional capital investment into the country, H.E. Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons of Equatorial Guinea, met with high-level Nigerian investors, bankers and financiers to discuss the opportunities offered by the country’s Year of Investment initiative. The delegation from Equatorial Guinea met with several Nigerian executives from the Africa Finance Corporation, Polaris Bank, Sterling Bank, First Bank, UBA and Zenith Bank but also captains of the industry such as Simbi Wabote, Executive Secretary of the Nigerian Content Development and Monitoring Board. Such discussions with all the leading figures who have been a true engine of growth for the Nigerian economy is essential as Nigeria continues to be Africa’s largest economy. Minister Obiang Lima presented key opportunities for them to expand their portfolio by investing in Equatorial Guinea. The Equatorial Guinea delegation also listened to their expectations on investing in Equatorial Guinea, while advising Nigerian businesses on the latest development and opportunities offered to African investors within the country’s rapidly developing oil and mining sectors. (Top African News)
Key Words: Africa, Investment Policy, Regional Integration
NORTH AFRICA
Tunisia: Export Volume Down 5 Percent in 2019 (Ins) – The export volume fell by 5% in 2019 against a 3.5% increase in 2018, the National Institute of Statistics (INS) said in its newsletter. That volume went down in several sectors, including agriculture and food processing industry (16.6%), textile-clothing and leather (6%), energy (7.3%) and mechanical and electrical industries (2.4%). In current values, exports grew 7% to 43,855.4 million dinars. The increase in export prices was 12.6%. Excluding energy, export prices went up 12%, knowing that energy export prices posted a rise of about 12% during the same period. 9% drop in import volume in 2019. The quantities imported were also down (9%) in 2019 against an increase of 1% in 2018. Therefore, the volume of imports saw a decrease by about 12.1% in the mechanical and electrical industries, about 8.4% in the textile-clothing and leather sectors and about 6.7% in the agriculture and food-processing industries. However, in current values, imports grew 5.4% to 63,264.1 MD. At the price level, imports increased by 15.8%. Excluding energy, import prices climbed up 15.5% compared to 2018. Indeed, energy import prices saw a rise of 16.5% in the same period. (TAP)
Key Words: North Africa, Business, Tunisia
EAST AFRICA
What Kenya can gain from UK-Africa Investment Summit - President Uhuru Kenyatta leads a delegation of leaders and businesspeople to the UK-Africa Investment Summit on Monday with Kenya eyeing investments for the ‘Big Four Agenda’, continued trade and multilateral deals with a post-Brexit United Kingdom and deepening of political ties. The historic summit will bring together at least 20 African Heads of State, ambassadors, high commissioners as well as captains of industry. The recent African, Caribbean and Pacific Group of States summit in Nairobi is testament of Kenya’s rising prominence as a global strategic partner, whose foreign policy has expanded beyond the traditional alliances of Europe, China and the United States to countries such as Japan, Jamaica and the Bahamas. It is no surprise that UK Prime Minister Boris Johnson invited Kenya to the summit. The country is solidifying its existing positions. As one of the stable political corners in Africa, it enjoys a multitude of bilateral and multilateral agreements covering security, development and intelligence sharing. Among the highlights of the trip will be the launch of the Green Bond at the London Securities Exchange (LSE) by President Kenyatta. This will open up Kenya to the coveted multimillion-pound UK financial markets, and Britons will also have access to the NSE. (Daily Nation)
Key Words: East Africa, Business, Regional Integration
Uganda’s beef gets nod, visa changes assured at UK-Africa Investment Summit – Uganda’s beef will be given ”space’ on the United Kingdom market, British Prime Minister Boris Johnson has promised. Addressing the UK-Africa investment summit in London today morning, Johnson displayed unusual charm to the African leaders, underlining the need for closer business with the UK. He also promised changes to the processing of visas. On Uganda, he said “I told Kaguta Museveni that his beef cattle will have an honored place on the tables of Britain.” Immediately, State Minister for Investment Evelyn Anite, also attending the summit, called this an opportunity tweeting “Big thanks to PM. Boris for this great opportunity for the Ugandan beef farmers.” Uganda’s beef is ranked favourably around the world because of its yellow fat that does not contain cholesterol mainly because the cows are naturally grazed, says Uganda Investment Authority. An estimated 90 per cent of the national cattle herd is kept under pastoral and mixed smallholder farming systems. However, UIA notes that commercial beef ranching is limited accounting for less than 10 per cent of the national herd. The country’s beef production has also been growing from 190,000 metric tons in 2012 to 211,000 in 2017, according to the Uganda Bureau of Statistics abstract. But there has not been much on the export side. In 2018, Uganda flagged off the first consignment to Egypt as a step to opening up markets for Uganda’s beef. (The Independent)
Key Words: East Africa, Trade Agreement, UK-Africa Investment Summit
Meeting on GERD "Fruitful", Ethiopian Delegation Says – The Ethiopian Ministry of Foreign Affairs announced that the tripartite meeting on the Grand Ethiopian Renaissance Dam (GERD) on the Nile, held in Washington D.C. from January 13 to 15, has been fruitful in marking "a major breakthrough." Foreign Ministers and Water Resources officials of Ethiopia, Sudan and Egypt wrapped up their three-day negotiation meetings in the presence of Steven Mnuchin, U.S. Treasury Secretary and David Malpass, World Bank President. Representing Ethiopia during the meetings were Gedu Andargachew, Foreign Minister, and Sileshi Bekele, Minister of Water, Irrigation, and Energy, who gave media briefings after the meetings concluded. Mr. Gedu said the meeting aimed at resolving divergence on the filling and operation of GERD was fruitful. The Ethiopian delegation has been successful in making "effective discourse and the meeting realized a breakthrough," according to the foreign minister. The three countries have found common ground on the general framework of the GERD accord, he explained. Foreign Minister Gedu said Ethiopia "did not compromise" its national interest, nor does it intend to do so in the future. The Ethiopian delegation affirms that the negotiation was successful in that it will not affect Ethiopia’s rights and national interest, or its "solid and merit-based stand" on the fair use of the Nile Water. (2merkato.com)
Key Words: East Africa, Business, Regional Integration
EAC moving at a snail’s pace – When Jakaya Kikwete, then Tanzania’s president, sharply criticised the “Coalition of the Willing” partners for sidelining other members of East African Community in their projects, he singled out Kenya, Uganda and Rwanda for blame. But seven years later, as the EAC celebrates its 20th birthday, the concerns of the three partner states are yet to be acted on. These concerns are contained in the Council of Ministers report, signed in November 2019 in Arusha. The report outlined a number of decisions that are yet to be complied with by the EAC partner states. The report is expected to be tabled before the EAC Heads of State Summit to be held in the next couple of months. The concerns include failure to remit budgetary allocations by each EAC partner state that would fund the EAC Secretariat activities, review work permit and social security guidelines in order to facilitate the Common Market Protocol’s Free Movement of People, finalise the tourism protocol to market EAC as a single tourist destination and stalled infrastructure projects. The report, seen by The EastAfrican, also says that a number of EAC activities are suffering following the failure by partner states to remit their budgetary contributions. Immediately after the meeting however, South Sudan paid up, but it still has a deficit. (The East African)
Key Words: East Africa, Business, Regional Integration
Key Words: East Africa, Business, IMF
Uganda-Kenya Milk War Boils Over With No End in Sight of Regional Trade Tiffs - The escalating trade dispute between Kenya and Uganda over milk exports, is just one of many facing all EAC partner states and underlines critical gaps in the regional integration project that could potentially harm the economies. Dr Gideon Badagawa, the executive director of the Uganda Private Sector Foundation warns that unless resolved early, these trade tiffs could affect the region's investment profile. At a glance, Uganda's trade with Rwanda is down to a trickle after a year-long of frosty relations; Tanzania has locked out Ugandan timber, sugar and maize; while Kenya, which has been open to imports of maize and beans from Uganda has been reluctant to open its market to manufactured products from Uganda and now even milk. The South Sudan market, while open, still suffers from effects of conflict and insecurity. Non-tariff barriers have intensified as member countries become competitors amid regional protocols that eliminate taxes on goods originating from within the economic bloc as conceived under the EAC Treaty. "This is going to hurt the region at some point. Put yourself in the shoes of an investor who set up in the region because he heard the presidents and other bureaucrats say East Africa was a single market and investment destination, but then later finds that for unofficial reasons, he cannot access half of that market," said Dr Badagawa. (The East African)
Key Words: East Africa, Business, Regional Integration
WEST AFRICA
A new case for a Commonwealth based on trade – Relations between Nigeria and the UK are close and longstanding, most recently reiterated in our 2018 bi-lateral security pact and our collaboration in anti-trafficking. But in recent years, our relationship – particularly economically – has become increasingly defined by Britain’s membership of the European Union. A new free trade agreement would reconfigure this, presenting new opportunities for both. As the largest economy in Africa, my country of nearly 200 million people has a great deal to offer: Nigeria’s vast natural energy and mineral resources, unbarred through the ending of customs barriers, could help supply growth for companies in all corners of the UK. Greater access would also be forthcoming to one of the world’s fastest expanding groups of consumers – the Nigerian middle classes. For my country, greater UK engagement in its economy would bring jobs to under-tapped sectors, such as agriculture and manufacturing. Millions of highly skilled, English-speaking but underemployed young people, are eager to work but without the opportunities that foreign investment can bring to create jobs and build businesses. (The Sun)
Key Words: West Africa, Business, Regional Programme
Opportunities exist in UK for Ghanaian garment manufacturers – Ghana’s High Commissioner to the United Kingdom (UK) Papa Owusu-Ankomah has urged Ghanaian garment and textile manufacturers to take advantage of the numerous opportunities that exist in the UK and European markets following UK’s decision to leave the European Union. “Brexit has opened up new markets, and it is my hope that you use the opportunity to manufacture more in order to create wealth and generate employment in Ghana,” Mr. Owusu-Ankomah advised. The high commissioner made these revelations at an event hosted by the Ghana High Commission to introduce Ghanaian garment manufacturers to potential buyers in the UK and Europe. It was organised by Ethical Apparel Africa, a UK-based garment sourcing and development organisation, in collaboration with Ghana’s Ministry of Trade and Industry through their UK office and supported by the UK Department for International Development (DFID). Mr. Owusu-Ankomah further urged the Ghanaian manufacturers to find out what the expectations of the market were in order to live up to them. Patrick Nimo, Chief Director, Ghana’s Ministry of Trade and Industry, urged participants to make the most of Ghana’s position as the Headquarters of the African Continental Trade Area and to use Ghana as a base to access the bigger African market. (Ghana Web)
Key Words: UK, Ghana, Investment
SOUTHERN AFRICA
Joint Communiqué of the 10th Session of the Joint Ministerial Commission between the Republic of India and the Republic of South Africa, New Delhi, 17 January 2020 - Both sides welcomed increased bilateral visits in recent years and agreed to maintain frequent and regular contacts between political leaders through bilateral visits and meetings on the sidelines of multilateral events. Both sides agreed to further enhance communication and coordination between both the countries on major issues of mutual concern. The Ministers agreed to continue to work closely together to implement the Strategic Programme of Cooperation with particular emphasis in the focus areas of, Deep Mining technology and equipment, Information technology, Science and technology, Agro-processing, Energy, Pharmaceuticals and Healthcare, Tourism, Financial Services, SME and Water Resources Management & Sanitation. EAM noted that South Africa is a valuable partner and a friend of India in the African continent. He extended invitations to concerned South African Ministers to participate in Africa Ministerial meets in the run-up to India Africa Forum Summit – IV (IAFS-IV), the India-Africa Defence Ministers Meet to be held in February 2020 and the India-Africa Agriculture Meet to be held in March 2020. EAM congratulated South Africa on forthcoming assumption of the position of African Union Chair in 2020 and expressed hope that the IAFS IV would be organized successfully with the support from South Africa as the Chair. SAFM’s assured to consider favorably, India’s candidature to a non-permanent seat of the UNSC for term 2021-22 and India’s bid to join the Nuclear Suppliers Group. (DIRCO)
Key Words: SA, Trade, Business
