Current Trade News

The 2019 edition of the WTO’s World Trade Report highlights that services have become the most dynamic component of international trade and that its role will continue to expand in the coming decades. It stresses the need to enhance cooperation in the international community to support this expansion. The report was launched during the WTO Public Forum on 9 October 2019 by Director-General Roberto Azevêdo.

“From logistics, to finance, to informatics, services have become the indispensable backbone of our economies. Services generate more than two-thirds of economic output. They account for more than two thirds of jobs in developing countries, and four-fifths of employment in developed ones.
“But services also play an increasingly important role in international trade. Global value chains for merchandise could not function without logistics and communications services. And thanks to digitalization, services that once had to be delivered face-to-face, like education, can now be delivered remotely.Yet services are often overlooked in discussions on global trade, and the extent of their contributions to global trade is not always fully appreciated. This report attempts to remedy this oversight.”, said DG Azevêdo in his opening remarks.
The report underlines that trade in services — ranging from distribution to financial services — can help countries boost economic growth, enhance domestic firms' competitiveness and promote inclusiveness. It illustrates how the share of services in international trade has continued to grow, and how technology, climate change, rising incomes and demographic changes will have an impact on services trade in the future. It also suggests ways to maximize the potential of services trade globally in the years to come.
On average, services account for about half of GDP worldwide. For developed economies, they account for around three-quarters of GDP and their proportion is increasing rapidly in developing economies.
According to the report, services trade has grown 5.4 per cent per year since 2005, while trade in goods has grown at 4.6 per cent on average. Trade in computer services and research and development have recorded the most rapid annual growth over the past decade. According to the WTO Global Trade Model, a new quantitative trade model used by the WTO to make projections about global trade, the share of services in global trade could increase by 50 per cent by 2040. This is thanks to lower trade costs and the reduced need for face-to-face interaction due to digitalization. It is also dependent on policy barriers to services trade being lowered.
Many developing economies are becoming increasingly services-based and their share of world services trade has grown by over 10 percentage points since 2005. However, services trade is concentrated in five developing economies — China; Hong-Kong China; India; the Republic of Korea and Singapore — accounting for over 50 per cent of developing economies’ services trade in 2017.
The report says that services trade may help women and micro, small and medium-sized enterprises (MSMEs) play a more active role in world trade, particularly in developing economies, helping to reduce economic inequality. When MSMEs in developing countries start exporting services, they are on average two years younger than manufacturing firms. However, they export less than 5 per cent of total sales. Services are the main source of employment for women. However, the service sectors that account for most women employment have been so far among the least traded.
Despite their decline by 9 per cent between 2000 and 2017, barriers to trade in services remain much higher than in goods trade. This is largely due to the limited possibilities to supply certain services across the border and the regulatory intensity of many service sectors.
Technologies are key drivers of services trade, enabling cross-border trade of services that have traditionally needed face-to-face interaction. Digital technologies are also reducing the cost of trading services. The report finds that if developing countries are able to adopt digital technologies, their share in world services trade could increase by about 15 per cent by 2040.
The report notes that policy barriers to services trade — mainly regulatory measures — are much more complex than in goods trade. The authors of the report note that for services trade to be a powerful engine of economic growth, development and poverty reduction international cooperation will need to be intensified and new pathways will need to be found to advance global trade cooperation and make services a central element of trade policy.
Source: World Trade organization

Rwandan President Paul Kagame Monday officiated the launch of Mara Phones manufacturing plant, which will make smartphones in the country.
The first 'made in Rwanda' phones rolled off the assembly line last week, the presidency said, through a partnership with Mara Group.
"The Mara Phone joins a growing list of high-quality products that are made in our country... It is another milestone on our journey to high-tech, 'made-in-Rwanda' industry," President Kagame said.
In a series of tweets from the presidency, Kagame was quoted saying: "The introduction of Mara Phones will put smartphone ownership within reach of more Rwandans."


THE country lost more than 60 000 livestock to drought-induced famine this year, agriculture minister Alpheus !Naruseb has said.
!Naruseb announced the figure during a consultative meeting prime minister Saara Kuugongelwa-Amadhila had with regional governors and chief regional officers last Wednesday.
Without mentioning the exact numbers of livestock that have perished per region, the minister said the Kunene, Omusati, Oshana, Oshikoto, Erongo and //Kharas regions recorded the highest number of livestock lost due to the current drought.
Addressing the meeting, Kuugongelwa-Amadhila said so far N$131 million has been spent on drought relief, with N$16,6 million spent on fodder for livestock.
She said of the N$595,2 million earmarked for the drought relief programme, N$112 million will be spent on fodder procurement.
"The challenges related to reliance on conventional grazing of animals during this drought has alerted us to the need to adopt more innovative and drought-resilient methods," she said.
The prime minister further noted that the government acknowledges the introduction of the hydroponic system, which produces fodder in seven days and could feed many cattle. It has therefore approved a subsidy scheme to support small-scale farmers who want to venture into non-mechanized fodder production.
The government also plans to train farmers in hydroponic fodder production.
"I urge our farmers to approach the ministry of agriculture offices to participate in the scheme," she said.
The state of emergency declared for the drought was set to lapse on 5 October 2019, but Kuugongelwa-Amadhila on Wednesday said she would table a motion in the National Assembly to have it extended for another six months.

Côte d’Ivoire came first out of 66 countries for having the greatest potential for future growth, according to Standard Chartered’s Trade20 Index.
Kenya ranked third and Ghana thirteenth, based on metrics such as economic dynamism, trade readiness and export diversity.
Researchers found that while existing trade powers like China and India continue to rapidly improve their trade potential, African countries such as Kenya and Côte d’Ivoire have cemented their positions as East and West African trading hubs from a relatively low starting point.
Huge investments in infrastructure, e-commerce and ease of doing business have also started paying off in Côte d’Ivoire and Kenya where the business environment has seen a marked improvement.
Côte d’Ivoire and Ghana also performed well for economic dynamism, measured in terms of foreign direct investment, export and GDP growth. Côte d’Ivoire enjoyed robust GDP growth at 7.4% in 2019, while exports also grew during the ten-year period.
FDI flows to Kenya, one of the largest recipients of foreign investment in Africa have also grown 27% since 2010, with the rise in investment coming mainly from China in the mining and hydrocarbon sectors, according to UNCTAD.
Home to some of the world’s fastest-growing economies, Africa has the potential to become a much bigger player in global trade, says Standard Chartered’s Regional Co-Head Saif Malik.
“Already connected with the trading powers in Asia, particularly China, through the Belt & Road Initiative, and with the launch of the African Continental Free Trade Area, we see numerous growth opportunities for trade and investment in the years ahead.
“Additionally, the growing young, digitally-savvy population and an increasing female workforce will aid the continent in its economic transformation.”
While most traditional trade indices are based on a market’s present performance, the Trade20 index captures changes over time to reveal the markets that have seen the most improvement within the last decade.
The Trade20 index
1. Côte d’Ivoire
2. India
3. Kenya
4. China
5. Ireland
6. Vietnam
7. Indonesia
8. Thailand
9. Oman
10. UAE
11. Hong Kong
12. Russia
13. Ghana
14. Sri Lanka
15. Bahrain
16. Singapore
17. Switzerland
18. Chile
19. Turkey
20. Philippines

Source: African Business Magazine

The new African continental free trade deal (AfCFTA) presents a unique opportunity to grow intra-Africa trade as a proportion of total African trade, and to diversify the continent’s exports to the rest of the world.
Coming at a time when Africa is poised to become a hotspot for global growth, boasting six of the fastest growing economies in the world, the trade area will ensure that African countries are able to maximise the benefit of this growth by becoming suppliers of various goods and services across the continent.
The trade agreement is the biggest of its kind since the World Trade Organization was established in 1994, and represents the most monumental step Africa has taken towards regional economic integration to date.
What’s new?
As communicated at the launch, the agreement will be fully supported with well-defined rules of origin; schedules of tariff concessions in trade in goods; an online continental non-tariff barrier monitoring and elimination mechanism; and a Pan-African digital payments and settlement platform as well as an African Trade Observatory portal.
The AfCFTA has the potential to boost intra-Africa trade to much higher levels, to the benefit of the continent’s economic ecosystem.
Intra-Africa trade currently remains low compared to other global regions, amounting to an average of 15% of global trade across both imports and exports as of 2017. With customs procedures eased under the CFTA, intra-Africa trade is expected to grow to 21.9% by 2022 and at least 53% by 2040, effectively contributing in the region of $70.0 billion to the continent’s GDP. This growth will ensure that an increasing proportion of Africa’s more than US$2 trillion economy is traded internally.
Trade financing gap
To support the expected increase in intra-Africa trade of $119.6bn by 2022 will require nearly $40 billion in trade financing alone. This is a big challenge for African banks in particular.
There was already a trade-financing deficit of at least $90 billion in Africa as of 2018, according to African Development Bank estimates.
African banks, especially regional banks like Absa Group, Standard Bank and Ecobank, will need to adopt new ways of assessing trade risks in order to support corporates as they look to capitalize on the new era of growth and trade opportunities.
Experience warns this will be crucial, as strong regional banks have proven vital to progressing intra-regional trade in other areas of the world.
Given South Africa’s anaemic economic growth over the past few years, as well as its persistently high unemployment rate, the timing couldn’t be better – in addition to hopes of broader and deeper regional economic integration, AfCFTA will specifically open up new markets for South African exporters.
Because of its sophisticated economy and comparatively more established industrial base, South Africa will be in a unique and advantageous position to grow and diversify its exports to the rest of Africa, as trade and tariff and non-tariff barriers are eventually relaxed or removed entirely.
AfCFTA is expected to increase regional value chains, enhancing opportunities for goods and services consumed in Africa to be produced and manufactured there too.
Land of opportunity
The rest of the continent already receives the second largest and fastest growing share of South African exports after Asia, at 26.2% in 2017. Yet just 9.9% of imports hailing from the continent are destined for South Africa.
The pattern follows from South Africa’s distinct position as Africa’s most industrialized economy – its exports to the rest of the continent are mainly manufactured goods (84% in 2017), in contrast to its Asian exports, a majority 59% of which are minerals.
When it comes to imports however the pattern is largely reversed, with the majority of South Africa’s imports from the rest of Africa (51%) being minerals, mainly crude oil from Nigeria and Angola.
The removal of tariffs and other constraints will benefit South Africa on this side of the ledger too. By enabling other African countries to develop their manufacturing capacity in line with their inherent competitive advantage, the agreement will also help South Africa reduce its dependency on expensive manufactured imports from regions further afield such as Europe and Asia.
Growth aside it is also expected that the AfCFTA will help diversify South Africa’s export destinations within the continent, given that more than 85% of South Africa’s exports to Africa are destined for the Southern Africa Development Community (SADC) and concentrated in just a handful of countries.
Exports to the other two largest economies in sub-Saharan Africa, Angola and Nigeria, together accounted for just 4.3% of South Africa’s total exports to the rest of Africa in 2017.
Additionally, and partly in response to the growing risk of global trade protectionism, South Africa will increasingly prioritize the development of its trade with the rest of Africa, a goal laid out in the 2018/19 Industrial Policy Action Plan and the National Development Plan (NDP).
Maximizing gains
As it is with any agreement involving many different countries, the key will be in implementation and the speed of execution.
There is no doubt that some elements of the AfCFTA will erode member governments’ powers to design and implement national policies, in the process reducing the politicians’ powers to influence electoral results in their own countries.
There will have to be a willingness to lose in the short term in order for the continent to benefit through increased intra-Africa trade and bigger markets in the medium and long-term.
The continent will also have to make sure that the benefits are not only felt in bigger economies such as South Africa, Nigeria, Egypt, Angola and Kenya if it wants to avoid its own “Brexit” from some of the countries as the agreement matures.
This will require a careful balancing between opening markets up and protecting smaller players. At the end of the day, the AfCFTA’s success will boil down to political will, discipline in execution, and the active management of conflicts that arise as implementation continues.
Source: African Business Magazine

A CHINESE cement giant, Huaxin Cement Co. Limited is set to acquire Kenya's ARM Cement's Maweni Limestone Limited in Tanzania to open doors for the top global cement maker into the lucrative local cement industry.
The Chinese firm, among leading cement companies in China and reportedly among the top ten cement companies in the world in terms of capacity and revenues, has signed agreement to buy 100 per cent shares of the Maweni Limestone Limited for 116 million US dollars, subject to regulatory approval.
The agreement is expected to pave the way for the Huaxin immediate entry into one of the leading markets in East Africa which is integral to their broader strategy to expand its footprint across emerging markets, according to a statement issued yesterday.
"We are very pleased that we were able to sign this Agreement. Tanzania is an important cement market in East Africa and MLL's operations are important for our ambitions in this market," the Vice- President of Huaxin and Head of Huaxin's international business, Xu Gang, is quoted as saying in the statement.
"We are looking forward to improving MLL's competitive position in the Tanzanian market with a state-of-the-art operation, creating value for its customers, suppliers, employees and other stakeholders and contributing to the development of Tanzania."
A Joint Administrator for ARM Cement, George Weru, said the transaction marked a crucial step for the delivery of their mandate as Joint Administrators of ARM Cement to realize value for the creditors, ensure continuity for the business and its suppliers and in the process safeguard the jobs of its employees through a going concern sale.
Wuhan-based Huaxin was founded in 1907 and operates today more than 200 plants with annual capacities of 100 million tons of cement, 24 million cubic meters of concrete and 25 million tons of aggregates.
It has 17,000 employees and generated revenues of USD 4bn in 2018.
In recent years, Huaxin expanded into the emerging markets of Tajikistan and Cambodia and is currently expanding into Uzbekistan and Nepal with greenfield projects.
ARM Cement Limited, formerly Athi River Mining Limited, was placed under administration last year after failing to meet its creditor obligations.