Africa’s Output Grew by 3.4% in 2018, Afreximbank’s Africa Trade Report 2019 Shows

Africa’s output grew by 3.4 per cent between 2017 and 2018 despite the slowdown in global growth during that period, a new report by the African Export-Import Bank (Afreximbank) has shown.

The African Trade Report 2019: African Trade in a Digital World, launched today in Moscow during the 26th Afreximbank Annual Meetings, states that Africa’s total merchandise trade in 2018 had a value of over $997.9 billion, noting that the continent remained one of the fastest growing regions in the world.

World Trade Organisation estimates show that the volume of global merchandise trade grew by 3 per cent in 2018, down from 4.6 per cent in 2017.

According to The African Trade Report 2019, the findings highlight the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China and others. The resilience reflects the diversification of Africa’s trading partners in the context of South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation. These factors reduce Africa’s exposure to the business cycles associated with individual countries and regions.

The report noted that while the European Union remained Africa’s main continental trading partner in 2018 – accounting for 29.8 per cent of total trade – African trade with the South grew significantly over the last decade to account for more than 35 per cent of the continent’s total trade in 2018. China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 per cent of total African trade in 2018. Intra-African trade also increased steadily in 2018, growing by 17 per cent to reach $159 billion.

The report highlights that Africa has the potential to do more, noting that its contribution to global trade remains marginal at 2.6 per cent, up from 2.4 percent in 2017, and that, while intra-African trade rose to 16 per cent in 2018 from 5 percent in 1980, it remains low compared to intra-regional trade in Europe and Asia.

The report states that ongoing digitalisation is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.

The report urges African governments to further capitalise on the opportunities associated with digitalisation, by bolstering regulatory environments and supporting the development of digital ecosystems.

Digitalization, the reports states, can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy. It can also reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.

Prof. Benedict Oramah, President of Afreximbank, said: “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”

Chief Economist and author of the report, Dr Hippolyte Fofack said: “Intra-African trade, which grew by 17 per cent in 2018, more than three times the rate of growth of extra-African trade, was the major driver of Africa’s total merchandise trade in 2018.”

 

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Sources: [1], [2]. Image sources: [1], [2].

Nigerian President Grants 6-month Grace for Illegal Migrants to be Registered

The federal government has given irregular migrants six months to get themselves duly registered.

Illegal migrants in Nigeria have been given a period of six months to be accredited as permitted residents in the country by the Nigeria Immigration Service for e-registration as directed by President Muhammadu Buhari. The order was given by President Muhammadu Buhari, represented by Secretary to the Government of the Federation (SGF), Boss Mustapha, at the unveiling and commissioning of the Migrant ‘e-Registration and the Passport Data Processing Centres in Abuja on Friday, July 13.

President Buhari said that the registration process, which will be done without any sort of payment, is the federal government’s initiative targeted at capturing the data of citizens and migrants who reside in the country, Leadership reports. He also explained that the move will be instrumental to the government’s achievement of internal security and national development.

More to this, according to the president, is that while the Migrant e-Registration Centre will gather and store data of foreigners in the country, the Passport Application Processing Centre on the other hand will provide improved issuance of passport and eradicate criminality in compliance with the federal government’s Ease of Doing Business policy. Buhari said: “It is on this note therefore that I am declaring a six-month amnesty period for irregular migrants already in the country to submit themselves to the Nigeria Immigration Service for the purpose of this registration which will be carried out without any payment or penalties.”

He added that in line with the local content act, the federal government has approved a detailed passport reform to aid Nigeria’s identity management. He said: “I have directed that the production of passport be domesticated in Nigeria to build the capacity of indigenous firms and enable seamless service delivery.

This must be done with care so that the process is not interrupted.  “The federal government under my watch will continue to support MDAs that have programmes and projects that will add value to governance and enhance national security. Therefore, I see these two major projects as laudable, timely and in synergy with the aspirations of this administration.”

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

World Bank: Côte d’Ivoire’s Economic Outlook, and Why it’s Time to Produce Cocoa Inclusively and Responsibly

The World Bank ninth economic update for Côte d’Ivoire confirms the positive trends noted in the past year but qualifies this assessment because of several risk factors, in particular the uncertainty linked to the 2020 presidential elections.

The study also proposes approaches to modernize the cocoa sector, which is currently not inclusive or environmentally responsible. Below are the eight takeaways:

1. Overall, the economy is in good shape and is maintaining its lead in the region and on the continent

With a growth rate of 7.4% in 2018 and a projected rate of 7.2% in 2019, placing it slightly behind Ethiopia and ahead of Rwanda and Senegal, Côte d’Ivoire continues to be a leader in economic activity on the continent.

The prudent monetary policy of the Central Bank of West African States is expected to keep inflation in check (at roughly 0.3%). Facilitating this are, in particular, stable food prices, lower telecommunications prices, and a modest increase in fuel prices.

2. The economic landscape has changed, and the private sector is once again the main engine of growth

The private sector regained its momentum following a decline in 2016 and 2017, but did so in a very uneven manner. The agricultural sector slowed significantly, especially cocoa and cashew production, which increased by a mere 4% and 7% respectively in 2018, compared to 24% and 9% in 2017. These figures serve as a reminder of this sector’s vulnerability to climate shocks and terms of trade, which were less favorable in 2018.

Growth was, however, robust in the telecommunications, agribusiness, and construction sectors. Furthermore, enterprise investment was greater in 2018, no doubt as a result of the reforms aimed at improving the business climate and perhaps the desire to make investments ahead of the October 2020 presidential elections.

3. Private sector momentum offset the negative impact of the external sector on growth

Following an exceptionally favorable year in 2017, the current account deficit increased from 2.7% to 4.7% of GDP between 2017 and 2018, with the country’s trade flows, which are relatively undiversified, remaining exposed to price changes in a number of commodities (in particular cocoa and oil).

However, the increase in foreign direct investment (FDI), in particular in agribusiness, and the government issuance in March 2018 of international bonds worth over $2 billion comfortably financed this current account deficit.

4. The government deficit was reduced; the trade-off was major budget cuts and a decline in public investment

Between 2017 and 2018, the government deficit fell from 4.5% to 4% of GDP, a path on which the Government would like to continue in order to bring this figure to 3% in 2019, thus meeting the targets set by the West African Economic and Monetary Union (WAEMU). However, this adjustment was based solely on a reduction in public expenditure, in particular government investment, which has not supported the Ivorian economy as much as it did in the past.

Going forward, the Government intends to be more selective in terms of the quality of the projects in which it invests and to make the development of private sector partnerships a priority. It will also have to ensure that government debt is controlled, in particular commercial borrowing, including borrowing by public enterprises and government agencies.

5. The Government is not increasing its tax revenue

Tax revenue declined by 0.7% of GDP between 2012 and 2018, contrary to the trend seen in other countries of the region such as Senegal and Togo, which have the same taxation system. This decline is a consequence of the slowdown in the extractive sector, a tax policy aimed at counteracting the effect of international price changes in cocoa and oil on the local economy, and low VAT revenue.

Although several tax administration reforms to facilitate tax procedures and tax collection such as the introduction of digital platforms and the streamlining of certain procedures should ultimately boost tax revenue, the Government will have to increase VAT collection, as this revenue from domestic transactions is among the lowest in the world. If the authorities managed to collect as much VAT as Cameroon or Cabo Verde, Côte d’Ivoire would be able to increase its tax revenue by two percentage points of GDP.

6. Côte d’Ivoire is changing but its agricultural sector remains under-productive and insufficiently diversified

While agricultural activity is declining in Côte d’Ivoire, more than half of its residents continue to depend on a primary activity for their livelihood. However, agriculture has contributed a mere 1.2 percentage points of GDP growth (or 14%) since the country’s improved economic situation starting in 2012. While many factors account for this, they are rooted in the low yield of most food and cash crops and the failure to diversify and move toward higher value-added activities.

To address this, the Government has made the modernization of the agricultural sector a priority in its new national development strategy, in particular the cocoa sector, which mobilizes more than five million persons and is by far the country’s biggest foreign exchange earner.

7. The cocoa sector in Côte d’Ivoire faces social and environmental challenges

Côte d’Ivoire supplies 40% of the world’s cocoa but only receives between 5% and 7% of the profit generated by this sector globally. This profit is essentially concentrated in the processing and distribution phases. As a result, although this sector employs close to one million producers and provides income to one-fifth of the Ivorian population, it has not contributed much to the country’s wealth.

It is estimated that 54.9% of Ivorian cocoa producers and their families currently live below the poverty line. Added to this is the fact that in the past two decades, consumers have gained awareness of environmental and social issues and have become more demanding, following numerous investigations that have shed light on the negative role played by cocoa production in terms of deforestation as well as child labor, which is often performed under extremely difficult working conditions on the cocoa plantations.

8. Three approaches to make the cocoa sector in Côte d’Ivoire more inclusive and responsible

To transform its cocoa sector, Côte d’Ivoire would first have to carry out a technological revolution to increase yield in order to promote reforestation and boost producer income. Traceability systems would then have to be instituted to offer consumers a guarantee of responsible cocoa production. Lastly, the sector would have to develop the local cocoa processing industry to meet local demand, design a label of origin that is more attractive to consumers, and take advantage of demand growth in Asia for intermediate products.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Clem Onojeghuo [1], [2].

Google Plans to Build Equiano, a Subsea Cable from Portugal to South Africa

Google will build a new undersea cable from Portugal to South Africa, which promises to bring superfast internet to local shores. The new cable will use state-of-the-art infrastructure based on space-division multiplexing (SDM) technology. SDM transmits information along parallel channels.

This will deliver approximately 20 times more network capacity than the last cable built to South Africa, Google said in a statement. “(It) will be the first subsea cable to incorporate optical switching at the fiber-pair level, rather than the traditional approach of wavelength-level switching.”

This greatly simplifies the allocation of cable capacity, giving Google the flexibility to add and reallocate it in different locations as needed. The new cable, which will be fully funded by Google, is expected to be operational in South Africa by 2021.

A contract to build the cable was signed with Alcatel Submarine Networks at the end of last year. South Africa has access to various undersea cables. Along the eastern Africa coastline, there are the Seacom cable built in 2009 and the SAT-3/SAFE (South Africa Far East cable) which is older. The WACS (West Africa Cable System), supported by MTN, was completed in 2012.

Recently, the Wall Street Journal reported on Facebook’s plans to build an underwater data cable that would encircle Africa. The group wants to lower data costs, and hopes to sign up more users in the process. The project is apparently named Simba, after “The Lion King”. Google’s new cable will be called “Equiano”, named for Olaudah Equiano, a Nigerian-born writer and abolitionist who was enslaved as a boy,

In the second phase of the project, the cable will be extended to Nigeria. Google says it is “looking forward to working with licensed partners to bring Equiano’s capacity to even more countries across the African continent”. While Google has only funded two other undersea cables, it has partnered with others on more than a dozen projects.

For more information from Google, click here. You can view the planned route for Equiano in the first image below, and all of Google’s subsea cable investments in the second image.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Cape Town to Newark, New Jersey Direct Flight Coming in December 2019

A new direct route between Cape Town and Newark, New Jersey, USA will be taking to the skies in December.

The seasonal route will be operated by United Airlines – their only route to Africa after they ended their Nigerian route a few years ago – and will operate between Cape Town International Airport and Newark Liberty International from 15 December 2019.

It will be a three-times-weekly service on Sunday, Wednesday and Friday from Newark, departing at 20:30 and arriving in Cape Town the next day at 18:00, and will depart again at 20:50 and arrive in Newark at 5:45. The flights will be serviced by a Boeing 787-9 Dreamliner.

It will cut travel time by eight hours for a round trip flight.

This is just another feather in the cap for the Cape Town Air Access team, making this their 15th new direct route since they started in 2015. According to Wesgro CEO Tim Harris, the new route is projected to bring in R425 million in direct tourism spending to the province by 2021, and R238 million in the first year of operation.

“By expanding air connectivity, we can expand opportunities for people, especially youth,” said David Maynier, Western Cape Minister for Finance and Economic Opportunities, at the launch.

It’s also expected to grow the US market by 20%, create 890 new jobs in the province in the first year and drastically increase cargo capacity between the two countries.

“We are grateful for the work done by our partners, especially the direct air access team,” lauded the city’s mayor Dan Plato.

“We see Cape Town, South Africa, as the gateway to Africa, and we have a lot to offer to the rest of the world.”

Why a direct route to Newark?

Americans are the third largest source market for tourists in Western Cape, after the UK and Germany, and while there has only been a 2% increase in passengers between 2017 and 2018, Business Class passengers grew by 19% in that same period.

Despite these numbers, New York (which is fed by Newark Liberty International) is one of Cape Town’s most under-served markets, followed by Brussels and Hamburg. Harris also noted that US travelers are also not beholden to seasonal travel – their numbers remain quite consistent throughout the year, even in the off-peak seasons when the city becomes a bit chilly.

And not only will a direct route boost tourism numbers, it will also boost trade exports and imports. Western Cape sells more to the US than it imports, and the US is its third biggest export market. The top six exports from the province to the US are products of iron or non-alloy steel, jewelry of precious metal, engine parts, citrus fruit, wine and yachts.

There will be a push to turn the seasonal route into a year-long route, but this is dependent on regular two-way traffic between the two countries. While marketing the US as a leisure destination to South Africans with the weak rand might be tough, the focus from SA Tourism’s side will instead be on the lucrative business travel sector.

Another point made by Harris was that the success of the air access program is the public-private partnership involved in route development, something that is unique in the world.

“We are competing with thousands of destinations around the world.”

“It is important to know what’s happening in the business sector when meeting with airlines, which is why you need a collaborative approach.”

What it means for South Africa

But the benefits won’t only be reaped by Western Cape.

For SA Tourism’s acting CEO Sthembiso Dlamini, direct air access is the best way to grow brand awareness of a country.

“Air access is very important in the business of tourism, which is a key economic growth factor for South Africa,” said Dlamini at the launch.

SA Tourism has plans and campaigns in place on the ground to drive traffic for the December launch.

“One of the key barriers to travel to South Africa is that it is too costly to get here from an airline’s point of view. So the first interaction a tourist or potential traveller has with a destination is through an airline ticket.”

“A lot of people say ‘you are not affordable’, but these issues are around perception. When you look at the currency or exchange rate, you get a lot of value for experiences using the dollar in South Africa.”

Other barriers highlighted by Dlamini are the appeal of other destinations over South Africa, concerns for personal safety and uncertain political climate – but these are, again, all an issue of perception according to Dlamini.

International visitors to SA saw a marked decrease of 1.3% between January and April 2019 compared to last year, while the domestic market saw an increase. SA Tourism plans to capitalize on this by reviving the ‘We Do Tourism’ campaign this year and getting corporates that aren’t necessarily in the tourism sector involved.

“We want to ensure that South Africans understand the value of tourism and the role that they need to play in ensuring that this sector grows,” says Dlamini.

While the US market saw a growth between 2016 and 2018 of 4.5%, major market China saw a 9% decline, which Dlamini claims is partly because the Chinese traveler doesn’t like layovers and want to fly direct.

She also noted that forward bookings were down for January almost 10%, as the peak booking period for this time took place during the drought crisis in Cape Town.

Besides the national markets, SA Tourism also wants to focus on special interest groups, LGBTQ+ travelers, repeat travelers, Millennials, and the meetings, conferences, and events sector.

Most US visitors travel to Western Cape, Gauteng and Mpumalanga, with traction seen in Limpopo, KwaZulu-Natal and Eastern Cape. SA Tourism will put their effort into showcasing those showing growth like the last three.

“We must look at what are the new products and experiences that we can start packaging so that South Africa presents a variety of products that people are looking for.”

SA Tourism’s plan of action is to “create desire through giving the traveler a vivid sense of the real South Africa before they visit” and “build confidence through giving access to real information that excites people about the country and dispels concerns”. For the US – and Canada – they want to market South Africa as an “ultimate adventure destination”.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Nicolas Jehly [1], [2].