Key Development Updates
AfCFTA to have short-term negative impact on tax revenue - World Bank
Anew report by the World Bank has said the African Continental Free Trade Area (AfCFTA) will have short-term negative impact on tax revenue of the countries who have signed up to the agreement that goes into operation on July 1, 2020. The report says the revenue shortfall will also be small for most countries.
The report, presented to African trade ministers and senior trade officials in Accra, Ghana, ahead of its official launch, says tariff revenues would decline by less than 1.5 per cent for most countries except for the DR Congo (3.4 per cent), Gambia (2.7 per cent), Republic of Congo (2.1 per cent), and Zambia (1.6 per cent).
An executive summary of the World Bank report states that total tax revenues would hardly decline by more than 0.3 per cent for most of the countries participating in AfCFTA.
World Bank explains that two factors account for the “small revenue impacts.” The first is that only a small share of tariff revenues come from imports from African countries: less than 10 per cent on average. The second reason is that exclusion lists can shield most tariff revenues from liberalization because these revenues are highly concentrated in a few tariff lines (1 per cent of tariff lines account for more than three-quarters of tariff revenues in almost all African countries).
“In the medium to long run, tariff revenues would grow by 3 per cent by 2035 relative to the baseline as imports rise and as tariff liberalization is accompanied by reduction of NTBs [Non-Tariff Barriers] and implementation of trade-facilitation measures,” the report states.
Facebook showcases key milestones in sub Saharan Africa in 2019
Facebook, the social media behemoth, has released information about the key milestones it attained in sub Saharan Africa (SSA) in 2019. In its ‘2019 Year in Review’ infographic report, Facebook showcased its commitment to giving people the power to build community and bringing the world closer together, and how that translated into significant support and investments in growing the ecosystem of developers, entrepreneurs, creatives, and other communities.
During the year, Facebook Africa said it trained over 7,000 woman-owned businesses in digital skills across SSA; celebrated 79 Community Leadership Circle meetups with over 2,650 participants; reached its 45th Developer Circle, with circles now in 17 African countries and representing more than 70,000 members; hosted the first-ever iD8 Nairobi Conference with over 400 African developers and startups in attendance; expanded Third-Party Fact-Checking to 10 African countries; and announced the creation of the world’s most detailed population density maps of Africa, created by Facebook AI researchers to help humanitarian aid and relief agencies, among other initiatives.
Eco currency may be adopted by 15 countries from launch in 2020
Anew West African currency, Eco, which is expected to be adopted by eight West African countries immediately at launch, is expected to roll out in 2020.
The eight Francophone West African countries to immediately adopt the new currency are Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo. All eight countries are members of the Economic Community of West African States (ECOWAS), and are already using the West African CFA franc common currency.
However, up to 15 West African and Central African countries are expected to soon adopt the Eco. Apart from the eight countries in the West African CFA franc zone that have indicated interest, Ghana has also expressed its desire to adopt the Eco. Six countries in the Central African CFA franc zone, namely Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon are also expected to adopt Eco.
Nigeria, ECOWAS’ biggest market, and, indeed, Africa’s largest economy, has been dubious about the replacement of the CFA franc with the Eco, which is a deviation from the original plan for the Eco to be the common currency of ECOWAS.
Global wave of debt is largest, fastest in 50 years
Debt in emerging and developing economies (EMDEs) climbed to a record US$55 trillion in 2018, marking an eight-year surge that has been the largest, fastest, and most broad-based in nearly five decades, according to a new World Bank Group study that urges policymakers to act promptly to strengthen their economic policies and make them less vulnerable to financial shocks.
The study found that the debt-to-GDP ratio of developing countries has climbed 54 percentage points to 168 per cent since the debt build-up began in 2010, and that the increase in debt was exceptionally broadbased, involving government as well as private debt, and observable in virtually all regions across the world.
According to the report, the prevalence of historically low global interest rates mitigates the risk of a crisis for now. But the record of the past 50 years highlights the dangers: Since 1970, about half of the 521 national episodes of rapid debt growth in developing countries have been accompanied by financial crises that significantly weakened per-capita income and investment.
“History shows that large debt surges often coincide with financial crises in developing countries, at great cost to the population,” said Ceyla Pazarbasioglu, the World Bank Group’s Vice President for Equitable Growth, Finance, and Institutions. “Policymakers should act promptly to enhance debt sustainability and reduce exposure to economic shocks.”
Under the circumstances, policymakers should develop mechanisms to facilitate debt resolution when it becomes necessary, according to the report, adding that greater debt transparency would also help.