Africa Business in Brief – 02 FEB 2020

Africa

Africa-Europe Alliance: four new financial guarantees worth EUR216-million

The European Commission signed today four guarantee agreements worth EUR216-million that will help unlock EUR2-billion to invest in renewables, urban infrastructure and start-ups in Africa and the Neighbourhood. The guarantees were signed with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the German KfW Group and the Spanish development cooperation agency, Agencia Española de Cooperación Internacional para el Desarrollo (AECID), at the 4th Strategic Board meeting of the External Investment Plan (EIP). These guarantees will significantly boost investment in renewable energy and increase access to finance for small businesses (MSMEs), while also improving investment in urban infrastructure and services in sub-Saharan Africa and in the European Union Neighbourhood.

Source: Africa Energy Portal

Africa

Trade integration, export patterns, and growth in sub-Saharan Africa

This paper examines systematically the growth effects of trade integration in sub-Saharan Africa. It complements and improves upon the empirical literature in two aspects: first, it jointly estimates the impact of different dimensions of trade integration, namely, trade volumes, export/trade patterns by product (primary and manufacturing goods), and by destination (inter- and intra-regional). Second, it estimates the impact of trade integration on economic growth and its sources, that is, capital accumulation and total factor productivity growth. The analysis finds causal evidence that trade integration fosters growth. Additionally, manufacturing trade boosts growth and trade in primary goods hampers growth. Doubling the manufacturing trade share in sub-Saharan Africa’s gross domestic product would increase growth by 1.9 percentage points per year, while increases in primary trade reduce growth by 1 percentage point. This impact is mainly transmitted through lower capital accumulation. Finally, inter- and intra-regional trade have a positive impact on growth in sub-Saharan Africa. Doubling inter-regional trade will increase growth by 1.9 percentage points, and the same increase for intra-regional trade enhances growth by 0.6 percentage points. The effects of inter-regional trade are transmitted primarily through capital accumulation, while those of intra-regional trade are channeled through enhanced total factor productivity growth.

Source: World Bank Group

Benin

Benin introduces VAT exemption on imports of PV panels

The Beninese government has included in the 2020 finance law a measure to exempt the imports of solar panels from the payment of the value added tax (VAT). According to the Off-Grid Clean Energy Facility (OCEF), a public entity aiming to increase access to electricity […]

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