Fellow SADC Citizens

It has been 40 years since our Organization was established in Lusaka, Zambia, in 1980; and exactly 28 years since the transformation of the Southern African Development Coordination Conference (SADCC) into the Southern African Development Community (SADC) in Windhoek, Namibia, in 1992. I, therefore, would like, as Chair of SADC, to extend warm greetings and congratulations to all SADC citizens on this Special Day for our Community. In the same vein, I take the opportunity to pay a well-deserved tribute to our Founding Fathers, who took the historic stride to form this noble Organization in order to serve as the vanguard of our aspirations for freedom, unity and solidarity. Indeed, without their vision and solidarity this day would have not been possible.

It is unfortunate that, today, not many of our Founding Fathers are still alive. In September last year, we lost one of our few remaining Founding Fathers of this Community, the Late Comrade Robert Mugabe, former President of the Republic of Zimbabwe. Once again, on behalf of the SADC, I extend my most sincere condolences to the Government and People of the Republic of Zimbabwe for this great loss. In this connection, I would like to take this opportunity to inform you that, this year, on 14th October, Tanzania will mark 21 years since the demise of yet another Founding Father of this Organization, who was also the Father of our Nation, the Late Mwalimu Julius Kambarage Nyerere; and on the 13th April 2022, we will celebrate the centenary of his birth.

We, therefore, invite all Member States and all well-wishers to join us in remembering Mwalimu Nyerere and celebrating his legacy. Needless to say, the late Baba wa Taifa was a true son of Africa who left a formidable legacy not only for our region but also the continent in general.

Fellow SADC Citizens,

SADC has come a long way since its inception in 1980. In this respect, it is heartening to note that, over the past four decades, our Organization has recorded some important milestones in different areas of cooperation: from peace and security, to infrastructure development, trade and industry, agriculture and food security, health, education, gender and youth empowerment. Indeed, our region is now, more than ever, enjoying unparalleled peace and security compared to any other regions on the continent; intra-regional trade is increasing, extreme poverty is declining, income is rising and the level of our international competitiveness has been enhanced.

I, therefore, take the opportunity to commend the efforts by our Founding Fathers, as well as the hard work of successive generations of leadership of our Community for achieving these important milestones. That said, however, we should always guard against complacency since much still needs to be done in order to realise our Founding Fathers’ dream and vision.

Fellow SADC Citizens,

On the 17th August 2019, I assumed the Chairmanship of our Organization. It has been a very exciting year and yet a very difficult one. As you are all aware, over the past 8 months, the world has been facing an acute and unprecedented health and economic crisis caused by the COVID-19 pandemic. In this regard, I wish to take this opportunity to extend my deepest condolences to those who have lost loved ones; and I wish a speedy recovery to those afflicted by the disease. Similarly, I would like to pay tribute to all SADC Member States for taking appropriate measures to fight this disease.

Indeed, thanks to our combined efforts, we have been able not only to reduce the impact caused by this pandemic, but also to be able to continue implementing our regional programmes and projects, including our theme for the past one year, which was ”A Conducive Environment for Inclusive and Sustainable Industrial Development, increased intra-regional trade, and job creation”. All Member States have continued to implement regional programmes and projects in line with the theme; and the results have been outstanding. Additionally, we have continued to implement our Regional Indicative Strategic Development Plan (RISDP), which ends this year; 2020; and also embarked on developing the new one for the next 30 years, which was anchored on “the SADC We Want”. This has shown how committed our region is in fulfilling its integration agenda. In this regard, going forward, I call upon all SADC Member States to continue to work together not only in addressing the COVID-19 impacts but also in preparing the post-pandemic situation of our Community. This, I believe, would be a nobler way to celebrate this SADC Day.

I wish you a happy, healthy and productive SADC Day.

Long live SADC.
Long live our Unity.
Long live our Solidarity.
Asanteni sana.

The 40th SADC Summit set for 17 August is expected to receive and deliberate on a new Vision 2050 and an accompanying development blueprint that will provide strategic direction for the region and outline a phased approach to implementation of regional programmes and activities over the next 10 years.

The draft SADC Vision 2050 and Regional Indicative Strategic Development Plan (RISDP) 2020-30 were presented for approval to the SADC Council of Ministers, which was held via video conferencing on 13 August and was chaired by Mozambican Minister of Foreign Affairs and Cooperation, Verónica Dlhovo.

The Vision 2050 sets out the long-term aspirations of SADC over the next 30 years while the RISDP 2020-30 outlines the proposed development trajectory for the region until 2030. The 10-year strategic plan is informed by the aspirations as set out in the long-term vision.

Under the draft Vision 2050, the region is expected to have five aspirations:

• Creation of a conducive environment to foster regional cooperation and integration and uphold fair/free movement of goods, people or labour, capital and services;

• Accelerated mobilisation of resources from within the region and external sources to fast-track the implementation of SADC policies and programmes, and a shift away from the current reliance on International Cooperating Partners towards a more diversified approach that is better integrated and complementary;

• Improved implementation of SADC policies and programmes through the effective realisation of roles and responsibilities undertaken by various actors and entities through institutional reforms at the levels of the SADC Secretariat, SADC National Committees and National Contact Points;

• Strengthened compliance by Member States through the implementation of effective compliance monitoring and assurance mechanisms to track progress in implementation of SADC programmes and compliance to Protocols and legal instruments. This will require regular review of the SADC RISDP 2020-30 to allow the effective and authentic application of variable geometry, facilitate active learning and the leveraging of relevant and emerging technologies; and

• Strengthening of visibility and awareness programmes as a means to trigger and maintain the interest, awareness and participation of the SADC citizenry and Member State officials responsible for driving the regional integration agenda.

Both the draft SADC Vision 2050 and RISDP 2020-30 envision a peaceful, middle- to high-income industrialised region, where all citizens enjoy sustainable economic well-being, justice and freedom.

The vision seeks to consolidate the Community by leveraging areas of excellence and implementing priorities to achieve sustainable and inclusive socio-economic development underpinned by good governance and durable peace and security in the region.

According to the draft vision, SADC Member States “commit to upholding the core principles of the Community, namely: the sovereign equality of all Member States; solidarity, peace and security; human rights, democracy and the rule of law; equity, balance and mutual benefit; and the peaceful settlement of disputes.”

The vision seeks the removal of all barriers to deeper regional integration, guided by the objectives and principles of the SADC Treaty and Common Agenda.

Both the Vision 2050 and RISDP 2020-30 are based on a firm foundation of Peace, Security and Democratic Governance and is premised on the three pillars of Industrial Development and Market Integration; Infrastructure Development in Support of Regional Integration; and Social and Human Capital Development.

Crosscutting issues such as Gender, Youth, Climate Change and Disaster Risk Management are considered an important component of the vision and its accompanying 10-year strategic plan.

In building the foundation for Peace, Security and Democratic Governance, SADC envisions to remain a peaceful and stable region, which is seen as a necessary condition for ensuring the attainment of the objectives of socio-economic development, poverty eradication, and regional integration by 2050.

This is expected to be achieved, among other things, through the strengthening of the regional early warning systems as well as conflict prevention, management, and resolution mechanisms to enable the region to track and monitor political, security and socio-economic threats before they become serious problems.

It is envisaged that by 2050 SADC would have strengthened its collective defence and security system that is capable of safeguarding the territorial integrity of the region.

Under the Industrial Development and Market Integration pillar, the vision is for SADC to be an industrialised and integrated region where citizens equitably benefit from the opportunities of a stable regional market.

By 2050, SADC undertakes to have an industrialised regional economy that is based on a competitive and facilitative environment, which includes robust infrastructure, skills development and the promotion of science, technology and innovation to ensure the sustainable exploitation of natural resources.

It is envisaged that by 2050 the SADC agricultural sector would have been transformed through mechanisation and other mechanisms in order to contribute to the sustainable management of the environment and natural resources.

The agricultural sector is regarded as an engine for socio-economic development in most SADC Member States, hence the drive towards deeper cooperation and collaboration to boost production and address food insecurity.

The draft SADC Vision 2050 and RISDP 2020-30 also envisage interconnected, integrated competitive blue and green economies that will be sustainably developed for the benefit of all SADC citizens.

Deepened regional market integration will be developed, together with deepened financial market integration, monetary cooperation and investment, as well as enhanced macroeconomic stability and convergence.

On the second pillar of Infrastructure Development in Support of Regional Integration, the target is that, by 2050, SADC would have efficient and effective cross-border infrastructure apparatus, services and networks to support and facilitate deeper regional integration and reduce or avoid transboundary conflicts.

The region envisions integrated and quality seamless infrastructure and networks, including improved capacity for construction, maintenance and operation of affordable regional infrastructure and services.

Under the third pillar of Social and Human Capital Development, SADC wants, by 2050, to have a high quality of life in which the citizens are well educated and enjoy long, healthy and productive lives that reinforce the link between economic growth and sustainable human development in order to end poverty in all its forms.

This strong and inclusive human capital base is expected to enable SADC citizens to play a pivotal role in socio-economic development through enhanced productivity.

Under this pillar, SADC seeks to strengthen and harmonised regional health systems for the provision of standardised and accessible health services to all citizens, improved food and nutrition security for the socio-economic wellbeing of people in the region.

In addition, the vision seeks increased access by SADC citizens to quality and relevant education and skills development, including in science and technology, and increased job creation with decent work opportunities for full and productive employment in the region.

Regarding the crosscutting issues of Gender, Youth and Climate Change, the vision is that, by 2050, SADC would be a community where citizens are treated equally, regardless of their gender, and where the youth are empowered.

SADC undertakes intensify gender equality, the empowerment and development of women, while there will be a robust and responsive regional statistical system to underpin regional integration processes, including measurement of progress and impact, by 2050.

The target is also to aim for improved youth empowerment and participation of young people in all aspects of social and economic development as well as strengthened climate change resilience and disaster risk management.

The decision to develop the SADC Vision 2050 was approved during an extraordinary Summit of the SADC Heads of State and Government in June 2012 in Luanda, Angola.

The summit decided that the Vision 2050 should be predicated upon the existing SADC vision, which is that “of a common future in a regional community that will ensure economic well-being, improvement of the standards of living and quality of life, freedom and social justice, and peace and security for the peoples of Southern Africa”.

In August 2018, the Council of Ministers directed the Secretariat to align the SADC Vision 2050 to the post-2020 development agenda since the Revised RISDP is expected to come to an end in December 2020.

Since the advent of the Covid-19 pandemic, the AU Commission, like most intergovernmental organisations around the world, has shifted most of its activities online.

In this context, the Commission believes that for the current AfCFTA operationalisation timeline of 1st January 2021 to be met, and the decision of African Leaders on the fast-tracking of processes leading to the commencement of trading to be implemented, outstanding AfCFTA negotiations must move online too. AU member states have outlined a number of concerns regarding the use of virtual systems, especially regarding infrastructure reliability, security and confidentiality.

In this regard, the African Union Commission has received with open hands many offers of support to help address these concerns that have come from the continental private sector, notably the African Virtual Trade-Diplomacy Platform (AVDP), itself a part of the broader AVRIVA (African Virtual Resilient-Integration for a Vibrant Africa) framework being developed as a public-private initiative between the African Union Commission and the over two dozen major multinational African corporations and pan-African institutions operating under the umbrella of the AfroChampions Initiative.

The AVDP and the AVRIVA concept aim to rally support towards a campaign to keep the AfCFTA on track using technology by enabling Member States to participate effectively and securely in the outstanding negotiations of the AfCFTA. This will help to ensure that African countries are able to meet the new date for the start of trading under the AfCFTA of 1st January 2021 as set by African Heads of State and Government, who are strongly committed to getting the AfCFTA agenda back on track after the postponement of the start of trading initially set for 1 July 2020. This is also bearing in mind that all analyses and studies confirm that the AfCFTA represents Africa’s best insurance policy and strategy to recover from the Covid-19 pandemic.

To ensure that Member States’ outstanding concerns about the security and reliability of the pro-integration digital platforms are addressed through the AVDP initiative, the Commission constituted a high-level committee of experts, including representatives from Member States, relevant Departments and Directorates of the AU Commission and security and Information technology specialists from the African private sector, to examine all aspects of the matter and present comprehensive guidance and advice to the Senior Trade Officials of Member States tasked with the AfCFTA program.

The concerns about the timely commencement of AfCFTA trading come at a time when countries all over Africa are getting ready to reopen their borders and economies, and a coordinated and harmonised effort is therefore urgently required to prevent confusion in the integration agenda. Here too, the Commission is hopeful that digital technologies can play a very powerful role in driving positive cooperation among Member States for a safe, smart and harmonised reopening process. In this regard, the mandate of the High-level Expert Committee is being broadened to include a review of the various options available to Member States, including digital solutions, which could be used to roll out trade under the AfCFTA on 1st January 2021.

Critical amongst these emerging digital solutions are:

• The establishment of a Pan-African technology platform to enable citizens of African countries to travel across borders (based on technical input from Koldchain BioCordon, the draft DABBIT protocol, and the latter’s reference archetype, PanaBIOS), as well as digitisation of the biosurveillance and bioscreening protocols of the Africa Centres for Disease Control & Prevention (Africa CDC), which are being developed as part of the AU Open Corridor Initiative;

• The design and deployment of a technology framework for aligning e-commerce and e-trading platforms, such as African Medical Supplies Platform (AMSP) developed by the Africa CDC, the “AfCFTA number” concept based on the draft TribeID protocol, and the African e-commerce platform Sokokuu promoted by AeTrade Group, with the needs of AfCFTA; and

• A broad initiative to enhance cybersecurity in multilateral affairs on the continent.

The recommendations of the High-level Expert Committee, which is being expanded to include other key stakeholders with in-depth expertise in digital solutions and wide knowledge of the African technology terrain will be submitted to Senior Trade Officials for consideration when they meet on 15 September 2020 ahead of full endorsement by the AU Member States during the upcoming meeting of African Ministers of Trade on 30 September 2020 to sustain the political commitment to the use of these solutions trans-continentally.

The Council of Ministers of the Southern African Development Community (SADC) held its virtual meeting on 13 August, 2020 with a call for strong and coordinated measures for the region to address the impact of COVID-19 which threatens to reverse the gains made in regional development and integration.

During the meeting Hon. Verónica Nataniel Macamo Dlhovo, Minister of Foreign Affairs and Cooperation of the Republic of Mozambique took over the Chairpersonship of the SADC Council of Minister from Hon. Prof. Palamagamba John Kabudi, Minister of Foreign Affairs and East African Cooperation of the United Republic of Tanzania.

In his remarks, Outgoing Chairperson of Council, Hon. Prof. Kabudi said the multiple hazards such as COVID-19 have highlighted the importance of regional cooperation and coordinated response, as well as the need to come up with innovative mechanisms to strengthen resilience, preparedness and responsiveness for disasters including pandemics, epidemics and related hazards.

He said, through collective resolve in response to the COVID-19 pandemic, SADC was able to promote intra-trade in the region and beyond by developing Regional Guidelines on Harmonisation and Facilitation of Cross Border Transport of Goods across the Region, leading to a seamless flow of trade in the region and mitigating the negative health impacts of the pandemic.

Hon. Prof. Kabudi said under the leadership of the United Republic of Tanzania, SADC finalised the formulation of the Post 2020 Agenda, culminating in the draft SADC Vision 2050 and Regional Indicative Strategic Development Plan (RISDP) 2020-2030 Blueprints which are aimed at providing strategic direction to advance the SADC regional integration agenda.

In her acceptance speech, Hon. Verónica Nataniel Macamo Dlhovo, commended the Outgoing Council Chairperson for the steering the work of Council and for the achievements that SADC has made under his leadership notwithstanding the COVID-19 pandemic. She pledged the commitment of the Republic of Mozambique to strengthening political and economic integration, by promoting inclusive and sustainable economic growth, industrialization, trade and investment agenda.

Hon. Dlhovo called for a coordinated and collective action to contain terrorism and other security threats to ensure sustained peace and security in the region in keeping with the 40th Summit theme: 40 Years Building Peace and Security, and Promoting Development and Resilience in the Face of Global Challenges.

The Executive Secretary of SADC, H.E. Dr Stergomena Lawrence Tax thanked the Outgoing Chairperson of Council for his wisdom, guidance and dedication to the SADC development and integration agenda, which enabled business continuity and attainment of a number of milestones, despite the severe challenges associated with the prevailing COVID-19 pandemic. H.E. Dr Tax assured the new Chairperson of Council of the Secretariat’s unwavering support in driving the SADC agenda during her tenure.

On the COVID-19 pandemic, H.E Dr Tax commended SADC Member States for the decisions and the rigorous measures put in place to mitigate the spread of the COVID-19, reduce human suffering, and minimize the damage to SADC economies. She encouraged SADC citizens to remain vigilant and comply with preventive measures and expressed the commitment of the SADC Secretariat to continue being innovative in adapting to the demands of a dynamic global environment.

H.E. Dr Tax added that, as part of the SADC Regional Response to COVID-19, the region resolved to enhance regional pharmaceutical manufacturing capacities, whereby Member States are encouraged to develop local and regional pharmaceutical manufacturing capacities that are safe and uphold highest standards of integrity.

The SADC Executive Secretary highlighted that the adoption of SADC Guidelines on Movement of Goods and Services across the region during COVID-19, and Standard Operating Procedures have greatly facilitated movement of essential goods and contributed not only to the containment of COVID-19, but also enabled the mitigation of socio-economic hardships to SADC citizens, while minimizing disruptions to economic activities in the region.

The Council of Ministers meeting was held ahead of the Summit of SADC Heads of State and Government scheduled for 17th August, 2020, where His Excellency Filipe Jacinto Nyusi, President of the Republic of Mozambique will take over the Chairpersonship of SADC from His Excellency Dr John Pombe Joseph Magufuli, President of the United Republic of Tanzania.

According to Article 11 of the SADC Treaty, the Council of Ministers is responsible for, among others, overseeing the functioning and development of SADC, approving policies, strategies and programmes of SADC as well as advising the Summit of Heads of State and Government on matters of overall policy.

The  Country Policy and Institutional Assessment (CPIA) for Africa is an annual diagnostic tool for Sub-Saharan African countries eligible for International Development Association (IDA) financing.

Covering the year from January to December 2019, the report measures the countries’ quality of policies and institutional frameworks, and their ability to support sustainable growth and poverty reduction. The report provides scores for 16 criteria for each country and an overall regional score on a scale of 1 (lowest) to 6 (highest), in four areas: economic management, structural policies, social inclusion and equity policies, and public sector management and institutions. 

The score informs governments of the impact of the country’s efforts to support favorable growth and poverty reduction. It also helps determine the size of the World Bank’s concessional lending and grants to low-income Sub-Saharan African countries. The 2019 CPIA includes 39 IDA-eligible countries, one more than in 2018 with the addition of Somalia, which is now eligible for IDA financing after 30 years.  

The 2019 CPIA scores also provides a view of the policies and institutions at the outset of the COVID-19 pandemic, highlighting the need for the region’s IDA countries to take action to strengthen health systems, protect human capital, strengthen public sector governance and implement structural reforms to boost productivity.  

Here are the top five highlights from the 2019 Africa CPIA: 

Rwanda leads CPIA rankings; score remains unchanged for three years

The overall CPIA score for the 39 IDA countries was 3.1, which has remained the same since 2016. Rwanda remained at the top of the ranking with an overall score of 4.0, which has also been the same since 2016, underscoring the need for IDA countries to implement economic and institutional reforms consistently. The highest scoring countries also stayed the same, including Cabo Verde, with an overall score of 3.8, followed by Kenya, Senegal and Uganda with overall scores of 3.7. Benin and Ghana saw their overall scores increase from 3.5 to 3.6. These high-ranking countries on the CPIA scale also have economies that are among the fastest growing in the region. Fifteen of the 39 countries, consisting predominantly of fragile countries, scored below the regional average.  

Overall CPIA Scores of Sub-Saharan African Countries (IDA), 2019

There is a need to strengthen health systems

The region’s IDA countries entered the COVID-19 pandemic with significant vulnerabilities to the management of a health emergency, reflected in low health coverage, inadequate government spending on health, and elevated out-of-pocket health payments by citizens. Overall, countries in Sub-Saharan Africa have severe weaknesses in their ability to prevent, detect, and respond to health emergencies. They also display severe gaps in health care systems, such as health care capacity in clinics and hospitals, medical personnel deployment, access to health care and infection control practices. 

Global Health Security Index, 2019

The importance of protecting human capital

The COVID-19 pandemic is likely to impact human capital including through disruptions in the provision of essential non-pandemic health services, income shocks, and mandatory school closures. In many health systems in the region’s IDA countries, the fight against the COVID-19 pandemic is expected to shift resources away from other essential health services due to their limited fiscal space, while in most countries lockdowns have led to loss of income for poor families without formal jobs and employment-based social protection, and school closures. Child mortality could rise due to the disruption of maternal and child health services.

Data suggest that, across the Africa region, about 252 million learners have been affected by COVID-19-driven school closures, which are likely to worsen learning outcomes. These disruptions to essential health and education services threaten the ability of IDA countries in the region to build the human capital they need for their development. By protecting human capital now, IDA countries in the region will be able to recover and sustain growth post COVID-19. This highlights the need for government policies to support vulnerable households, protect livelihoods, ensure access to education, and strengthen digital connectivity.

Human Capital Index, 2018

Gains in fiscal policy and debt management, but elevated debt vulnerabilities

The CPIA is made up of 16 criteria grouped into four clusters: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions. The average scores for the economic management (cluster A) remained unchanged from last year, reflecting gains in fiscal policy and debt management in several countries. Under Cluster A measures, the average fiscal policy score stayed at 3.0, signaling a stabilizing trend. Debt policy and management scores had been trending downward, but steadied in 2019. In many countries, medium-term debt strategies were adopted and implementation capacity increased, strengthening debt management functions. Nevertheless, debt vulnerabilities remained elevated, with many countries at high risk of debt distress. Inconsistencies between monetary policy frameworks and price stability goals contributed to a decrease in average monetary and exchange rate scores. 

Additionally, the average scores for the other clusters decreased. Due to a decline in the quality of the trade policy framework and further weakening of the financial sector in several countries, average scores for structural policies (Cluster B) decreased after remaining steady for several years. In social inclusion (cluster C), the decrease reflected weaker performance on human capital development, especially in the quality of health services. Public sector management and institutions (cluster D) scores, which had been lagging behind all other clusters, further decreased in 2019, as the efficiency of revenue mobilization and quality of public administration deteriorated in many countries.  

Decreasing Trends in CPIA Cluster Scores

Fragile countries continued to lag behind non-fragile countries across every cluster

The gap between fragile and non-fragile countries was particularly large in economic management and structural policies. In economic management, fragile countries lagged non-fragile countries on the quality of their monetary and exchange rate policies and debt management frameworks. On the structural policies cluster, the difference in scores was largest on the trade criterion. Fragile countries’ scores were also notably weaker on gender equality and property rights, and rule-based governance.

Figure 25: CPIA Scores, by Country Group and Cluster, 2019

The WTO Secretariat has published a new information note warning of possible increases to trade costs due to COVID-19 disruptions. The note examines the pandemic’s impact on key components of trade costs, particularly those relating to travel and transport, trade policy, uncertainty, and identifies areas where higher costs may persist even after the pandemic is contained.

The note estimates that travel and transport costs account for as much as a third of trade costs depending on the sector. Pandemic-related travel restrictions are therefore likely to affect trade costs for as long as they remain in place. For example, global air cargo capacity shrank by 24.6 per cent in March 2020, as passenger flights account for around half of air cargo volumes. The resulting increase in air freight prices is likely to subside only with a rebound in passenger transport, according to the report. While sea and land transport have not faced comparable shocks, maritime transport has seen a decrease in numbers of sailings, while international land transport has been affected by border closures, sanitary measures and detours. Moreover, business travel, which is important for maintaining trading relationships and managing global value chains, in addition to being a significant economic activity in its own right, is being disrupted. The quality of information and communications technology (ICT) infrastructure and digital preparedness will be important in determining how well economies can cope.

Trade policy barriers and regulatory differences are estimated to account for at least 10 per cent of trade costs in all sectors. They include tariff and non-tariff measures, temporary trade barriers, regulatory differences and the costs of crossing borders, as well as other policies that impact trade, such as a lack of investment facilitation or of intellectual property protection. The report notes that while COVID-19 has motivated both trade-restricting and import-facilitating changes in tariffs and regulatory practices, these measures have so far affected only a small subset of products. A crisis-induced shift towards the digitalization of customs and regulatory procedures to reduce physical contact could potentially lower the associated trade costs in the long-term.

The report also points to uncertainty as a factor that magnifies the impact of existing trade-related costs, weighing on trade finance flows and dampening the appetite of businesses to invest in researching new markets, acquiring language skills and prospective partners, and conforming with foreign standards. It  notes that in the first quarter of 2020, a widely used measure for the global level of uncertainty registered levels 60 per cent higher than those triggered by the Iraq War and the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003. In mid-March, a separate index of financial market volatility came close to highs last seen in 2008 after the failure of Lehman Brothers.

Looking ahead, the report notes that many governments have implemented measures to mitigate pandemic-related disruptions to economic activity, for instance by exempting certain transport crew from travel restrictions, or by enhancing the quality of and the access to ICT. While many of the changes in trade costs can be expected to revert once the pandemic is brought under control, the report observes that some effects may persist. For example, aviation industry consolidation and shifts in passenger appetite for air travel could lead to higher air transport costs. In addition, government policy choices – which could either reduce or increase trade policy uncertainty – will be important in shaping uncertainty-related trade costs in the future.

Key points

• Travel restrictions and border closures have been an important part of the initial policy response to the COVID-19 pandemic, and these measures have directly affected trade in goods and services. They have disrupted freight transport, business travel and the supply of services that rely on the presence of individuals abroad. Transport and travel costs constitute an important part of trade costs, and, depending on the sector, are estimated to account for 15 to 31 per cent. Travel restrictions are therefore likely to account for a substantial increase in trade costs for as long as they remain in place.

• Freight transport service performance is crucial to trade costs in manufacturing. Since the beginning of the COVID-19 crisis, maritime and land transport have remained largely functional, although they have registered sometimes considerable delays, but air freight transport has been severely disrupted, with global air cargo capacity shrinking by 24.6 per cent in March 2020. Many governments are trying to do as much as possible to keep trade flowing, but in some regions, travel restrictions have the potential to disrupt regional trade and livelihoods severely.

• Tradable services that rely on physical proximity between suppliers and consumers, such as tourism, passenger transport or maintenance and repair services, have been severely impacted by travel restrictions and social distancing and have seen a prohibitive increase in trade costs. The disruption in business travel, which plays important roles in establishing and maintaining trading relationships as well as in managing global value chains, is also likely to affect both business and professional services and manufacturing production, although this will depend on how possible it is to substitute e-interactions for face-to-face communication. The quality of information and communications technology (ICT) infrastructure and digital preparedness will thus be important factors in how well economies cope with the pandemic shock.

• Estimates suggest that trade policy barriers and regulatory differences account for at least 10 per cent of trade costs in all sectors. Products essential in the fight against the pandemic have seen the introduction of mostly temporary import-facilitating and export-restrictive measures. The former push down trade costs while the latter raise them. Nevertheless, both types of measures have covered a small share of global trade.

• High levels of uncertainty magnify the impact of trade costs on international trade. In the first quarter of 2020, for instance, a widely used measure for the global level of uncertainty was 60 per cent higher than the levels triggered by the Iraq War and the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003. Uncertainty reduces the appetite of firms to invest into new trading relationships, and the increase in uncertainty may also result in trade finance contraction that is likely to take a particularly heavy toll on emerging and developing economies.

The preceding meetings of the 40th Ordinary Summit of Heads of State and Government and Council of Ministers meeting of the Southern African Development Community (SADC) started on 10th August, 2020, with a virtual meeting of the SADC Standing Committee of Senior Officials, a technical advisory committee which reviews and clears documents for the SADC Council of Ministers.

During the opening session of the meeting, Ambassador Brigadier General Wilbert Augustin Ibuge, Permanent Secretary in the Ministry of Foreign Affairs and East African Cooperation of the United Republic of Tanzania handed over the Chairpersonship of the SADC Committee of Senior Officials to Ambassador Alfredo Fabião Nuvunga, Director for Regional and Continental Integration in the Ministry of Foreign Affairs and Cooperation of the Republic of Mozambique.

Ambassador Brigadier General Ibuge thanked the SADC Senior Officials for the support rendered to him during his tenure as Chairperson and for collectively addressing regional issues in the midst of the COVID-19 global pandemic.

In his remarks after assuming the chairpersonship of the Committee, Ambassador Nuvunga expressed appreciation and gratitude to the outgoing Chairperson and the United Republic of Tanzania for the invaluable contribution to the socio-economic development and regional integration agenda in the midst of the COVID-19 pandemic.

He added that the 40th SADC Summit theme, "SADC: 40 Years Building Peace and Security, Promoting Development and Resilience in the Face of Global Challenges" is intended to reflect on the SADC achievements whilst taking collective measures to consolidate peace and security and identify appropriate solutions to the challenges facing the region.

On 13th August 2020, Hon. Verónica Nataniel Macamo Dlhovo, Minister of Foreign Affairs and Cooperation of the Republic of Mozambique will take over the Chairpersonship of the SADC Council of Ministers from Hon. Prof. Palamagamba John Kabudi, Minister of Foreign Affairs and East African Cooperation of the United Republic of Tanzania.

During the meeting, the SADC Council of Ministers will discuss strategic policy and programmatic issues aimed at strengthening regional, development, cooperation and integration. Among the key issues, the Ministers will discuss measures to mitigate the socio-economic impact of COVID-19, following the preliminary analysis conducted by the SADC Secretariat on the impact of COVID-19 and its implications on the SADC region.

On the 39th SADC Summit theme, the Ministers will take stock of the progress made on the prioritised activities and challenges in the implementation of the theme adopted in August 2019, “A Conducive Environment for Inclusive and Sustainable Industrial Development, Increased Intra-Regional Trade and Job Creation”.

The Ministers will also discuss the SADC Post-2020 Agenda, which includes the formulation of SADC Vision 2050 and the revised Regional Indicative Strategic Development Plan (RISDP) 2020-2030. Once approved by the 40th SADC Summit, the two strategic documents will lay the foundation and set a strategic direction for the SADC region to implement its programmes and activities.

During the Ministers meeting, the SADC Executive Secretary will present a report highlighting, among others, regional political and economic developments; implementation of programmes of regional cooperation and integration; peace and security cooperation and implementation of corporate activities since the last Summit in August 2019.

His Excellency President Filipe Jacinto Nyusi of the Republic of Mozambique will assume the Chairpersonship of SADC on 17th August 2020 during the Opening Session of the SADC Summit of Heads of State and Government, taking over from His Excellency Dr John Pombe Joseph Magufuli, President of the United Republic of Tanzania who has served as SADC Chairperson since August, 2019.

This year’s SADC Summit of Heads of State and Government is being held when SADC is commemorating its 40th Anniversary since its establishment as the Southern African Development Conference (SADCC) on 1 April 1980 before it was later, in August 1992, transformed into the Southern African Development Community (SADC) through the signing of the Declaration and Treaty.

The 40th SADC Summit Theme takes forward the implementation of the pdf SADC Industrialisation Strategy and Roadmap (2.34 MB) by recognising the primacy of peace security and governance as a foundation which ensures the preconditions needed to achieve the other priorities of SADC regional integration.

According to Article 11 of the SADC Treaty, the Council of Ministers is responsible for, among others, overseeing the functioning and development of SADC, approving policies, strategies and programmes of SADC as well as advising the Summit of Heads of State and Government on matters of overall policy. The Council consists of Ministers from each of the 16 Member States; usually from the Ministries responsible for Foreign Affairs and International Relations, Economic Planning or Finance.

Follow the proceedings of the Opening and Closing Ceremony of the 40th SADC Summit which will be broadcast live by Televisão de Moçambique (TVM), Channel 701 on DSTV from 10.am to 11.10am CAT and from 12.30 to 13.30pm respectively on 17th August, 2020. The ceremony will also be streamed live on the TVM Facebook and YouTube Channel.

The Regional Integration and Trade Division (RITD) at ECA has released a new report entitled “Facilitating Cross-Border Trade Through a Coordinated African Response to COVID-19”.

The report provides a critical assessment of existing border restrictions and regulations, with a view to providing guidance on how to strike an appropriate balance between curbing the long term spread of the virus and facilitating emergency and essential trade.

Mr. Stephen Karingi, Director of RITD, commenting on the report, noted that COVID-19 may become the “new normal” for some time, forcing African Governments to adapt and innovate in order to facilitate new “safe” ways of conducting cross-border trade. Maintaining trade flows as much as possible during the pandemic will be crucial in providing access to essential food and medical items and in limiting negative impacts on jobs and poverty.

Following the COVID-19 outbreak, nearly all African countries have imposed various degrees of restrictions on cross-border movement of goods and people, including suspension of international flights, quarantine requirements for entrants, and closures of land and maritime borders. Under a set of strict regulations, these closures target reducing movement of people while allowing exemptions for the movement of emergency and essential freight supplies. Such regulations typically cover mandatory testing, sanitizing trucks, limiting the numbers of crew members, and designating transit resting areas. These restrictions and regulations have helped in the continent’s COVID-19 battle, but they have also had negative impacts on cross-border trade and economic activity. This risks impeding the continent’s progress towards the Sustainable Development Goals set out in the 2030 Agenda and the aspirations in Agenda 2063.

In light of these challenges, it is crucial that African countries cooperate to harmonize COVID-19 border regulations in order to reduce delays, while not undermining the safety of trade. To that end, the report proposes fast tracking implementation of existing Regional Economic Community (REC) COVID-19 guidelines, including through establishing regional coordinating committees with the primary task of addressing operational issues at national borders.

In addition, these regional efforts must also be coordinated at the continental level through the African Union. A common COVID-19 AU Protocol on trade and transport is needed given the overlap in membership of RECs and shared trade facilitation goals of the African Continental Free Trade Area (AfCFTA). In developing such a protocol, the experiences and best practice of RECs need to be taken into account. A common African Union COVID-19 test certificate for truck drivers and crew members will also be required to facilitate movement of essential personnel across borders with the least possible interference.

In some instances, new COVID-19 border regulations and concerns of cross-border transmission of the virus have caused clashes between truck drivers and border authorities, and even disputes that have required diplomatic intervention. Amid the pandemic, African economies should not let COVID-19 undermine regional integration and must maintain the momentum and ambition of the AfCFTA process. The landmark Agreement offers a tool to hasten economic recovery while protecting Africa against future adverse global shocks. As AfCFTA State Parties finalize tariff offers and gear up to begin trading, African countries can already start to prioritize the implementation of elements of the Agreement that are complete and “ready to go”, including the non-tariff barrier mechanism, and annexes on trade facilitation and customs cooperation.

The role of digital solutions in the fight against the spread of COVID-19 along trade corridors must not be overlooked. Contract tracing through electronic cargo tracking systems, electronic signatures and documents, and the use of mobile banking and payment systems, can help to support safe and efficient trade. In this respect, the upcoming AfCFTA negotiations on e-commerce should be utilized to fast-track digitalization of procedures and systems so that Africa’s exporters are at lesser risk of losing access to markets in future crises.

The primary take-away of the report, is that by magnifying Africa’s cross-border inefficiencies, the pandemic presents an opportunity to reinvigorate efforts targeted at overcoming long-standing trade facilitation challenges. COVID-19 has increased the urgency to do better and find innovative solutions to facilitate safe and efficient cross-border trade. It will be important for Africa to maintain and upgrade these solutions post COVID-19, to lower trade costs, boost competitiveness, and support more resilient cross-border trade in the face of future shocks.

As part of the on-going regional response to the COVID-19 pandemic, the Executive Secretary of the Southern African Development Community (SADC), Her Excellency Dr. Stergomena Lawrence Tax and His Excellency Mr. Jan Sadek, Ambassador of the European Union (EU) to Botswana and SADC, have signed a new agreement worth EUR 3.6 million to facilitate cross-border transit of essential goods during the COVID-19 crisis.

The 3.6 million Euro for the Tripartite Transit and Transport Facilitation Programme (TTTFP) under the SADC Secretariat, is geared at developing a special Corridor Trip Monitoring System (CTMS) to facilitate transit of essential goods that include food, fuel and medicines across the borders during the constraints of the COVID-19 epidemic. Recently, SADC adopted revised Regional Guidelines on Harmonization and Facilitation of Cross Border Transport Operations across the Region, and Regional Standard Operating Procedures for the Management and Monitoring of Cross Border Road Transport at Designated Points of Entry and Covid-19 Checkpoints.

The revised guidelines, will also facilitate the implementation of SMART corridor trip monitoring system for management of the registration of cross border trips through, recording, monitoring and surveillance of driver wellness; tracking of vehicles loads and drivers; contact tracing; queue management; as well as statistical analysis and reporting.

Ambassador Sadek said that the EU support will contribute to the easing of movements of essential goods and services across the borders within the SADC region.

On the same occasion, His Excellency Mr. Ralf Andreas Breth, Ambassador of the Federal Republic of Germany to Botswana launched the implementation of the German Government support to ‘measures on the prevention and management of the negative effects of COVID-19 in the SADC region’ worth EUR1.53 million, which will assist in the development of policy guidelines to harmonize and ease cross-border trade of professional medical services and strengthen the digital infrastructure of the SADC Secretariat and Member States.

“COVID-19 is a global challenge which calls for collective solidarity through strengthening existing partnerships amongst Germany, EU and SADC. This collective response will not only impact positively on short term regional response to the pandemic but will undoubtedly boost the long term availability of medical goods and services in the SADC region,” noted Ambassador Breth.

These new allocations are part of a package of measures put in place by the EU and Germany to support SADC’s regional response to the COVID-19 pandemic.

In addition to the EUR 3.6 million for the TTTFP programme, the EU and SADC also revised the ongoing joint portfolio, worth EUR 145 million, and resolved to redirect some activities of projects to address the emerging needs derived from the COVID-19 crisis.

Under the Support to Industrialisation and Productive Sector (SIPS) programme, which is jointly implemented by SADC Secretariat and GIZ, the EU has redirected EUR 2 million while Germany redirected EUR 1 million to address the shortage of Personal Protective Equipment (PPEs) and key medical supplies within the region while strengthening the capacity of local manufacturers and developing regional value chains.

Through the EU-SADC Support to Peace and Security (SPSS) programme, the EU is supporting SADC to monitor and address the escalating trends of Gender-Based Violence (GBV) arising from movement restrictions put in place to curb the spread of COVID-19.

The EU and SADC have allocated EUR 361,000 to the EU-SADC Regional Agriculture Policy (RAP) programme to support Regional and National Early Warning Systems. In addition, the EU and SADC have allocated EUR 180,000 to the Global Climate Change Alliance Programme (GGCA+) to improve availability and access to high value nutritious agricultural produce using Climate Smart Agriculture (CSA) technologies in Eswatini, Mozambique, Zambia and Zimbabwe targeting food insecure and vulnerable communities impacted by COVID-19.

Ambassador Sadek added that, “the EU wants to be relevant to SADC and stands in solidarity with SADC Heads of State and Governments, and the SADC Secretariat to support the regional response both to the health crisis as well as economic recovery. COVID-19 can only be defeated if we act united through a coordinated global effort”.

The SADC Executive Secretary highlighted that, “the collaboration between SADC and the International Cooperation Partners in response to the impact of the COVID-19 pandemic will assist to facilitate trade and ensure sustained movement of essential goods and services, enhance capacity of local manufacturers of PPEs and medical supplies, boost food and nutrition security of vulnerable communities and address Gender-Based Violence. With unity and joint efforts of all stakeholders, we will defeat COVID-19”.

The 40th SADC Summit scheduled for Maputo, Mozambique on 17 August will for the first time in history be held in a virtual format.

This is due to health measures and travel restrictions imposed by most Member States in response to the novel coronavirus, commonly known as COVID-19.

Described as the most serious health emergency in generations by the World Health Organisation (WHO), the pandemic has affected the global socio-economic landscape and resulted in the loss of many lives.

In light of this, the 2020 Southern African Development Community (SADC) Summit will be coordinated from Mozambique with other Heads of State and Government linking up via video conferencing technology from their various capitals.

The fact that the region has managed to convene the 40th SADC Summit in a virtual format is commendable, and a demonstration of SADC ability to move in unison and conquer challenges no matter the magnitude of a challenge.

Running under the theme “SADC: 40 Years Building Peace and Security, Promoting Development and Resilience to face global challenges”, the virtual summit will be held under a reduced agenda to allow the leaders to focus more on critical issues in the region.

This article looks at some of the major issues expected to be discussed by the 40th SADC Summit.

Coordinated response to COVID-19 pandemic

Extraordinary times call for extraordinary measures.

As such, one of the main highlights at the Summit will be how SADC Member States – both at the national and regional levels – could combat the coronavirus, which has not only disrupted the implementation of various regional activities and projects, but also caused the loss of lives.

In this regard, the Summit is expected to explore ways on how Member States could invest more resources in strengthening their public health systems and implement measures to curtail the spread of the virus.

For example, Member States that are beginning to reopen their economies as well as air travel and land borders should observe and enforce strict anti-coronavirus standards such as social distancing at workplaces, regular health screenings and wearing of masks at all times.

It is also critical for countries to put in place vibrant social protection measures to cushion the population from the effects of loss of income, particularly due to the economic lockdown imposed by a number of countries in response to the pandemic.

Post-2020 SADC agenda

The current SADC development blueprint, the Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020, is coming to an end in December.

Therefore, the 40th SADC Summit is expected to review progress towards the development of a post-2020 SADC agenda.

Formulation of a new 30-year vision that will lay the foundation and set a strategic direction for the region to implement its programmes and activities until 2050 is already at an advanced state, and a progress report is set to be presented to the Heads of State and Government for deliberation.

The proposed SADC Vision 2050 will be aligned to the African Union Agenda 2063 and a resolution was also made by the region that the vision should inform the development of the RISDP 2020-30.

In a departure from the previous regional strategic plans, the RISDP 2020-30 is expected to combine interventions previously presented under the Revised RISDP and the Strategic Indicative Plan for the Organ on Politics, Defence, and Security Cooperation.

The decision to include peace, security and governance matters in the RISDP 2020-30 is important as the two strategic plans are complementary and seek to achieve the same common objective.

State of regional food security

The 2020 Synthesis Report on the State of Food and Nutrition Security and Vulnerability in southern Africa released in July indicates that about 44.8 million people across 13 SADC Member States are food insecure this year.

This is due to various factors, including a poor harvest and low rainfall experienced during the 2019/20 agriculture season.

The impact is further exacerbated by the current effects of COVID-19.

The 40th SADC Summit is expected to discuss measures to address the food insecurity.

Possible strategies include a combination of short-term measures such as social protection programmes to support those immediately affected, as well as more medium- to long-term strategies focused around areas such as the maintenance of domestic and international supply chains and incentives for the diversification of agricultural production.

Taking stock of the industrialization agenda

Summit will also take stock of the implementation of the SADC Industrialization Strategy and Roadmap 2015-2063, which was adopted in 2015 to unlock the industrial potential of the region.

Industrialization is a top priority for southern Africa, and Member States are implementing various measures to accelerate economic growth through industrial development.

Summit is expected to receive a progress report on the implementation of the industrialization strategy.

In August 2109, the region adopted a Protocol on Industry in a bid to ensure the attainment of unified goals and cohesion among Member States in terms of their industrialization policies and strategies.

The protocol is a binding instrument that gives legal effect to the SADC Industrialisation Strategy and Roadmap and seeks to ensure adequate coordination, monitoring and evaluation of implementation. 

Strengthening peace and security

On the political front, the leaders will remain seized with the political and security situation prevailing in the region since stability is a key conduit for sustainable development.

The SADC region has generally enjoyed stability despite some pockets of volatility in northern Mozambique and the eastern part of the Democratic Republic of Congo.

Summit is expected to take stock of interventions undertaken by the region to promote peace and stability in these and other Member States.

As captured by the theme of the Summit – “SADC: 40 Years Building Peace and Security, Promoting Development and Resilience to Face Global Challenges” – peace and stability are a key conduit for sustainable development and regional integration. 

40 years anniversary

The SADC regional integration journey has been long but worthwhile.

From a series of consultations held in the late 70s by representative of the Frontline States to forge closer alliance, southern Africa was finally able to form a vibrant regional organization, the Southern African Development Coordination Conference (SADCC) in 1980, which was later transformed to SADC in 1992.

This April, SADC turned 40 years, and as part of its celebrations, the Summit will take stock of its integration journey.

New SADC leadership

The 40th SADC Summit will see Mozambican President Filipe Nyusi assuming the rotating SADC chair from President John Magufuli of the United Republic of Tanzania.

The SADC Summit is responsible for the overall policy direction and control of functions of the Community, ultimately making it the supreme policy-making institution of SADC.

It is made up of all SADC Heads of States or Government of Member States and is managed on a Troika system that comprises the current SADC Summit Chairperson, the incoming Chairperson (the Deputy at the time), and the immediate previous Chairperson.

With respect to the Organ on Politics, Defence and Security Cooperation, President Mokgweetsi Masisi of Botswana will assume the chairmanship from President Emmerson Mnangagwa of Zimbabwe.

The SADC Organ on Politics Defence and Security Cooperation is also managed on a Troika basis and is responsible for promoting peace and security in the SADC region. It consists of a Chairperson, Incoming Chairperson and Outgoing Chairperson, and reports to the SADC Summit Chairperson.

The SADC Summit and the Organ Troika are mutually exclusive, and the Chairperson of the Organ does not simultaneously hold the chair of Summit.

In line with ECA's campaign on the structural transformation of the economies of Central Africa, CEMAC countries have just adopted a five-year post-COVID-19 recovery plan that prioritises industrialisation and economic diversification.

Central African Economic and Monetary Community (CEMAC) member States plan to make industrialisation and economic diversification a key to the zone’s second generation economic programmes and the post-COVID-19 economic recovery plan, as advocated by the Sub-regional Office for Central Africa of the UN Nations Economic Commission for Africa (ECA).

The 11th session of the Steering Committee of the CEMAC Economic and Financial Reform programme (PREF-CEMAC), which was held by videoconference on Monday, 3 August 2020, adopted these guidelines.

It was agreed that the reforms and the recovery programme should lead to a fundamental change in the socio-economic fabric of the sub-region through structural transformation, economic diversification and inclusive growth, in which human capital development and private sector participation are central.

The PREF-CEMAC Steering Committee is composed of the Ministers of Finance and Economy of the CEMAC countries, the President of the Commission, the Governor of the Central Bank of Central African States (BEAC), the President of the Central African Development Bank (BDEAC) and representatives of technical and financial partners.

The concluding points of the 11th session of the PREF-CEMAC Steering Committee have come to reinforce the campaign of ECA’s sub-regional office for Central Africa to foster industrialisation and economic diversification through the development of adequate skills.

ECA intends to contribute to the efforts to formulate second generation economic programmes and the post-COVID-19 recovery plan of the CEMAC countries.

During the videoconference, Antonio Pedro, Director of the ECA Sub-regional Office for Central Africa, stated that it will focus on "our work on economic diversification and particularly the Central Africa's Sub-Regional Industrialisation and Economic Diversification Master Plan (PDIDE-AC)".

In view of formulating the PDIDE-AC, the President of the CEMAC Commission has set up an internal CEMAC task force composed of all sector directors who will work with their counterparts at ECA and ECCAS offices.

During the discussions, the Governor of BEAC insisted on "the need to guarantee more budgetary space for structural transformation and the need to redefine local economies".

During an exchange with the Bank’s Governor, Antonio Pedro, Director of the ECA Sub-regional Office for Central Africa, stated the position of his institution, which intends to undertake one of the exercises to rebase the economies of Central Africa in order to promote the integration of natural capital into national accounts. He cited the example of work planned in Gabon on natural capital accounting and green bonds.

Pedro thinks "the rebasing exercise will certainly be a massive undertaking in which collaboration with other ECA divisions and partners will be crucial”.

The forthcoming structural economic changes in the CEMAC zone are taking place at a time when the Economic Community of Central African States (ECCAS) is operationalising its institutional reform with a Commission to replace its General Secretariat as its executive organ.

The very first Commissioner for Trade and Industry of the new ECCAS 'Commission', François Kanimba, former Rwandan Minister, held talks with economic operators and experts from the sub-region after his appointment, on his country's public television channel. He spoke at length about the importance of economic diversification for the sub-region, as canvassed for by ECA.

For Antonio Pedro, Central Africa is entering "a very interesting and exciting times" of economic diversification which will break the vicious circle of the current model of economic growth characterised by an overdependence on the export of raw materials which exposes the region to the fluctuations in international prices and their resulting economic shocks.

The 11th session of the PREF-CEMAC steering committee preceded the meeting of the Inter-State Committee of Experts of the Central African Economic Union (UEAC), which took place on 4 and 5 August 2020.

The Inter-State Committee of Experts met to prepare the 35th session of the Council of Ministers of the Central African Economic Union (UEAC), which will be held on 10 August 2020. The Council brings together ministers of economy and finance who will once more examine the guidelines of the sub-region’s second generation economic programmes and its post-COVID-19 recovery plan.

In a conversation with IMF Country Focus, Rwanda’s Minister of State in Charge of National Treasury Richard Tusabe explains how his government is leveraging technology and grass-roots networks to fight the spread of COVID-19 and ensure financial support for households and businesses.

What has been the impact of COVID-19 on the country and what sectors suffered most?

Most of the impact has been on Rwanda’s services sector, which has been adversely affected by limitations on international travel and social distancing measures. The services sector is projected to grow by only 1 percent in 2020 due to lower trade (imports are expected to fall by 7 percent) and travel. Travel to Rwanda has fallen by 70 percent, which has caused a major impact on the tourism industry.

The agricultural sector, which is a major economic driver, was also impacted, further to the already expected decline because of adverse weather. A reduction in demand due to COVID-19 as well as a drop in international prices of export crops has made the situation worse. The industrial sector will also slow because of a drop in demand and delays in foreign direct investment in the construction sector.

Economic growth is projected to slow down to 2 percent in 2020 from 9.4 percent in 2019. In the medium term, the economy is expected to recover with growth reaching 6.3 percent in 2021, and back to its average growth of 8 percent in 2022.

Rwanda’s use of grassroots networks and local governments has been cited as an innovative way to assist households. How does this program work?

In the year 2000, Rwanda adopted the National Decentralization Policy – a “people centered” policy that uses grassroots networks and local governments to help lessen shocks on households and alleviate poverty. Household assistance is based on Ubudehe categorization, a long-standing cultural value of mutual assistance that was also adopted by the government as a poverty reduction strategy.

Ubudehe is a socio-economic stratification system that provides support for Rwandans in lower categories with social protection schemes such as cash transfer, public works, access to agricultural inputs, shelter, health, and education with the aim to graduate to higher categories. The process has been useful in identifying vulnerable households – through community-based identification, the Ubudehe database, and other means – that need assistance as a result of the crisis. In 2018, core social protection programs covered 6.5 percent of the population. These are being scaled up to cover more people in this period of pandemic.

How has emergency assistance been used to supplement and support the country’s economic and health response? Can you elaborate on any specific programs operating as a result of IMF funding?

In April 2020, the government established an Economic Recovery Fund that will be bolstered through emergency assistance from the IMF’s Rapid Credit Facility. The Fund will support the recovery of businesses hardest hit by COVID-19 to allow them to resume operations and safeguard employment. Efforts include refinancing hotels; providing working capital for large companies, microbusinesses and small- and medium-sized enterprises (SMEs); and setting up an SME guarantee scheme.

Can you highlight some examples of how the Rwandan government is leveraging digitization of healthcare to help respond directly to the public health crisis and provide support for households and businesses?

The government has effectively responded to the COVID-19 outbreak through existing and new innovative digital solutions:

• Contact tracing: Infections are being traced through the paperless Open Data Kit application that can be downloaded on a mobile device. Data is collected for analysis by outbreak investigation teams.

• COVID-19 surveillance: A health facility digital reporting surveillance system is used to monitor influenza-like illnesses and severe acute respiratory infections in real time to provide an early warning of suspected COVID-19 cases.

• Infection prevention: Robots have been used in healthcare settings to carry out simple tasks, like checking temperatures and monitoring patients, to reduce exposure of healthcare workers.

• Data visualization: A Geographic Information System (GIS) is being used to monitor COVID-19 cases at the household level to assess the need for implementing lockdown measures, focus public health interventions where there is evidence of community transmission, and monitor at-risk populations.

Do you expect the pandemic to increase inclusion of people in the financial system? Is the government seeing any upward trends in the use of digital financial services?

Financial inclusion measures have been taken to support people’s ability to save before the crisis. Financial digital services are proving essential as lockdowns have prevented some people from accessing cash at physical bank branches.

The government leveraged the country’s already high financial inclusion rate (93 percent) and took measures to limit the spread of COVID-19 by waiving peer-to-peer mobile money transfer fees, merchant payment fees, and transfers from account to mobile wallets or vice versa for three months.

The above measures limited cash usage, which raises the risk of COVID-19 transmission. For example, peer-to-peer transfers increased significantly from $11 million the week of March 15, 2020 to nearly $73 million in the last week of May 2020.

UNCTAD15, the UN trade and development body's fifteenth quadriennial conference, will take place under the theme “From inequality and vulnerability to prosperity for all” as the world seeks solutions for a global new normal.

UNCTAD’s 15th quadrennial ministerial conference (UNCTAD15) to be held in Bridgetown, Barbados from 25 to 30 April 2021 will present the world with the first opportunity to align the sustainable development agenda with global efforts to recover from the COVID-19 pandemic.

The Prime Minister of Barbados Mia Amor Mottley and UNCTAD Secretary-General Mukhisa Kituyi today signed an agreement for the hosting of UNCTAD15, officially setting off preparations for the landmark gathering of the organization’s 195 member States.

“The COVID-19 global emergency and its extreme repercussions have exposed the need for a fundamental rethinking of many of the assumptions that previously underpinned the international economic order,” Prime Minister Mottley said during the signing ceremony held virtually.

“In a sudden and unexpected way, the crisis has provided the UNCTAD membership with a unique opportunity to be at the forefront of the new thinking and radical policy corrections that the situation now requires,” she added.

Dr. Kituyi said: “In a world overhung with the COVID-19 pandemic, UNCTAD15 is a first opportunity for the development community to give us a mandate aligning Agenda 2030 with the global new normal.”

The UN’s 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs) are a universal call to action to end poverty, protect the planet and improve the lives and prospects of everyone, everywhere, in line

Major event of the ‘decade of action’

UNCTAD15 will be a major global event of the UN’s “decade for action” to deliver on the SDGs. It will mobilize governments, civil society organizations, businesses and the youth to address the massive unmet trade, finance, investment and technology needs of developing countries struggling to tackle the coronavirus crisis.

According to UNCTAD’s estimates, developing countries need $2.5 trillion in immediate resources to begin meeting the challenge of the pandemic. This is beyond the outstanding SDG funding gap of billions.

For example, even before the pandemic, least developed countries (LDCs) alone needed annual investments of $120 billion to achieve the SDG targets.

From inequality and vulnerability to prosperity for all

UNCTAD15 will be held under the theme “From inequality and vulnerability to prosperity for all”, offering the nations of the world a platform to devise new ways to use trade as an enabler of sustainable development.

With economies all over the world ravaged by COVID-19, countries will explore how to build back better and strengthen their resilience. They will discuss the strategies and policies needed to resist shocks and quickly recover from crises – economic, financial, climate and social.

The pandemic has hit the most vulnerable countries and people hardest. Over 70 million additional people living in LDCs will be pushed into extreme poverty this year, increasing the global poverty headcount ratio for the first time in two decades, according to UN estimates.

COVID-19’s economic impact is particularly acute in small island developing states (SIDS) such as Barbados, the UNCTAD15 host country, where the services industry, especially travel, tourism and hospitality, have borne the brunt of the pandemic.

These sectors are the lifeline of SIDS and the main sources of employment for women and small businesses, all of whom are severely affected by the pandemic’s economic fallout.

At UNCTAD15, countries will discuss how to get these vulnerable economies quickly back on their feet and trigger the investment needed to enhance their resilience to shocks, including climate change, which exacts a disproportionately heavy toll on SIDS.

Urgent need for new approaches to trade and development

Dr. Kituyi said COVID-19 has starkly revealed that the world must transform global approaches to trade and development to chart a sustainable course to a better recovery.

“We need to rebuild entirely from the ground up, because for too many, going back to business as usual is anathema to sustaining prosperity,” Dr. Kituyi said.

As the number of COVID-19 cases continues to rise in the developing world, the global economy enters a synchronized recession unseen since the Second World War.

To cope with the spiralling economic fallout, developing countries need the galvanized attention of the international community. UNCTAD15 will offer the focused attention needed to mobilize political will towards the systemic changes needed for a better recovery.

“From a trade and development perspective, a better recovery must be green, resilient, just and digital – but it must also be for all people and all countries, not just those who can afford it,” Dr. Kituyi said.

UNCTAD15 will build on the success of previous conferences that have generated ambitious solutions and policy responses to development challenges globally.

The quadrennial conference is the highest decision-making body of UNCTAD. It sets the organization’s work priorities for the next four years.

Ministers responsible for agriculture, environment and natural resources have adopted the COMESA COVID-19 Food Security Response Plan to help the region deal with the impacts of Covid-19 on regional food security.

In their 7th joint meeting conducted virtually, the Ministers expressed concern about the unfolding effects of Covid-19 on food and nutrition and called on Member States to immediately mobilise resources to support the implementation of the regional plan to ensure food security.

The Ministers have also committed themselves to ensure that food and agricultural input markets and supply chains, along with associated logistics and services remained open and functional in line with the pdf COMESA-EAC-SADC Tripartite COVID-19 guidelines (651 KB) adopted last week.

In a Declaration issued at the end of the one-day meeting, the Ministers pledged to support agricultural research to develop, transfer and disseminate technologies, innovations and management practices that are climate-resilient, market-responsive, suited to assorted agro-ecological contexts and end-user preferences in the region.

“We commit ourselves to supporting smallholder farmers to increase production and productivity, through access to inputs, services and improved technologies including seeds, planting materials, fertilizer, veterinary products and animal feeds,” the Ministers said.

Speaking at the official opening, Secretary General Chileshe Mpundu Kapwepwe said a lot more that still needs to be done for the region to effectively address the challenges of climate change, transboundary plant pest and animal diseases, and degradation of natural resources.

“We need to build the resilience of our agriculture and agri-food systems as well as ecosystems for greater functionality and efficiency. This will also call for adoption of comprehensive approach to early warning, disaster preparedness and response including social protection & safety net systems,” the Secretary General noted.

She urged Member States to collectively deal with food safety issues to further open-up of markets and enhance trade in safe agricultural and food commodities in the region and in the context of African Continental Free Trade Area.

As part of efforts to boost sustainable agricultural productivity, the Secretariat has supported Member States to adopt Climate Smart Agricultural policies and strategies and implementation of the Comprehensive African Agriculture Development Programme (CAADP) through technical and advisory support.

The Secretariat has also supported the development of livestock and fisheries development through provision of financial, technical and organizational support in the development and implementation of policies and strategies.

Through its Agency, the Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA), COMESA Secretariat has been working with Member States and partners in harmonizing and domestication of the seed trade regulations to promote cross-border seed trade for increased access to quality seeds by the farmers.

Representatives of partners organization including the Alliance for a Green Revolution in Africa (AGRA), the United Nations Industrial Development Organization (UNIDO), Forum for Agricultural Research in Africa (FARA) and the African Union Inter-African Bureau for Animal Resources (AU-IBAR) among others attended the meeting.

Women are likely to be harder hit than men by trade disruptions caused by the COVID-19 pandemic and the dangers are particularly acute in developing countries according to a new information note from the WTO Secretariat. The paper points to how governments’ policy responses could address gender-specific effects of the crisis.

Women make up a larger share of the workforce in the manufacturing sectors, such as textiles, apparel, footwear and telecommunication products, that have seen the largest falls in export growth during the first months of the pandemic, the paper notes. In the services sector, women also outnumber men in industries that have been directly affected by travel restrictions, such as tourism and business travel services.

The paper estimates the risk posed by trade disruptions on men and women using employment data from the World Bank Enterprise Surveys, monthly merchandise exports data and statistics on the mode by which a service is supplied.

The paper furthermore notes that women are disproportionately present in the informal sector in developing and least-developed countries and in activities that cannot be done remotely. It also highlights how the existing gender gap in terms of income, education, information technology skills, access to finance, and childcare responsibilities put women at a further disadvantage during the pandemic.

Maintaining open markets during the recovery period is key to building faster and more inclusive growth, the information note states, adding that this should be complemented by appropriate labour and education policies as well as legal and social reforms to support women workers, consumers and traders. The paper also points to the recently launched WTO-World Bank report pdf Women and Trade: The role of trade in promoting gender equality (14.36 MB) , which highlights ways to ensure women continue to benefit from trade during the economic recovery after the pandemic.

Key points

• Women are at risk of suffering more than men from the trade disruption generated by the COVID-19 pandemic. One of the reasons for this is that a larger share of women works in sectors and types of firms that have been particularly hard-hit by the pandemic. 

• Women make up a larger share of the workforce in the manufacturing sectors, such as textiles, apparel, footwear and telecommunication products, that experienced some of the largest falls in export growth during the first months of the pandemic. For example, female employees represent 80 per cent of the workforce in ready-made garment production in Bangladesh, in which industry orders declined by 45.8 per cent over the first quarter of 2020, and by 81 per cent in April alone.

• A larger share of women than men works in services, such as tourism and business travel services, that have been directly affected by regional and international travel restrictions.

• A large share of firms owned or managed by women are micro, small and medium-sized enterprises (MSMEs), and lower levels of financial resources and limited access to public funds are placing the survival of such businesses at greater risk.

• The economic impact of the pandemic is expected to be particularly significant for women in least-developed and developing economies because fewer women than men are employed in these economies in occupations which can be undertaken remotely, and a larger share of women is employed in sectors highly exposed to international travel restrictions.

• The effects of the pandemic are aggravating existing vulnerabilities. Many channels through which COVID-19 is having a greater impact on women are those at the heart of gender inequalities, such as lower wages for women, fewer educational opportunities, limited access to finance, greater reliance on informal employment and social constraints. Limited access to digital technologies and lower rates of information technology (IT) skills further reduce women's opportunities for teleworking and e-commerce, and thus for adapting to the current crisis.

• Many governments have adopted a broad range of support measures to help individuals and businesses. Some of these measures, mainly social protection initiatives adopted by some central or local governments, are specifically targeted at women.

• Maintaining open trade during the economic recovery period is key to building faster and more inclusive growth.

• The joint World Bank and World Trade Organization report on trade and gender, "Women and Trade: the role of trade in promoting gender equality", published in July 2020, highlights ways in which trade can continue to benefit women in the post-COVID-19 recovery period.

In a conversation with IMF Country Focus, the Director-General of South Africa’s National Treasury Dondo Mogajane explains how the government has responded to the COVID-19 crisis, how IMF financing will help to stabilize the economy, and strategies for addressing debt and spurring growth.

South Africa’s economic activity is projected to contract by 7.2 percent in 2020, according to the International Monetary Fund (IMF’s) staff report that accompanied the government’s Rapid Financing Instrument request.

What has been the impact of COVID-19 on South Africa and what sectors have been hit the hardest?

COVID-19 brought many challenges: a decline of about 18 percent in employment between February and April; every third income earner in February did not earn income in April; job losses were felt most among women and manual labor. Those at the bottom of the income distribution have suffered a great deal.

Based on our assessment, the most affected sectors are construction, personal services, trade, catering, hospitality, transport, storage, and communications. The crisis also brought manufacturing and mining to a halt.

We are projecting a loss in government revenue of $18.2 billion this year.

What measures are being taken to provide relief to households and businesses?

A second phase is aimed at stabilizing the economy. This is driven by support from the IMF and others. Assistance comes through a $29.9 billion package announced by President Ramaphosa on April 21 that boosts healthcare spending, provides financial relief to municipalities, and temporarily expands the social grant payment system.

The third phase will help drive the recovery and economic growth. Central to this recovery strategy will be measures that stimulate demand and supply through interventions such as infrastructure funding.

How will the recently approved $4.3 billion IMF Rapid Financing Instrument be deployed?

This funding will support five interventions laid out in the supplementary budget: supporting health and frontline services; protecting the vulnerable by extending child support, old age benefits, and disability grants by six months; creating more jobs; unlocking economic growth through our reform initiative; and taking measures to stabilize public debt.

We think that over time we will be able to augment these budget initiatives by reprioritizing and ending certain programs and projects that are not effective.

What measures are being put in place to ensure the IMF assistance is used for its intended purpose?

We have agreed with the Auditor General, an independent body, to not wait until next year to audit COVID-19 related spending. General Emergency Procurement instructions were issued by the Treasury on April 28 to put measures in place to prevent and combat the abuse of supply chain management processes and ensure monies go where intended. These instructions also specifically outline control measures that must be put in place in relation to COVID-19 spending, such as reporting frameworks, internal measures between and within departments, the establishment of audit committees, and reporting on a monthly basis what has been procured, who has ordered these, and the amounts. Procurement of personal protective equipment will also be based on a price reference list.

The President also recently announced a high-level committee that includes law enforcement agencies, the Special Investigating Unit, and the Financial Intelligence Center to investigate anti-corruption cases involving COVID-19 funding.

South Africa’s debt is expected to further increase this year. What actions are being taken to address this?

We have designated $9.6 billion for budget cuts. Some of this is part of $23.3 billion in designated spending over three years in relation to public wages and salaries. I recently filed an affidavit to the High Court in South Africa to explain that we cannot fulfill wage increases in the last year of the three-year wage agreement with labor unions because of lost revenue due to the crisis.

We are committed to stabilize debt so that it peaks at 87 percent debt to GDP by 2023-2024 and starts declining thereafter. Ahead of the medium-term budget policy statement in October, some debt reduction will be achieved as a result of the expenditure reviews that we are currently conducting.

We also agreed to a zero-based budgeting exercise. It will help us to focus on areas where we should cut to reverse the rise in debt.

Economic growth in South Africa has been very low in the last decade and is now negative. What is the government doing to reverse this trend?

The government is undertaking structural reforms to facilitate higher and more inclusive growth. Network industries in telecommunications, electricity, ports, rail, and roads will undergo modernization and reform. Trade policies will be reoriented to take advantage of the free trade area in Africa, pursue greater regional integration, and establish South Africa as an export platform to the region. Entry barriers will be lowered to make it easier for business to start, grow, and compete. Support will be focused on labor-intensive sectors like tourism and agriculture where there is more potential for people to get jobs. Finally, reforms will be implemented to strengthen the governance of state-owned companies.

Government will in the coming months expedite the implementation of at least 50 infrastructure projects with a total investment value of more than R340 billion. 

The fast-tracking of the projects forms part of the reconstruction and recovery of the South African economy. 

This was the key outcome of the inaugural meeting of the reconstituted Council of the Presidential Infrastructure Coordinating Commission on Thursday. 

President Cyril Ramaphosa chaired the meeting, which brought together Ministers, Premiers, Mayors and the South African Local Government Association to ensure the effective integration of the country’s substantial infrastructure programme. 

President Ramaphosa said the focus of this administration is to consolidate infrastructure under one roof to ensure effective implementation. 

“Our experience has been that infrastructure can only be sustainable if there is cooperation and partnership between all three spheres of government and if there is a common intent,” he said. 

In terms of the Infrastructure Development Act of 2014, the Presidential Infrastructure Coordinating Commission (PICC) acts through its council. 

The council coordinates the development, maintenance, implementation and monitoring of the National Infrastructure Plan; coordinates the determination of priorities for infrastructure development; designates strategic integrated projects (SIPS) and ensures that infrastructure development, in respect of any SIP, is given priority in planning, approval and implementation. 

The council also coordinates the identification of strategic partners with which to conclude agreements that seek to promote the objects of infrastructure development. 

The council must ensure that infrastructure projects promote economic equality, social cohesion, decent employment opportunities and skills development. 

In keeping with this mandate, the council agreed to expedite the implementation of projects in prioritised sectors such as human settlements, transport, energy, water and sanitation, agriculture and agro-processing, and digital infrastructure. 

The council confirmed a new approach to infrastructure build including:

• Preventing corruption through transparent tender processes and stronger due diligence; 

• Greater involvement of communities in design and implementation;

• Emphasis on local employment and procurement, and targeted involvement of SMEs, and

• Blended financing through the Infrastructure Fund to mobilise more resources from the private sector, multilateral development banks and development finance institutions.

President Ramaphosa emphasised the vital importance of infrastructure development in responding to the economic impact of the COVID-19 pandemic, restoring growth and creating jobs.

“Extraordinary measures are required to return us to a path of sustainable growth. Central to this effort is infrastructure construction and maintenance, which is the flywheel for economic growth and large-scale job creation,” he said.

"Pink tariffs” and other trade barriers are obstacles to better jobs, wage equality

Trade increases women’s wages and helps close the wage gap between men and women while creating better jobs for women, a new World Bank Group report concludes. Countries that are open to international trade tend to grow faster, innovate, improve productivity, and provide higher income and more opportunities to their people. Countries that are more open to trade, as measured by the trade-to-GDP ratio, have higher levels of gender equality.

The report, produced in collaboration with the World Trade Organization, marks the first major effort to quantify how women are affected by trade using a new gender-disaggregated dataset. The dataset, developed by the World Bank Group, allows researchers to understand how women are employed, in which industries they work, how much they earn, and whether or not they are involved in global trade. This analysis helps governments see how trade policies can affect women and men differently.

“Over the past 30 years trade has been the engine of poverty reduction. This report shows that, provided the right policies are in place, it can also provide an engine to reduce the gender gap,” said World Bank Managing Director Mari Pangestu. “Trade can expand women’s role in the economy and decrease disparities with men by giving women more and better employment opportunities. Seizing these opportunities will be even more important in a post-COVID-19 world.”

The report, Women and Trade: The Role of Trade in Promoting Women’s Equality, offers several key findings. Firms that are part of global value chains (GVCs) employ a greater percentage of women (33 percent) relative to non-GVC firms (24 percent). When countries open themselves to trade, women’s share of wages in the manufacturing sector increase by 5.8 percentage points on average. When women are employed in sectors with high exports, they are more likely to be formally employed. Formal employment means better job benefits, training, and job security.

The report also highlights the importance of addressing discrimination against women in trade policy. Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage. The report shows that products specifically consumed by women face a higher tariff burden than men’s products. In the textile sector, for instance, tariffs on women’s apparel are US$2.77 billion higher than on men’s clothing, a consumption gap that grew about 11 percent in real terms between 2006 and 2016. Disparities like this can hurt women consumers all over the world.

Targeted policies can help women maximize the benefits of trade. These include removing trade barriers that impede women’s access to international markets and improving women’s access to education, financial services, and digital technologies. Governments can design trade facilitation measures that remove gender-specific barriers to trade. These measures could address burdensome customs requirements, limited access to trade finance, and exposure to extortion or physical harassment at borders.

Key Findings

• Exporters employ more women: In developing countries, women make up 33 percent of the workforce of exporting firms compared with just 24 percent of non-exporting firms.

• Trade creates better jobs for women: When women are employed in sectors with high levels of exports, they are more likely to be formally employed in a job with better benefits, training and security.

• Trade increases women’s wages and increases economic equality: Developing countries that double their manufacturing exports – a typical increase for developing countries that open themselves to trade – would see women increase their share of total manufacturing wages from 24% to 30% through a combination of increased employment and higher salaries.

Despite many advances, women across the world hold fewer jobs, are paid less, and are more likely to experience worse job conditions than men.

• Fewer than one in two women works.

• Among those who do work, 80% occupy medium- and low-skilled jobs.

• Women are also overrepresented in the informal sector, with up to 90% of women informally employed in Sub-Saharan Africa.

• Just 3% of female employees in low-income countries are skilled workers.

Trade policy is inadvertently biased against women, resulting in lower levels of employment and higher prices for consumer goods.

• Although no country overtly imposes tariffs according to gender, implicit biases can amount to “pink tariffs” that put women at an economic disadvantage – as both producers and consumers.

• Compared to men, women tend to spend a larger share of their income goods with high tariffs, such as food. Removing import tariffs could help women gain 2.5 percent more real income than men.

• Targeted policies can help women maximize the benefits of trade. These include removing trade barriers that impede women’s access to international markets and improving women’s access to education, financial services, and digital technologies.

The lack of gender-specific data reinforces biases against women in trade policymaking. Sex-disaggregated data is necessary to assess how different policies and obstacles impact women and men differently.

• This report makes use of a new dataset that for the first time allows researchers to see labor data at the industry level by gender, reducing subjectivity of trade-related analysis.

• This data sheds light on how women are employed, in which industries they work, what their income is and whether or not they are involved in global trade.

• This analysis helps governments understand how trade policies will affect women and men differently.

The changing global economy offers new opportunities for women through services, GVCs and digital technology.

• More than two-thirds of women in developed countries were employed in the services sector in 2017, up from 45 percent in 1991. In developing countries, the proportion of women in the service sector jumped to 38 percent from 25 percent over the same period.

• Countries are becoming more integrated with global value chains, which tend to create jobs and increase wages for women. GVC jobs tend to have positive, indirect benefits on other aspects of women’s livelihoods, such as education.

• Digital technology and new online platforms create opportunities for women to bypass traditional trade barriers, expand their entrepreneurial skills and develop flexible careers that enable them to manage both work and household responsibilities.

Calls made for temporary debt standstill for all African countries

Mozambique was already struggling with repaying its $14 billion external debt when COVID-19 hit earlier this year.

The country’s debt-to-GDP ratio, which was 100% in 2018 ballooned to 130% in 2020. With debt overtaking total economic output, Mozambique has little fiscal space to provide a robust response and recovery from the pandemic.

The COVID-19 pandemic is just the latest of Mozambique’s woes. The country continues to recover from cyclone Idai which struck in March 2019, and during which 607 people lost their lives and thousands were displaced.

Like Mozambique, many poor and heavily indebted African countries such as Angola, Cabo Verde, Congo, Djibouti and Egypt – all with a higher than 100% external debt-to-GDP ratio – must now, amid a pandemic, decide how to navigate significant financial difficulties.

An African Union (AU) study on the economic impact of COVID-19 released in April 2020 showed that the continent could lose up to $500 billion and that countries may be forced to borrow heavily to survive after the pandemic.

UN Secretary-General António Guterres in in June 2020 warned that an additional “50 million people risk falling into extreme poverty in 2020 owing to the pandemic.” Mr. Guterres has appealed for a “global response package amounting to at least 10% of the world’s Gross Domestic Product. For Africa, that means more than $200 billion as additional support from the international community.”

Africa needs at least $100 billion to immediately resource a health and social safety net response, and another $100 billion for economic stimulus, including a debt standstill, the financing of a special purpose vehicle for commercial debt obligations, and provision of extra liquidity for the private sector, according to the UN Economic Commission for Africa (ECA).

African countries’ lack of fiscal space to tackle the pandemic and its aftermath could be attributed to four challenges, according to the International Monetary Fund (IMF).

The first challenge is high debt-to-GDP levels, which are unsustainable.

The second is that high fiscal deficits (gaps between spending and revenues) will force countries to explore alternative financing for development projects. Consequently, loans become a recourse, further exacerbating their debt burden.

The third challenge is the high cost of borrowing, with interest rates between 5% and 16% on 10-year government bonds, compared to near-zero to negative rates in Europe and America.

For sub-Saharan African economies, interest repayments constitute the highest expenditure portion – and fastest-growing expenditure – of budgets.

Lastly, the depreciation of many African currencies against major international currencies has triggered inflation. For example, the Botswanan Pula and the South African Rand have lost about 8% of value against the US dollar and the euro since the outbreak of the pandemic.

To recover better, Mr. Guterres has called for debt relief, while advocating for a transition to low-carbon, climate-resilient growth that will create millions of green jobs and ensure sustainable production and consumption.

Addressing these challenges requires bridging inequalities based on income, gender and race, says Mr. Guterres. He continues to advocate for equity in global liquidity and has proposed a set of innovative solutions to financing post-pandemic recovery.

For example, the UN Chief has urged the IMF to increase its financial support to African countries under its Special Drawing Rights facility – a monetary reserve currency that countries in financial stress can draw from.

Call for debt cancellation

While the G-20 agreed to suspend debt repayment for the world’s 75 poorest countries until the end of this year, Mr. Guterres maintains that debt suspension should be extended to all developing countries, adding that the private sector must be part of any dialogue on debt forgiveness.

The ECA also recommends a “complete temporary debt standstill for two years for all African countries, without exception.”

The African Union has launched several programmes, such as the African Union Development Agency (AUDA-NEPAD) COVID-19 Response Plan to help countries fight the pandemic and recover better.

The CEO of AUDA-NEPAD Ibrahim Mayaki acknowledges that countries desperately need to lighten the burden of debt. “Consultations are ongoing with major financial development partners for a short- and medium-term scheme that can respond to those needs,” he told Africa Renewal, in an interview.

Calls for debt cancelation for poor countries have been ongoing for many years. In 2005 the World Bank and the IMF cancelled $55 billion of the debt owed by Africa’s most impoverished states; still, a full cancellation would be unprecedented.

Also, total debt forgiveness usually involves intense political negotiations. The China Development Bank and the Export-Import Bank of China account for most of the lending to African countries. These institutions are closely linked to the Chinese government and its Belt and Road Initiative. Therefore, they are likely to toe the official position of the government.

In April 2020, China expressed a willingness to provide Africa debt relief, but not forgiveness.

In a meeting with African leaders in mid-June to discuss the COVID-19 response, China’s President Xi Jinping offered to cancel Africa’s interest-free loans, but indicated that negotiations would be carried out bilaterally.

However, Johns Hopkins University in the US analyzes that the loans China intends to cancel are less than 5% of Africa’s debt to China – hardly a dent on the continent’s debt.

Meantime, the Secretary-General of the African Continental Free Trade Area (AfCFTA) Wamkele Mene maintains that the implementation of the trade pact would increase intra-African trade and boost industrialization on the continent – precisely the stimulus Africa needs.

However, stimulus from AfCFTA implementation will have to wait as trading could not begin on the scheduled date of 1 July. The AU is expected to announce a new date soon.

Diarise (5 August): PIIE Trade Winds, with Anabel González. African perspectives on the WTO and prospects for regional trade cooperation. Is a new African voice on trade emerging? How does Africa view WTO reform and how could it contribute to strengthening global trade cooperation? How can the AfCFTA help Africa recover from the pandemic. Guests:

• Dr Vera Songwe (Executive Secretary, UNECA)
• Ambassador Albert M. Muchanga (African Union Commissioner for Trade and Industry)

• Robert Z. Lawrence (Harvard Kennedy School, PIIE)

A South African trade and development policy special focus: SARS, dtic, BUSA, OECD, Wits University

1. South Africa: A June trade surplus of R46.63bn (SARS)

   The South African Revenue Service today released trade statistics for June 2020 recording a trade surplus of R46.63bn. The surplus is attributable to exports of R116.31bn and imports of R69.68bn. Exports increased by R10.68bn (10.1%) between May and June 2020 and imports decreased by R16.25bn (18.9%) between May and June 2020. Exports for the year-to-date (1 January to 30 June 2020) decreased by 2.1% to R599.83bn from R612.54bn over the same period during 2019. Imports for the year-to-date of R536.76bn are 13.0% less than the R617.28bn imports recorded during the same period in 2019. The cumulative trade surplus for 2020 is R63.07bn (pdf).

   • Top 5 countries for SA exports: China (13.7%), United Kingdom (7.7%), United States (6.7%), Germany (5.1%), Netherlands (4.2%)

     Top 5 countries for SA imports: China (23.9%), United States (7.6%), Germany (7.5%), India (6.1%), Italy (3.3%)

2. Minister Ebrahim Patel: Briefing to the Portfolio Committee of Trade and Industry on developments in the steel and sugar industries (pdf)

   Shrinking market: SA share of SACU local market shrunk from 1.6 to 1.2 million tons – the lowest since 1983

   Slowly shrinking SA sugar industry – mainly in KZN. Area under cane has shrunk by 70 000 ha from 430 000 ha in 2000 to current 360 000 ha; loss 2% per annum – the lowest since 1983; Shrinking slowly – 10 year crop – farmers stop investing or switch; Marginal growers going out of business

   • Milling and refining over capacity increasing

   • Job losses in both growing and milling sector

   • Urgent diversification to prevent further shrinkage and create sustainable industry

   • Financial sustainability prerequisite for meaningful transformation

   • Key challenges facing the sugar industry:

     The global sugar price has declined below local cost of production – with no real prospect of improvement

     The Health Promotion Levy (commonly known as Sugar Tax) and eSwatini imports have significantly reduced demand for locally produced sugar resulting in: 50%+ of raw sugar currently exported at a loss; 20-40% excess capacity in milling and refining

     Majority of growers and millers are losing money, many under severe pressure: Likely acceleration of small-scale grower exits; Despite disincentives, unmanaged unilateral capacity reduction a possibility

3. Call to Action: Local procurement approach beyond COVID-19 (BUSA, Agbiz)

   Our local manufacturing opportunity however needs to extend beyond COVID19 demands, to strengthen and grow our local manufacturing base on an economically feasible and competitive basis. To this end, local procurement advocates have been collaborating to ensure that a holistic approach is applied, prioritizing local procurement in support of economic recovery. These advocates have formed a Technical Working Committee focused on mobilising corporate to support the localisation agenda. Members of the technical working committee include Business Unity South Africa, Business Leadership South Africa, National Business Initiative, Manufacturing Circle, Proudly South African and South African Breweries. We communicate the following Call to Action for Corporate South Africa (pdf):

   • Review your procurement practices and give preference in all cases possible, to companies that are manufacturing locally;

   • Secure procurement commitments to give preference through your entire supply chain to local manufacturers;

   • Earmark procurement opportunities for companies manufacturing locally; and

   • Utilise the procurement portal (Market Access Platform) that influences localisation and transformation, to refer and find high performing suppliers and advertise procurement opportunities to local producers and service providers.

4. Economic Survey of South Africa (OECD)

   In the latest Economic Survey of South Africa, the OECD indicates that the nationwide lockdown enacted in March 2020 reduced activity in mining and industry while bringing the tourism, entertainment and passenger transport sectors to a near-standstill. The pandemic adds to South Africa’s long-standing challenges, the Survey says. Under a so-called double-hit scenario, a new outbreak affecting South Africa and its trading partner countries will curtail exports, deepening the recession to -8.2% in 2020, and limiting the recovery in 2021 to GDP growth of just 0.6%. In the single-hit scenario, where a second wave of the virus is avoided, economic activity will still fall by 7½ percent in 2020 before picking up progressively to growth of 2½ percent in 2021. Extract (pdf):

   Reaping the benefits of participating in global value chains South Africa’s participation in global value chains is more pronounced than that of many of its peers, but remains below the OECD average. In 2015, 23.5% of South Africa’s domestic value added was driven by foreign demand compared to the OECD average of 31.9%. However, South Africa’s domestic value added was higher than in other emerging countries such as Argentina (10.9%), Brazil (12%), Indonesia (18.3%) and Turkey (20%). Tariff liberalisation in the early 2000s mainly benefited the skill– and capital intensive manufacturing sector allowing greater integration in global value chains. Thus, the foreign value added content to exports increased from 22% to about 30% between 2005 and 2016 in the manufacturing industries (Figure 1.21). By contrast, deepening of integration into global supply chains stalled in the service industries over the same period. This development reflects an increase in South Africa’s services trade restrictiveness of recent years in all services sectors.

   South African firms benefit from more global openness to trade. Tariff barriers on imports are significantly lower in South Africa than in other emerging countries such as Brazil, India and Argentina (Figure 1.22). Competitive pricing of intermediate inputs is important due to the high import intensity of many South African exporters. Thus, comparatively low import tariffs on intermediate goods increases the competitiveness of exporting firms. By contrast, tariff barriers on South African exports to developing countries – including Brazil, China and India – far exceed those to developed countries. South Africa has to increase trade access for its firms to fast-growing developing economies to harness growing demand in these countries. It is necessary to push for reduced tariffs on South African exports and the removal of non-tariff barriers. Moreover, further measures should focus on advancing the SADC free trade agreement and pursuing new and re-negotiated trade agreements in markets where there is growing demand for key export products. As recommended in previous surveys, trade facilitation measures should address non-tariff barriers, such as improving the quality and access of infrastructure, as well as the access to export credit and credit insurance. [Overview of the Survey with key findings and charts]

5. WSG, Telkom team up to address South Africa’s economic challenges (Wits University)

   The aim of this project - led by the new Head of the Wits School of Governance, Professor Mzukisi Qobo and Dr Nomfundo Ngwenya, a Visiting Research Fellow at the WSG - is to provide evidence-based research to be considered by policy makers and other stakeholders such as business, labour and civil society. Although South Africa’s triple challenges of unemployment, poverty and inequality have been amplified by COVID-19, the country’s current economic malaise preceded the pandemic. The project will therefore recognise the epoch-defining shifts presented by COVID-19, but it will not utilise the pandemic as the sole prism through which to view South Africa’s challenges. The team will explore areas such as the role of the state and markets in development (including industrial policy, competition policy, and state capabilities); rethinking macro-economic policy (including fiscal and monetary policy) and sectors identified for future development including the health sector (economic and social); energy and ecology products; agriculture; infrastructure (including transport and other social sectors). They will also study new industries (including digital products, platforms and services) and employment trends and labour markets.

The COVID-19 crisis in Liberia: Projected impact and policy options for a robust recovery (World Bank)

The COVID-19 pandemic continues to exact a toll on the global economy, and Liberia is facing its dire human and economic impact, with real GDP projected to contract by 2.6% in 2020, according to the first Liberia Economic Update. The report shows that the human cost of COVID-19 could be high. The population living below the national poverty line is expected to increase from 55.5% in 2019 to 68.9%, which means that an additional 526,000 Liberians are at risk of falling into poverty. The authors also warn that economic growth could further slowdown if government’s policy response is delayed, not well-targeted, or if the external environment does not improve significantly this year. Liberia’s near-term outlook is highly uncertain (pdf). Under the baseline scenario, a sharp rebound is expected with real GDP growth projected to rise to an average of 4.1% during 2021-22. However, under the downside scenario, real GDP is expected to recover more slowly, growing at an average rate of 3.7% in 2021-22. In both scenarios, the medium-term recovery will be underpinned by the post-COVID-19 normalization of economic activity and the implementation of structural reforms designed to alleviate constraints on productivity growth and support economic diversification.

pdf The COVID-19 crisis and trade facilitation (8.70 MB) (WTO, TFA, ICC, GATF)

To get a more detailed understanding of how the COVID-19 pandemic is affecting the movement of goods across borders and to ascertain how implementation of the WTO Trade Facilitation Agreement might ease the situation, the WTO Trade Facilitation Agreement Facility, International Chamber of Commerce and the Global Alliance for Trade Facilitation decided to carry out an online survey of business, government and other groups. The survey asked government officials and private sector representatives to identify which import, export and transit processes have become more cumbersome or time consuming in the context of the COVID-19 containment efforts, which processes have become less cumbersome or time consuming, and which trade-related processes would have the most positive impact if implemented in the current circumstances.

Digitalisation of trade processes represents a significant opportunity to deliver a trade policy that addresses current needs while also preparing for the future. There have been some indications that in some countries, having measures such as a single window in place has helped with their response to Covid-19, while others have implemented ad hoc digitalisation of their processes to better cope with the pandemic. We need to harness this impetus on digital while also ensuring that these initiatives form part of a cohesive trade policy. Countries also have to resist any backsliding once the immediate shock of the disease has passed. We propose that the WTO Trade Facilitation Agreement provides tools that can help WTO Members to overcome these problems, particularly as trade facilitation measures can reduce the cost of trade and spark competitiveness, productivity, innovation and growth, thus assisting countries with the post-virus period, and economic growth into the future. In this way countries around the world, of all development levels, will be better prepared for any shocks on the scale of the current crisis.

IISD: COVID-19 and food export restrictions. This policy brief draws on the International Food Policy Research Institute’s COVID-19 Food Trade Policy Tracker to compare how governments have reacted to the current crisis with how they did so in the past.

Tsafrir Attar: Setting the new global standard in trade finance digitisation (ICC Guest Blog)

Perhaps finally the future of trade finance digitisation really is now; perhaps now presents an unprecedented opportunity for banks to set the new global standard? While consumers are adapting like never before to the new digital norm, so too will corporate customers, expecting their banking partners to keep pace and to deliver their services without delay or error. But how can banks leverage this opportunity? Quite simply by implementing new technologies and adjusting their services and operations to provide end-to-end digital services with higher efficiency and lower costs. The scope of trade finance digitisation possibility is endless and contrary to some misconceptions, does not require a drastic change in operations.

Adding new automation tools without seamless interoperability to incumbent systems, however, will undoubtedly increase deployment costs and decrease return on investment (ROI). It is far better to streamline operations by eliminating multiple systems that address the same problem and then focus on technologies that connect and facilitate customer engagement. While individual platforms can contribute value to a business, it is far better to use integrated, complementary solutions for greater impact, reduced implementation time, increased ROI and faster results. [The author is Surecomp’s Vice-President of Digitisation]

African Union: Mobility of African health workers comes under the spotlight, post-COVID19

As we move towards a more digitally-aggregated news service, we would like to thank Richard Humphries (@RichardHumphri1) who has worked with tralac to build this daily news selection since its inception. We greatly appreciate your input and wish you well!