tralac’s Daily News Selection
Uganda to petition EAC on milk export blockade (Daily Monitor)
Uganda and Kenya, have for three months now bickered over milk exports with Kenya announcing last week it would not allow cheap milk from Uganda on its market. Speaking to Daily Monitor at the weekend, Mr Dicksons Kateshumbwa, the Uganda Revenue Authority outgoing commissioner for customs, said Uganda will petition the EAC on the matter during the regional pre-budget meeting scheduled in Arusha, Tanzania next month. “We shall discuss this matter when we go to Arusha for pre-budget meetings next month [April], so [that] we get an official stand,” he said, noting that on average in the last three months, the trade war cost Uganda close to Shs60b in milk exports. Uganda, according to available data, had before the ban, been shipping close to 450,000 litres of milk to Kenya. Kenya has largely remained silent on why it is blocking Uganda’s milk from its market with unofficial comments pointing to the need to protect the country’s milk industry from external competition.
Uganda’s gold exports more than doubled in 2019 compared with the previous year, according to data from the central bank seen by Reuters on Wednesday. An official attributed the surge to soaring demand for bullion and larger refining capacity. The east African country shipped $1.25bn worth of gold last year, compared with $514.8m exported in the previous 12 months. Adam Mugume, executive director in charge of research at the central Bank of Uganda, told Reuters the spike was due to a growing international demand for gold and a boost in Uganda’s refining capacity.
South Africa: Record exports, but new unit SA sales decline (IOL)
Vehicle exports were likely to reach a third consecutive record-high in 2020 even as sales of new units locally were likely to decline, the National Association of Automobile Manufacturers of SA (Naamsa) said yesterday. Africa’s largest carmaker is projected to ship 391900 vehicles this year, up from the record 387125 units in 2019, Naamsa said in its 2019 fourth-quarter industry report. The surge in exports would potentially offset the continued decline in domestic new vehicle sales, which were expected to fall to 525500 units from 536611 in 2019. South Africa’s share of global new motor vehicle production in 2019 improved 0.69% from 0.64%, with the country’s ranking remaining at 22nd position in the world. In light commercial vehicle production, South Africa ranked 14th globally, with a market share of 1.26%. Vehicle exports into Europe, and North and South America reflected growth in 2019. Europe accounted for 73.8 of total vehicle exports. “Africa remains a priority focus for the domestic automotive industry and the low motorisation rate on the continent, growing middle-class and the African Continental Free Trade Area should stimulate future demand, albeit from a low base,” Naamsa said.
FairPlay’s Francois Baird: South Africa’s chicken industry rescue plan is already behind schedule (IOL)
The poultry sector master plan is only a few months old, but already it is falling behind schedule. This means continued uncertainty for thousands of chicken industry jobs and further delays in stimulatory measures, which will lead to industry expansion and job creation. It has become all too clear that the tariff-adjustment decision-making process is at best not fit for purpose, at worse not understood to be the priority action that it is by those government agencies tasked with its delivery. Then there’s the implementation of the master plan. Most of the measures set out in the master plan are due to be completed by mid-2020, with a list of important deadlines to be met by the end of this month. These include important food safety measures – a review of regulations to prevent the thawing and refreezing of imported chicken portions because of health risks involved, and a review of packaging and traceability regulations to ensure that all imports can be traced, and that producers meet required standards. Traceability is crucial in the event of product contamination, and was shown in the 2018 listeriosis outbreak. Unfortunately for South African consumers, much of the imported frozen chicken offered for sale in South Africa does not meet the strict labelling requirements which apply to local chicken. These reviews are supposed to be done by the end of March, and there is no indication that progress is being made.
SAFTU’s Zwelinzima Vavi: Government failing to protect chicken industry (Politicsweb)
Imports have taken nearly 30% of the local chicken market, and agricultural experts estimate this could go up to 40% if nothing is done. SAFTU wants a situation where South African workers produce South African chicken for the South African market and then develop a strong export capability. We want a situation where South African jobs are prioritised, and where a threatened local industry is encouraged to expand and create thousands more jobs. That starts with tariffs. Tariffs that have been signed off and promised by the President. This not a capable state, the people and working class is bearing the brunt of this failure by the government. The people and workers are owed an explanation!
SA commercial pig herd now among ‘healthiest in the world’ (Farmer’s Weekly)
With approximately 65% of South Africa’s commercial pig herd now officially registered with the South African Pork Producers’ Organisation’s compartmentalisation system, the local commercial herd is now one of the healthiest in the world. This was according to Johann Kotze, CEO of SAPPO, who explained that compartmentalised piggery operations had essentially “placed themselves under quarantine”. Data presented by SAPPO showed that by 31 January, 104 piggeries and 57 sow units in South Africa were voluntarily participating in the compartmentalised system. Kotze pointed out that with South Africa’s pig production compartmentalisation system, even if a notifiable disease, such as African swine fever or foot-and-mouth disease, broke out elsewhere in the country, compartmentalised piggeries could continue to export pork to international trade partners that recognised the system. “These trade partners understand and trust our compartmentalised system, and they also trust the safety of the pork that comes out of it. Our system is light years ahead of even the US and the EU,” he added.
World services trade growth continued to weaken toward the end of 2019 and into the first quarter of 2020 according to the WTO’s Services Trade Barometer, released on 11 March 2020. The latest reading of 96.8 is down from the 98.4 recorded last September and well below the baseline value of 100 for the index, suggesting below-trend growth in world services trade. The indicator does not yet fully capture the economic impact of the COVID-19 virus and is likely to decline further in the coming months. Among the component indices, the largest declines were in passenger air travel (93.5) and container shipping (94.3), growth of which was already moderating before the COVID-19 outbreak. Both indices cover developments through January and may partly reflect early efforts to halt the spread of the disease, which intensified toward the end of the month. The drop in the container shipping index was driven by lower shipping volumes in Asia while the slowdown in passenger air travel was more broad-based, also covering North America, South America and Europe. The global financial transactions (97.7) and ICT services (97.0) indices also dipped below trend, while the construction index (99.8) appears to have held steady. The global services Purchasing Managers’ Index (96.1) is the most forward-looking barometer component, reflecting expectations that COVID-19 is likely to continue to weigh on services trade in the near-term. An approximate measure of the volume of world services trade shows that year-on-year growth in services trade activity already fell from 4.7% in the first quarter of 2019 to 2.8% in the third quarter.
Although no country in East Africa has reported coronavirus cases, trade between the region and China is already declining due to the outbreak. Risk expert Caroline Gathii joined CNBC Africa to share more on the impact on the region and ways to deal with it.
Rolake Akinkugbe-Filani: How coronavirus and the global oil price war can impact Nigeria
Will 2020 be a pivotal year for Africa-EU relations? Not without dialogue and mutual respect (Euronews)
The proposed strategy is meant to help foster a two-way partnership, but it neglects measures to maximise the contributions of Africans to development in Africa. For example, it lacks proposals on fighting racism in Europe, an important obstacle for African diaspora to reach its full potential, and on reducing the cost on the remittances (SDG 10) they send to their countries of origin, an important resource for development. It also lacks proposals for how to change EU citizens’ consumption patterns that are dependent on exploitative practices in Africa (SDG 12), to ensure that EU companies are socially responsible (SDGs 8 and 12), and to promote trade without hindering local agriculture to the benefit of European farmers. The new strategy talks about fighting illicit financial flows, but does not propose a fair tax system in which European companies pay taxes in the African countries where they make their wealth, which could give an important push to those economies. [A note on the authors: Albert Mashika is Secretary General of Caritas Africa; Maria Nyman is Secretary General of Caritas Europa]
Uganda-European Union Business Forum: updates
Museveni assures EU on business facilitation financing agreements
EU-Uganda roadmap to improved investment climate (pdf)
Trade minister Amelia Kyambadde lures EU investors to Uganda
EU cautions Uganda on corruption
IMF Executive Board Concludes 2019 Article IV Consultation. Reflecting weak competitiveness, the poor business environment, and social turmoil, GDP is estimated to have contracted by 2½% in 2019. Moreover, the fiscal deficit rose by almost three percentage points to 10.8% of GDP in 2019, reflecting ballooning energy subsidies and weak revenue mobilization. With limited external financing, the fiscal deficit has primarily been financed by monetization, fueling a vicious cycle of inflation, exchange rate depreciation, and deficit expansion. Inflation rose to 60% in November 2019, while the parallel market exchange rate continues to depreciate strongly. The exchange rate system remains highly distorted with multiple currency practices, and the real exchange rate is substantially overvalued. The external position is weak, with the current account deficit standing at 7.8% of GDP in 2019 and low international reserves ($1.4 bn in October 2019, 2 months of imports). Limited forex for fuel imports has led to rationing, persistent shortages, and disruptions to electricity and food supplies. Public and external debt ratios remain high and unsustainable, and stood at 211.7% of GDP and 198.2% of GDP, respectively, in 2019. With large imbalances and loose policies, the outlook is alarming without policy reforms.
pdf 2019 Article IV Consultation: Staff Report (1.45 MB) . The fiscal position has deteriorated because of ballooning fuel subsidies and weak revenue mobilization (See Tables 1-7; Figures 2-5). Revenues and grants increased by 1¾ percentage points to almost 9% of GDP in 2018 as exchange rate devaluation boosted customs duty and VAT on imports, but remained among the lowest in the world. In 2019, however, they fell to 7¾% of GDP as continued overvaluation of the official and customs duty exchange rates depressed foreign-currency-denominated and import-related revenues.
Total expenditure (including off-budget implicit fuel subsidies) increased by 3 percentage points to 16¾% of GDP in 2018, with ballooning subsidies partly offset by other expenditure tightening. Expenditure increased further by 2 percentage points to 18¾% of GDP in 2019 largely due to a continued increase of fuel subsidies.
In 2018, the wage bill fell by 1¼ percent of GDP, as public workers did not receive a wage increase despite high inflation. There were also moderate cuts to expenditure on goods and services, wheat subsidies, and transfers to state governments. In 2019, the wage bill is estimated to have risen by ½ percent of GDP on account of higher wages for some segments of the civil service and the security forces. There were also modest cuts to expenditure on goods and services, and transfers to state governments. Capital expenditure fell by ½ percent of GDP to nearly zero. [ pdf Companion Selected Issues report (566 KB) ]
Ethiopia to lose $1bn in case it exits Somaliland’s Berbera port (EA Business Week)
Ethiopia stands to lose close to $1bn should the country move ahead and halt its new development and partnership with Somaliland over the Port of Berbera. There have been unconfirmed reports in the Ethiopian and Somaliland media that the Horn of Africa nation is considering developing a port in Sudan that will be an optional sea outlet. While the reports are not conclusive, Ethiopia Minister for Transport Dagmawit Moges said that owning a port is part of the Ten Years National Logistics Strategy issued a few months ago. “We are interested to develop ports and it is one of the interventions in the logistics strategy, but it should be determined by the deal with countries,” said Moges. This basically means Ethiopia still consider Berbera Port strategic to their trade and security partnership with Somaliland. Ethiopia owns 19% stake in the Port of Berbera which it uses to export Khat, Cement and fruits to Somaliland earning close to a billion dollars annually.