Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Message from tralac on COVID-19

We recognise COVID-19 as a global disaster and are adapting the way we work and how we deliver our work programme, to safeguard the health of our staff, and all with whom we work. We will keep you informed of our work programme and new initiatives, including webinars that we will launch very soon.

Please take note of the following:

  1. tralac’s office is closed with effect from 17 March – all staff will be working from home. Any queries can be directed to us via email (This email address is being protected from spambots. You need JavaScript enabled to view it.) or phone +27 71 403 6643 (Madeleine) or +27 83 527 0871 (Trudi)

  2. tralac Annual Conference and other workshops are postponed

  3. tralac Certificate Course: Trade Law and Policy for Africa’s developments. Module 1 (20-24 April) and Module 2 (11-15 May) will be e-learning modules. Details on Module 3 will be provided in due course.

  4. Data Science Bootcamp – an e-learning course, will take place on 4-8 May.

President Ramaphosa postpones meeting with African Union commissioners. President Cyril Ramaphosa has, in his capacity as Chair of the African Union, requested a postponement of a meeting - scheduled for Thursday 19 March - with Commissioners of the African Union Commission. The President’s request arises from the priority he is giving to South Africa’s national response to the global COVID-19 pandemic.

Keys to Success: the latest report from the President’s Advisory Council on Doing Business in Africa

The President’s Advisory Council on Doing Business in Africa held its second meeting of the current Council term on 26 February, 2020. Deputy Secretary of Commerce Karen Dunn Kelley, on behalf of Secretary of Commerce Wilbur Ross, chaired the meeting for the US Government, which included representatives from 10 different agencies, plus the newly established Prosper Africa Secretariat. PAC-DBIA Members deliberated and adopted a report, pdf Keys to Success (701 KB) , a compilation of the collective insights from the Council on best practices US companies should consider in order to approach, compete, succeed, and invest in African markets. The Council also adopted a letter to the President that outlines new initiative areas that Members would like to prioritize in their work over the course of the current term.

  1. In support of the above initiatives, PAC-DBIA makes the following recommendations for the US government to pursue in 2020:

    The Administration should organize a PAC-DBIA fact-finding trip to Africa in 2020, led by Secretary of Commerce Wilbur Ross and accompanied by heads of other key agencies critical to the implementation of the Prosper Africa initiative. The trip should be organized in conjunction with the Corporate Council on Africa’s US-Africa Business Summit in Marrakech, Morocco, June 9-12, and include a visit to at least one additional country in the region.

    The Administration, with PAC-DBIA participation and support, should host a formal engagement with African heads of state in 2020 and begin making preparations to host a formal US-Africa Heads of State Summit next year. As part of the effort to enhance senior US official engagement with African counterparts, and to inform additional PAC-DBIA recommendations, the Council should undertake a fact-finding trip to Africa before July 2020, when presidential election activities may begin to preclude senior-level Administration participation.

    pdf PAC-DBIA: Letter and Recommendations to President Trump - February 2020 (132 KB)

  2. Once a company has made the decision to engage in any of the markets in Africa, there are a number of key considerations to compete successfully:

    Adopt a long-term view. While many of the world’s fastest-growing economies are found on the continent of Africa, companies need to take a long-term approach given the market dynamics of emerging economies. Businesses have been successful when they anticipate the significant investment of time and resources necessary to achieve their business goals. Being committed to the long-term, and managing and sharing that view internally and externally, has helped position companies for better success. Typically, government leaders in Africa appreciate this long-term approach.

    As in many parts of the world, doing business in Africa can take time and patience. Projects may require long preparation times, long distance travel, and projects and deals may face delays or unexpected hurdles, such as sudden changes to customs regulations or required import documentation. Persistence and effective followup are key to the success of a deal or project. This is particularly true when working with governments. While timelines can stretch, day-to-day engagement can help to keep things moving.

    Align with host government objectives and demand. As with many emerging markets, many governments in Africa play a leading role in setting their national economic development plans, particularly through vision papers, national agendas, and economic growth strategies. These can include everything from strategic industry development, workforce issues, infrastructure programs, financial inclusion, and digital economy strategies. Engaging early to ensure strong relationships with government, not only at leadership but also at working (emerging leader) level, is a key opportunity.

    pdf PAC-DBIA: Keys to Success Report - February 2020 (701 KB)

Tunisia is now ready to trade under the COMESA FTA

Tunisia can now export its products to 15 member states of the COMESA Free Trade Area without paying import duties after completing the process of developing and issuing the legal instruments for trading. In a communication by the Tunisia Minister of Trade, Mohamed Msilini, to COMESA Secretary General Chileshe Kapwepwe on 3 March, Tunisia declared it was now ready to implement the COMESA FTA. At the same time, the minister forwarded the legal document published by the Tunisia Customs authority on the implementation of the COMESA FTA as well as the final adopted template of the COMESA Certificate of Origin to be used by the Tunisian operators when exporting to COMESA member States. The Secretariat will subsequently inform the rest of the member States that they can now trade with Tunisia as an FTA member and share with them the legal instrument and sample certificates.

Zimbabwe: Agriculture sector disaster risk assessment (World Bank)

This report presents an assessment of Zimbabwe’s agriculture sector disaster risk and management capacity. The findings indicate that Zimbabwe is highly exposed to agricultural risks and has limited capacity to manage risk at various levels. The report shows that disaster-related shocks along Zimbabwe’s agricultural supply chains directly translate to volatility in agricultural GDP. Such shocks have a substantial impact on economic growth, food security, and fiscal balance. When catastrophic disasters occur, the economy absorbs the shocks, without benefiting from any instruments that transfer the risk to markets and coping ability. The increasing prevalence of ‘shock recovery-shock’ cycles impairs Zimbabwe’s ability to plan and pursue a sustainable development path. [WFP: Many Mozambicans still struggling to get back on their feet, one year after cyclone]

Kenya’s agricultural trade: updates

  1. Sugar imports up 28% in January on low production. Sugar imports in January grew 28% compared with the similar period last year as the country shipped in more of the sweetener to cover for a growing deficit. According to the Sugar Directorate, imports in January stood at 46,796 tonnes compared with 36,674 in the corresponding period last year. Local production declined by 15% in the review period compared with last year following poor performance in most factories with about four of them remaining shut. The directorate notes that the continued closure of Mumias and Kwale sugar factories have had a huge impact on sugar production.

  2. Munya, Wekesa differ on maize importation plan. Agriculture Cabinet Secretary Peter Munya and the Strategic Food Reserve chairman Noah Wekesa are headed on a collision path over the imports of maize to bridge an impending shortage. The Noah Wekesa- led fund has requested the Ministry of Agriculture for importation of four million bags of maize to refill the SFR reservoirs and curb a shortage. However, Mr Munya says they will not import maize at the moment until the claims from SFR are verified. “We are not going to import maize until a proper assessment has been done and approved by the Cabinet,” said Mr Munya. Mr Wekesa said the SFR has Sh10 billion in its account, which it can use for the imports once the green light has been issued. The government said a food security committee that moved round the country assessing the stocks indicated that the available stocks can only last up to the end of April, meaning that Kenya will have to seek alternative stock to cushion consumers from high prices of flour.

Related: Africa’s Production and Trade: Agriculture and minerals - a new tralac e-book

Promoting African green business and circular economy for better policies (UNEP)

On the shores of Lake Victoria, just outside Kampala city in Uganda, State Minister for Environment of Uganda Beatrice Anywar addressed over 300 African entrepreneurs and policymakers gathered in February 2020 at the Switch Africa Green regional forum to discuss how to advance green economy in Africa. Echoing the main lesson learned from phase 1 of Switch Africa Green, a project led by UNEP and supported by the EU to assist Africa’s transition into green economy, Anywar said the transition to a green economy requires actions and significant technological, behavioural and systemic change at all levels of the society, including citizens, public and the private sector. “It has been established that more radical innovations come from micro, small and medium enterprises,” Anywar said. “[These enterprises] play a key role in the transition to green economies and sustainable development in general by greening the existing business models and creating new business models that are not only economically profitable but also create environmental and social inclusiveness.”

UNECA: Economic diversification a must, as Central Africa faces double-jeopardy with coronavirus

Speaking to a range of media organizations to unpack the impacts of COVID-19 to Central African economies, Antonio Pedro, Director for ECA’s Office for the subregion said “with the coronavirus, Central African countries face a double jeopardy, underpinned by their excessive dependence on the export of commodities.” “This double jeopardy means that in addition to struggling with the health pandemic with very limited financial resources and fragile health systems, we are also faced with addressing its serious economic effects, which are multiplied because of the structure of our economies leading to a disproportionate exposure to the contagion effects of external shocks.”

In the Central African subregion, he said, countries such as Gabon, Congo, Chad and Equatorial Guinea will be among the hardest-hit in economic terms given the weight of oil exports in total exports. In a scenario of a US$30/barrel this would be a 50% reduction in oil export revenues caused by a demand and price contraction. The latter, a result of downward projections of the rate of growth in Chinese and Western economies and unresolved dispute between Russia and Saudi Arabia on oil production ceilings. Apart from oil, areas to be most affected, according to Economic Affairs Officers Simon Fouda and Issoufou Seidou Sanda, are the supply chain, tourism, remittances from the diaspora and commodities such as coffee, cocoa, rubber and timber. The effect on tourism for instance could cause Sao Tome and Principe to lose 34.2% of its projected GDP in 2020, which is far more significant in terms of loss than what oil-dependent Gabon and Equatorial Guinea would lose in terms of previously projected GDP – that is, 17.6% and 18.5% respectively. [ pdf Economic Impact of the COVID-19 on Africa (1.37 MB) ]

Bloomberg: How coronavirus will dominate African interest-rate decisions

Central bankers in five key sub-Saharan African countries will meet on interest rates in the next ten days as the focus turns to them for measures to shore up their economies that are expected to be hit by the novel coronavirus. Since their monetary policy committees last met, South Africa declared a national state of disaster, Ghana set aside the local-currency equivalent of $100m to combat virus-driven contagion and Kenya’s central bank dropped charges on mobile-money transactions to curb the use of cash for hygiene reasons. Many governments have moved to restrict travel. On Monday, monetary policymakers in Mozambique reduced reserve requirements to boost liquidity, and those in Nigeria announced measures including the extension of a moratorium on principal debt repayments. Still, after the US Federal Reserve cut its main interest rate to near zero, the attention now is on what African central banks, many of whom target inflation and have to prop up volatile currencies, will do with interest rates to help their economies.

IMF: pdf Policy steps to address the Corona crisis (154 KB)

Monitoring, containing and mitigating the effects of the corona virus are top priorities. Timely and decisive actions by health authorities, central banks, fiscal, regulatory and supervisory authorities can help contain the virus outbreak and offset the economic impact of the pandemic. Central banks must support demand and confidence by preventing a tightening of financial conditions, lowering borrowing costs for households and firms, and ensuring market liquidity. Fiscal policy must step up to provide sizable support to the most affected people and firms, including in hard-to-reach informal sectors. Regulatory and supervisory responses must aim to preserve financial stability and banking system soundness while sustaining economic activity.

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