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tralac’s Daily News selection

tralac’s Daily News selection
Photo credit: Joseph Maynard

24 Apr 2020

Peter Fabricius: Africa’s free trade agreement gets locked down for the year (ISS, Daily Maverick)

The AfCFTA has become the latest in the many casualties of the devastating coronavirus pandemic which has so far infected over 2.7 million people and killed more than 191,000 globally. In Africa the toll is over 27,000 cases and 1,298 deaths. The AfCFTA, widely touted as an economic saviour, was signed and ratified in record time and was due to come into effect – ie free trading was supposed to start – on 1 July. But that kickoff will probably be postponed until at least 1 January, depending on the severity of the Covid-19 impact on the continent. The AU summit which South Africa was to host on 30 May to encourage trade negotiators to complete their bargaining on tariff reductions, rules of origin and other necessary regulations, will now probably only happen earliest in November or December. Wamkele Mene, newly elected Secretary-General of the AfCFTA secretariat, said these were the postponements the secretariat had recommended to heads of state who still had to ratify them. But it’s hard to see how they could reject this proposal. [Nigeria: Business leaders, others seek delay in AfCFTA’s implementation]

“Post COVID-19, Africa must adopt inward-looking trade strategy”: Ofosu-Dorte (Ghanaweb)

The executive chairman of law firm AB & David, David Ofosu-Dorte, is proposing that through the AU and the AfCFTA, African countries should be made to produce a COVID-19 impact analysis of AfCFTA. The document should come with an adjusted Boosting Intra-Africa Trade strategy plan to help the continent identify challenges countries faced and are facing due to COVID-19, and draft some measures to mitigate and strengthen supply chains in specific areas. [Frank Matseart: How to keep trade between Africa and the rest of the world flowing]

COMESA hands over Tripartite Task Force leadership to SADC (KBC)

The changeover, effective 22 April, was conducted by teleconference on Tuesday this week, during the 31st Meeting of the Tripartite Task Force made up of the Chief Executives of the three RECs. COMESA has chaired the TTF since November 2017. In her handing over statement, the COMESA Secretary General, Ms Chileshe Kapwepwe, outlined key accomplishments that the Tripartite group has achieved in its three pillars: market integration, infrastructure development and industrial development. COMESA leads in the first pillar, while EAC and SADC takes the lead in the other two respectively. “As I hand over to SADC, the ratification of TFTA Agreement especially with Zambia, Zimbabwe, Comoros, Tanzania, Sudan, Eswatini and Malawi is one of the activities that will need active follow up,” the COMESA SG said.

In his remarks, Dr Mhlongo, who represented the SADC Executive Secretary, noted that SADC was taking over the stewardship of the group at a critical time of crisis occasion by COIVD-19 pandemic. “We may have to re-look at the tripartite implementation plans and prioritize what can be done in the prevailing environment that we are all in,” he said. He noted that the implementation of activities under the industrialization pillar has been slowed down by resource constraints.


pdf Communiqué of the Bureau of the Assembly of AU Heads of State and Government video conference with African Business Leaders on COVID-19 (397 KB) (Presidency)

President Ramaphosa also informed the Meeting that he has appointed Mr Benkhalfa Abderrahmane, a former Minister of Finance of Algeria to join the panel of Special Envoys, and will soon announce the appointment of one more additional Special Envoy, from the Central African region.

In order to ensure a coordinated implementation of the Africa COVID-19 response strategy, the Heads of State and Government agreed to convene a Meeting with the Heads of State and Government who chair Regional Economic Communities as soon as possible.

The Heads of State and Government encouraged the Business Leaders to establish a private sector platform to develop further proposals to support the Continental response strategy for combatting the COVID-19 pandemic.

Vera Songwe: Innovative tech and connectivity key to fighting COVID-19 in Africa (ECA)

Dealing with the health and economic challenges of COVID-19 has made one point abundantly clear for African countries – “that we need broadband, faster, cheaper, and expanded to the last mile of our populations.” UN Under Secretary-General and Executive Secretary of the Economic Commission for Africa, Ms. Vera Songwe, echoed this point today during a virtual high-level policy dialogue on ‘leveraging technology in assisting African countries in the fight against COVID-19’. Organized in collaboration with Ant Financial Services of the Alibaba Group, the live-streamed event brought together leaders of the Asian tech giant, some African ministers of technology and telecommunication, private sector actors across the continent and innovation/digital economy activists who agreed that technology is a common denominator in mitigating the impact of the pandemic, restoring livelihoods and tackling similar challenges in the future. The dialogue ended with a general agreement on the need to quickly set up a collaborative platform for immediately helping businesses to sell African products on and beyond the continent in this time of crisis. The panelists agreed to reconvene quickly to act on these recommendations.

Mzukisi Qobo, Wandile Sihlobo, Isaah Mhlanga: Africa’s food security under fire (Fin24)

We set out various proposals for African leaders and external development partners. First, African leaders should place food security at the centre in their quest to mobilise resources from continental institutions and external development partners. Without receiving a sufficient quantum of resources to strengthen the resilience of Africa’s food systems, any isolated intervention will be undermined by deepening malnutrition and rising levels of poverty. Second, support from the international financial institutions towards national response plans of various African countries should have dedicated resources that are targeted at improving food security. Third, continental institutions such as the African Union should mobilise rapidly, coordinate an inter-agency task team on food security, and constitute a sound platform to respond to food crises and multidimensional poverty that affect various regions in the continent. Finally, the African continent should use this crisis to fix institutional and governance weaknesses and build up resources that will bolster the resilience of food systems in the continent. Crucially, African leaders should take seriously the role of agriculture in improving livelihoods and as an important economic sector that could be positioned for competitiveness in the global markets.

South Africa: COVID-19 and reopening the economy (TIPS)

This brief looks at the impacts of the pandemic on the global economy, especially South Africa’s main trading partners. Reopening the economy will take time and provide opportunities unevenly by industry and region. The regulation of economic activity will depend in part on the extent of infections, in part on the priority given to different value chains, and in part on the risk associated with the production of specific goods and services. But the recovery will also be affected by economic factors, in part rooted in the shutdown period and in part reflecting long-standing economic challenges nationally and internationally. The brief analyses the blockages to reopening the economy, which in turn lays the basis for more effective and strategic measures.

Related:


EU Chief Economist: The impact of the Covid-19 pandemic on global and EU trade

The in-house analysis performed by DG TRADE’s Chief Economist team estimates a 9.7% decrease in global trade for 2020 (pdf). For the EU27, the predicted COVID19-related economic contraction results in a reduction of 9.2% in extra-EU27 exports of goods and services, and an 8.8% decrease in extra-EU27 imports in 2020. In absolute terms, compared to the latest available statistics, this amounts to a reduction of exports by about 285 billion EUR and by 240 billion EUR in extra-EU imports (goods and services combined). Exports of primary sectors (other than energy) and services trade turn out to be less strongly affected than manufacturing sectors, most of which see export contractions above 10%. In particular, transport equipment and electrical machinery turn out to be more strongly affected. Given the fast changing elements of the crisis and many recent updates of economic forecasts, we will issue new trade projections in May. With predicted GDP losses becoming more significant, reductions in trade may also be more considerable. [WTO, IMF heads call for lifting trade restrictions on medical supplies and food]

The EU and 21 other WTO members pledge to ensure well-functioning global food supply chains

The statement calls for any emergency measures related to agriculture and agri-food products to be targeted, proportionate, transparent, temporary and consistent with WTO rules. Measures should not distort international trade in these products or result in unjustified trade barriers. Rather, WTO Members are encouraged to put in place temporary working solutions to facilitate trade. Signatories also commit to engage in a dialogue to improve preparedness and responsiveness to pandemics, including through multilateral coordination. [ pdf Joint Statement (87 KB) ]

Pamela Coke-Hamilton: Impact of COVID-19 on tourism in small island developing states (UNCTAD)

On average, the tourism sector accounts for almost 30% of the gross domestic product (GDP) of the SIDS, according to WTTC data. This share is over 50% for the Maldives, Seychelles, St. Kitts and Nevis and Grenada. Overall, travel and tourism in the SIDS generates approximately $30bn per year. A decline in tourism receipts by 25% will result in a $7.4bn or 7.3% fall in GDP. The drop could be significantly greater in some of the SIDS, reaching 16% in the Maldives and Seychelles. It is expected that for many SIDS, the COVID-19 pandemic will directly result in record amounts of revenue losses without the alternative sources of foreign exchange revenues necessary to service external debt and pay for imports.

In general, countries may be able to weather economic storms by relying on additional debt or using available foreign reserves. However, access to global capital markets is increasingly tight, more so for small countries such as SIDS, which are often highly indebted and not well diversified. The external debt of the SIDS as a group accounts for 72.4% of their GDP on average, reaching up to 200% in the Seychelles and the Bahamas. Foreign reserves are also generally low, with many of the SIDS possessing only the reserves sufficient for a few months of imports. Given these statistics, it is evident that without international assistance, the economic consequences of the pandemic will be devastating for many of the SIDS.

Kenya: Social economic blueprint for the Frontier Counties Development Council 2018-2030 (World Bank)

The Frontier Counties Development Council is a regional grouping of the counties of Baringo, Garissa, Isiolo, Lamu, Mandera, Marsabit, Tana River, Samburu, Turkana, Wajir, and West Pokot established to accelerate the socio-economic transformation of its members. These counties occupy 377,746.8 square kilometers equivalent to 65% of Kenya’s land area and 12% of the population. They are part of Kenya’s Arid and Semi-Arid Lands (pdf) that comprise 23 of the 47 counties. Since the colonial period the region has been politically and economically marginalized, and to date, their socio-economic development outcomes lags the rest of the country. In 2016, about 20.5% of Kenya’s poor lived in the FCDC region. On average, about 64.2% of the population live below the poverty line compared to a national average of 36.1%. Over the last decade, however, greater effort has been directed towards economic development and transformation of the region. Recent policy and constitutional developments provide hope that the marginalization of the FCDC region may, at last, be a thing of the past.

Exporters dynamics and the role of imports in Argentina (World Bank)

This paper examines the performance of globally engaged firms in Argentina in the past decade. Using highly disaggregated firm-level customs transaction data for imports and exports, the paper documents the progressive retreat of Argentine firms from global markets. Between 2007 and 2017, the number of exporters decreased by 30 percent. Benchmarking the characteristics of these exporters with similar countries reveals that Argentine exporters are disproportionally fewer and individually larger, with export value extremely concentrated in a few firms. Firm churning rates are disproportionately low and survival rates of entrants are high. These findings reflect exceptionally high entry costs of export, which are the result of anti-export bias and import substitution policies that sought unsuccessfully to develop the local industry. The paper shows that exporters that import directly intermediate and capital goods have better export outcomes than other exporters.