tralac’s Daily News selection
The Secretary-General of the AfCFTA Secretariat, Mr Wamkele Mene, spoke during a webinar on the “Political economy of COVID-19: implications for AfCFTA”, which was organised by the Africa International Trade and Commerce Research and Nigeria Private Sector Alliance. He said the Bureau of African Ministers of Trade will be meeting next week to consider further proposals for minimising the negative impact of the pandemic across the continent. According to him, one of the items on the ministers’ agenda is to work out a possible moratorium on duties for essential products and goods “when they cross the border so that the items will become more affordable for consumers across the continent.” [Maryanne Iwara: Leveraging the African Union’s role in the time of Covid-19]
South Africa: March trade statistics show a surplus of R24.25bn (SARS)
The South African Revenue Service today released trade statistics for March 2020 (pdf) recording a trade surplus of R24.25bn. The year-to-date (1 January to 31 March 2020) trade surplus of R34.93bn is an improvement from the R5.28bn deficit for the comparable period in 2019. Exports increased by 13.3% year-on-year whilst imports declined by 6.2% over the same period. The March R24.25bn trade surplus is attributable to exports of R118.45bn and imports of R94.20bn.
The Southern African Customs Union says that its member states were bleeding at least R7bn in customs revenue every month due to the COVID-19 pandemic. SACU’s executive secretary Paulina Elago said that closed borders had cut trade in some countries to only one percent of normal flows. Due to closed borders, the Botswana Unified Revenue Service is currently processing less than 1% of the usual cross-border trade volumes while the eSwatini Revenue Authority estimates a decline of 70%. At that rate, which means that of the estimated R10bn that SACU would have generated in a month, anything between R7bn and R9.9bn is already lost.
Report on the COVID-19 pandemic in the SADC region: extract on trade and transport facilitation (SADC)
The Regional Trade and Transport Facilitation Committee continues to monitor implementation of COVID-19 response measures by Member States and to analyse the alignment of national measures with the adopted regional guidelines. The following has been observed:
Some member states have begun aligning national measures to the regional guidelines. Specifically, the measures recently gazetted by Zimbabwe and Eswatini are broadly aligned to the regional guidelines and so are the draft guidelines from Zambia.
There are improvements to the quality of quarantine facilities at borders and services but more still needs to be done to ensure full compliance with WHO and SADC guidelines.
The Non-Tariff Barrier (NTB 000-951) registered against Zambia’s policy on mandatory quarantine of all incoming drivers and vehicles including drivers ferrying essential and perishable cargo still remains unresolved.
Operators and drivers are unhappy with fees being charged for police escorts in some Member States and the NTB (NTB 000-953) that was registered against Zambia is still unresolved.
An NTB (NTB 000-949) registered against Mozambique suspending issuance of visas to commercial truck drivers still remains unresolved and is negatively affecting member states who use the port of Beira.
A strategy on collaboration on the implementation of the Guidelines with the private sector through the SADC Business Council is being developed in consultation with the Nepad Business Foundation who are the Secretariat to the SADC Business Council.
COVID-19 in COMESA: Situational Update 11
CNBC Africa interview: Sandra Uwera, CEO of the COMESA Business Council CEO
East African Business Council snapshot survey: impact of COVID-19 on business and investment in the EAC
Source of data for this survey were collected using an online survey whereby a questionnaire was sent out to EABC members and non-members from different sectors in EAC region. Respondents were asked to indicate how COVID-19 affected their business cash flows in their respective sectors and suggest mitigation measures. The survey established that tourism, logistics, and retail have significantly experienced a higher percentage of reduction of cash flow of 92%, 75% and 63%, respectively. Other sectors affected include: real estate, finance, construction, events management, ICT, manufacturing and consultancy.
However, the pharmaceutical sector has recorded zero effect on cash flow. The COVID-19 pandemic has attributed to the increase of demand for pharmaceutical products as well as decisions of EAC Partner States to allow movement of essential goods such as pharmaceutical businesses during this pandemic.
According to the response from respondents of the survey, the reduction of cash flows will continue disrupting value chains and may lead to the closure of businesses and investment projects as well as increase the rate of unemployment unless EAC Partner States come up with appropriate measures to mitigate the impacts of COVID-19 pandemic.
Based on the data analysis presented above, COVID-19 as affected companies as follows: decline in sales (55.9%), increased cross border restrictions (55.9%) and challenges to source raw materials (44.1%). Other ways in which businesses have been affected are; reduction in the export market and laying off staff (17.6%), delay of contracts and reduction of spending by customers (14.5%). To mitigate the impact of the reduced cash-flow, EABC recommends as follows (pdf):
Related EABC report: Impact of COVID-19 on EAC trade
Ugandan President Yoweri Museveni, Rwandan President Paul Kagame and Kenya’s President Uhuru Kenyatta on Wednesday agreed to formulate a common approach for the testing of truck drivers at border points for COVID-19, addressing an issue which has caused confusion and sparked fear in border communities in recent weeks. The leaders concurred after Museveni reached out to Uhuru and Kagame in a phone call at night, with the Ugandan leader revealing they had ‘a very long discussion’. Museveni further disclosed that he also called Tanzanian President John Pombe Magufuli, asserting, however, that they discussed issues unrelated to the testing of truck drivers. The announcement is expected to pave the way for policy experts to formulate protocols that could be implemented at border points to keep businesses going and further curb the spread of Coronavirus.
Uganda: Traders count losses as goods get stuck in Kenya (New Vision)
Ugandan traders are counting losses occasioned by delays in clearing goods both at Mombasa port in Kenya, and at the entry points at both Malaba and Busia. The importers say several anti-Covid-19 measures have disrupted many activities, thereby impacting the movement of goods. Although the exact figures are not known, sources privy to dealings between Uganda and Kenya say the losses could be in billions of shillings. Mr Hussein Kiddede, the chairperson of Uganda Freight Forwarders Association, told Daily Monitor yesterday that the crisis is heightened at the borders as Uganda tests all the drivers entering the country. “There is a delay and the last information we got was that there is a 35km stretch of trucks on the road, and this is certainly not good to the customer who is supposed to receive the goods because it means they have to wait longer. If it is a factory, it means production has to be halted.”
South Africa: pdf Economic measures for COVID-19 (555 KB) (National Treasury)
In the coming months, a special adjustment budget will set out a range of economic reform proposals and measures to stabilise the public finances. The National Treasury is working closely with provinces and local government to coordinate spending across all spheres of government, including through weekly online meetings with Finance MECs, provincial treasuries and metropolitan municipalities. In the months ahead, government’s response will shift towards helping support employment and investment, and to position the economy for structurally higher growth. This will happen in three phases:
Phase 1 is to preserve the economy through a set of immediate, targeted and temporary responses.
Phase 2 is a plan to recover from the immediate effects of the crisis by supporting investment and employment.
Phase 3 is a pivot to position the economy for the faster growth needed to restore the country’s long-term prosperity.
Mozambique: Request for disbursement under the Rapid Credit Facility (IMF)
The impact of the COVID-19 pandemic will be significant in the short-term, dashing prospects of a nascent economic recovery. The brunt of the impact will be felt in the first half of 2020, due to lower tax revenue collections and higher spending to treat infected people and protect the most vulnerable in society, as well as production and transportation disruptions if large segments of the population have to be put in quarantine when the outbreak spreads further. In the fiscal sector, the COVID-19 pandemic will lead in 2020 to a projected financing gap of about 4¾% of GDP due to (i) lower tax revenues (1¾% of GDP) given the adverse effect of lower GDP growth on revenue collections and temporary and well-targeted measures to support families, SMEs and the health sector, and (ii) higher spending to respond to the health crisis and humanitarian needs, including higher health related spending on goods and services (¾% of GDP), and higher cash transfers and subsidies to the poorest households as well as micro-businesses and SMEs (2¼% of GDP).
Nigeria: Request for purchase under the Rapid Financing Instrument (IMF)
Market dynamics have worsened and have led to an adjustment in the exchange rate. By end-March, foreign portfolio holdings decreased by 46% since the beginning of the year and by almost 60% since mid-2019. The official exchange rate has been adjusted by 17.5%, bringing it much closer to other rates, and the various exchange rate windows have been broadly unified around the rate in the investors and exporters window. The overall general government fiscal deficit for 2020 would widen to 6.8% of GDP (from 4.6% expected prior to the Covid-19 outbreak). Total revenue is projected to decline by 3.6% of GDP, with the sharp decline in oil revenue following the collapse of oil prices partially offset by a depreciation of the naira.
The fiscal financing gap remains large at about $11bn. Together with a larger deficit, a downward revision in available financing - including less recourse to CBN overdrafts - leads to about $8bn (2% of GDP), even after accounting for RFI purchases. Of that gap, 25% will be covered by existing budget support commitments from multilateral institutions. The authorities plan to cover the rest through reprioritization of existing project loans (including from the World Bank and AfDB) towards health spending, drawdown from existing deposits held in accounts of extra-budgetary funds and sovereign wealth funds, as well as domestic borrowing.
Kenya Economic Survey 2020: extract on international trade and balance of payments (pdf, KNBS)
During the review period, the total exports declined by 2.9% in the value of exports to KSh 596.7 billion, while total imports increased by 2.4% to KSh 1,806.3 billion, over the same period. As a result, the balance of trade deteriorated by 5.2% to a deficit of KSh 1,209.7 billion. The total value of trade transactions increased from KSh 2,378.8 billion in 2018 to KSh 2,403.0 billion in 2019. Horticulture; tea; articles of apparel and clothing accessories; coffee; and iron and steel, remained the leading export earners, collectively accounting for 59.0% of the total value of domestic exports. On the other hand (pdf), major imports included: petroleum products; industrial machineries; iron and steel; road motor vehicles; plastics in primary and non-primary form; and pharmaceutical products, which collectively accounted for 49.5% of the total import bill.
In 2019, Africa remained the leading destination of the country’s exports accounting for 37.6% of the total exports at KSh 224.2 billion, with exports to EAC partner states accounting for 62.6% of the total exports to Africa. Europe was the second leading destination of exports, accounting for 25.4% of the total exports at KSh 151.3 billion. The share of export earnings from European Union stood at 22.4% of the total export earnings, mainly due to horticultural products. Netherlands, United Kingdom and Germany were the three major export destinations within the EU region in 2019. Asia was the main source of imports in 2019, accounting for 63.8% of the total value of imports, with China, India, United Arab Emirates, Japan and Saudi Arabia being the main sources of imports from the region.
Mauritius: Covid-19 technical team set up to review local industrial sector (GoM)
A technical team will be set up to conduct a review of the industrial sector of Mauritius as well as propose recommendations for the consolidation of the local industry. It will comprise representatives of the Ministry of Industrial Development, SMEs and Cooperatives, Mauritius Export Association, Business Mauritius, Economic Development Board, Mauritius Chamber of Commerce and Industry, Association of Mauritian Manufacturers, SME Mauritius and Mauritius Cooperative Alliance.
Uganda starts exporting ARVs to South Africa (Dispatch Uganda)
Quality Chemicals Limited, Cipla in Luzira has received approval from the South African Health Products Regulatory Authority to start supplying Antiretroviral (ARV) HIV drugs to South Africa. According to Nevin Bradford, CIPLA’s chief executive secretary officer, the company recently dispatched 300,000 packs of ARVs, a combination of tenofovir, emtricitabine efavirenz to South Africa, as part of it’s “Africa for Africa” ambition. In a press statement, Bradford says this consignment marks the beginning of supply that’s expected to spread over the next 12 months and will give South Africans access to quality medicines made in Uganda. “For the first time, a manufacturer from East Africa has received approval to supply ARVs to South Africa,” said Bradford.