tralac’s Daily News selection
African countries are turning their attention to lockdown exit plans as they seek to limit economic and societal damage with figures from the ECA showing the continent losing about 2.5% of its GDP in one month or $65bn. Panelists on an ECA online global debate on Africa’s COVID-19 lockdown exit strategies agreed Africa could not sustain prolonged lockdowns, especially as 40% of the continent’s populace was struggling to survive daily as food shortages mount. But much needs to be done for the exit strategies to be successful, the panelists, including UN Under-Secretary-General and Executive Secretary of the ECA, Ms Vera Songwe; Spain’s Foreign Affairs, European Union and Cooperation Minister, Ms Arancha Gonzalez Laya; and Chief Executive Officer of the NEPAD Agency, Mr. Ibrahim Assane Mayaki, agreed. [Download: pdf The ECA’s presentation (1.39 MB) ]
pdf SADC regional response to the COVID-19 pandemic Bulletin #4 (264 KB) : Regional Trade and Transport Facilitation Committee observations
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.
Lubumbashi and Kasumbablesa in DRC were placed under lockdown on 28 and 29 April respectively following the recording of the first positive case in the provincial capital. Indications were given that cross border transport will not be stopped during the lockdown.
Cross border transport drivers in Malawi were reported to have gone on strike demanding to be supplied with PPE and payment of Covid-19 risk allowance. The striking drivers were reported to be threatening to block foreign trucks from entering Malawi until their demands are met.
A number of transport companies are reported to be laying off employees and going into liquidation as a result of the sudden drop in transport demand due to factories, mines and commerce closing, under lockdown measures. Regional airlines including SAA and SA Express are facing liquidation. The restructuring of the airline industry appears to be inevitable as a consequence of Covid-19 pandemic.
Construction of the Kazungula Bridge and One Stop Border Post across the Zambezi is proceeding uninterrupted. The two Governments have adopted measures to ensure compliance with Covid-19 health measures. Construction is still scheduled to be completed by the revised dates around July 2020.
Before the introduction of any transit restrictions in Africa, women informal cross-border traders had already stopped crossing borders for business because of transport and logistics constraints or disruptions in food markets of neighboring countries and in supply chains. After already a few weeks with no gains, there are pressing fears that this crisis will eventually push them out of business. Micro, small and medium enterprises, the backbone of developing countries’ economies, are experiencing some of the most severe effects of the economic slow-down. This is particularly the case of small informal businesses, which usually lack access to social protection.
But as countries prepare to address the COVID-19 crisis, it is expected that response mechanisms will not immediately prioritize business activities operating in the informal sector. There are ways in which the global threat of the pandemic could be turned into an opportunity for the most vulnerable. This requires governments to acknowledge, on one side, the enormous contributions of the informal sector to employment creation and to the overall economy and, on the other, the fact that formalization is not a realistic and affordable option for everyone. When it comes to informal cross-border trade, efforts should be directed towards providing new incentives to formalization and helping informal traders thrive. The following are policy measures that could serve both purposes. [The authors: Simonetta Zarrilli, Mariangela Linoci]
COVID-19 crisis and the informal economy: Immediate responses and policy challenges (ILO)
COVID-19 lockdown and containment measures threaten to increase relative poverty levels among the world’s informal economy workers by as much as 56 percentage points in low-income countries, says a new briefing paper issued by the International Labour Organization. In high-income countries, relative poverty levels among informal workers is estimated to increase by 52 percentage points, while in upper middle-income countries the increase is estimated to be 21 percentage points. As many as 1.6 billion of the world’s two billion informal economy workers are affected by lockdown and containment measures. Most are working in the hardest-hit sectors or in small units more vulnerable to shocks. These include workers in accommodation and food services, manufacturing, wholesale and retail, and the more than 500 million farmers producing for the urban market. Women are particularly affected in high-risk sectors, the report says.
Kenya: Corona to cut farm exports by Sh150bn (Business Daily)
Kenyan farmers are set to lose up to Sh51 billion from the decline in exports in four months of Corona restrictions, experts have predicted, worsening earnings outlook of key agricultural commodities. Bernard Kiarie, chief executive at the African Alliance Kenya said agricultural exports (horticulture, tea and coffee) which were collectively earning Sh21.4 billion monthly last year are currently down to about 40 percent. That translates to an annualised loss of Sh150 billion. “The situation will be dire in 2020 in case of an underwhelming production. This will result in the need for additional resources from the central government at a time when competing needs are on the rise,” Mr Kiarie said. Low demand in the European market had already pushed the flower industry to the edge from as early as late 2019 with Finlay’s signalling closure of its two farms employing about 1,000 workers, Karuturi laying off more than 3,000 workers while Oserian Farm was to fire 400 staff. At the moment, freight costs have shot up over the Covid-19 period to levels between Sh450 and Sh700 per kilogramme from Sh130 to 330/kg in January. [Nigeria: Agric exports also vulnerable to external shocks, says CBN]
Kenya: Relief for food exporters as more airlines resume flights (Business Daily)
Foreign-based airlines have resumed flying to Jomo Kenyatta International Airport as European countries start easing Covid-19 lockdowns, pushing up demand for fresh produce and the capacity of freighters. The latest entrants are British Airways and Singapore Air, which had stopped plying the Nairobi route following restrictions on international travel and low demand for horticultural produce in Europe after cancellation of orders. Other airlines have also increased their frequencies, with Ethiopian Airlines flying daily from JKIA, KLM three times a week and Kenya Airways also making a couple of trips to Europe and China. “We are happy that the capacity for freight is now building up at JKIA and this will go a long way in ensuring we do not suffer space constraint as well as address the high cargo rates being levied at the moment,” said Fresh Produce Consortium chief executive Ojepat Okisegere.
Pandemic puts strain on 30 major African oil and gas projects (The Africa Report)
To date, oil and gas majors have only officially announced delays and cancellations impacting minor projects, but the start-up dates of most major hydrocarbon projects are expected to be postponed by one to three years. Rystad Energy, an independent energy research and business intelligence company, helps us take stock of the situation.
Prior to the crisis, aviation contributed $1.7bn to Nigeria’s GDP and supported 241,000 jobs. IATA estimates that the COVID-19 crisis puts 124,000 Nigerian jobs at risk and some $900m of the country’s GDP. The Nigerian government has introduced broad economic relief packages to mitigate the devastation caused by COVID-19 but IATA now urges the government to implement specific financial relief measures for aviation to ensure that, the sector will be capable of driving the recovery.
A conceptual and empirical analysis. This paper discusses how to promote trade in services as a channel for growth, employment, and diversification by assessing services trade costs and identifying policies that contribute to their reduction: a concept termed trade facilitation in services. It summarizes the latest research on the costs facing trade in services beyond discriminatory market access and national treatment and finds that these are high. It proposes measures that could fall under the scope of a potential trade facilitation in services agenda, namely: streamlining processes and procedures used in administering regulatory policies aside from the policy itself, improving access to information on regulatory policies (that is, transparency), and boosting the efficiency of governance structures for regulators that set policies affecting trade in services.
Concepts and empirical importance. This paper examines the concept of trade facilitation in services from the perspective of the recent literature on the determinants of services trade. The aim is to conceptualize trade facilitation in this area as a dimension of international integration beyond the baseline restrictiveness of policy, as captured by indicators of discriminatory market access. The analysis focuses on the role of governance structures, institutions, and transparency in shaping the environment for trading in services internationally. In addition to examining these factors, the paper provides some novel empirical estimates.
This policy brief makes a case for protecting science, technology and innovation (STI) budgets during the COVID-19 crisis and its aftermath, based on the fact that continued investments in STI will be critical to the achievement of the 2030 Agenda for Sustainable Development. Even though developing countries as a group have recorded continued growth in R&D expenditure over recent years, the absolute levels remain small and their STI capabilities limited. It is therefore crucial for developing countries to reinforce their commitments to protect investment in STI and to design recovery packages that leverage technology and innovation for sustainable development. Key points:
Stability and predictability of funding for science, technology and innovation are critical for the ability of national innovation systems to support sustainable development.
During and after the COVID-19 crisis countries, particularly in the developing world where innovation systems remain fragile, should protect science, technology and innovation resources from austerity drives given their long-term implications for development strategies.
The policy responses proposed in this policy brief introduce concrete steps in effectively continuing investments in science, technology and innovation, both during and after the crisis, towards the achievement of the 2030 Agenda. [The COVID-19 pandemic and the blue economy: new challenges and prospects for revoery and resilience]
The full effect and duration of the COVID-19 crisis is still unknown, and its peak- and second-round effects are still to come in most countries. With indebtedness at record levels, the tight interlinkages between sovereign, financial and corporate sectors may give rise to adverse feedback loops, especially in countries with weaker crisis management and corporate insolvency frameworks. It is crucial to continue strengthening the resilience of the financial sector, while helping mitigate the impact of the crisis, so that it can play its countercyclical role now, and support the economy in the recovery phase.
Decisions, including whether and how much to scale up quality public investment, will depend on the needs in specific sectors and their economic and social benefits, financing capacity, and the efficiency of public investment. This last point is critical for all countries because one-third of funds for public infrastructure is lost worldwide to inefficiency and corruption. For advanced economies with ample room in the budget such as Germany and the Netherlands, spending more on public investment is worthwhile because the value of the resulting assets will likely exceed the liabilities incurred given how low interest rates are. This in turn improves the public sector’s net worth. For countries with less room to maneuver when it comes to spending, such as Italy and Spain, they can redirect revenues and expenditures to increase investment. In emerging markets and developing economies such as Brazil and South Africa, high debt levels and rising interest payments call for financing development in a prudent and sustainable way. These countries should try to achieve more with less. Raising tax revenues over the long term would be crucial for low-income developing countries such as Nigeria.