News

tralac’s Daily News selection

tralac’s Daily News selection

11 May 2020

Trade impacts of LDC graduation (WTO)

There are currently 47 LDCs, of which 12 are at different stages of the graduation process. Of these LDCs, seven are WTO members (Angola, Bangladesh, Lao PDR, Myanmar, Nepal, Solomon Islands and Vanuatu) while three are in the process of negotiating their WTO accession (Bhutan, Sao Tome and Principe, and Timor-Leste). The other two LDCs on the graduation path are Kiribati and Tuvalu. The report notes that while graduating LDCs have diverse economic and trade profiles, for most of them the impact of graduation appears limited, with only marginal increases in tariffs due to the loss of preferences. The biggest impact is likely to be confined to a handful of export items (clothing, fish products, footwear) destined for a few developed country markets (Canada, EU, Japan). With a considerable share of graduating LDC exports going to markets covered by regional trade agreements, the impact of graduation is likely to be limited for this trade.

Graduating governments may need to take certain steps to adhere to their new non-LDC obligations, particularly with regards to increased notification requirements, the report notes (pdf). The report explores options for graduating LDCs, including through forging appropriate trade arrangements with their trading partners and seeking recourse to instruments and procedures available under WTO rules that allow them to engage with WTO members should they face difficulties in meeting their commitments. It also identifies potential support measures that graduating LDCs can build on by working hand-in-hand with their development partners to ensure sustainable graduation. The WTO Secretariat intends to undertake a COVID-19 impact analysis for graduating LDCs under the aegis of this project.

Business leaders: COVID-19 shouldn’t derail AfCFTA (New Times)

According to sources, AU Chairperson Cyril Ramaphosa is now consulting member states to make a final decision, either on postponement or starting trading on 1 July. Edem Adzogenu, Co-Chair of the AfroChampions Initiative Executive Committee, noted that modes of communication have evolved over the past century and, to assume that 2021 will be any different won’t be prudent. He stressed: “We can’t anticipate 2021 just as we didn’t anticipate the COVID-19 pandemic. So we must approach this situation as if this is the new normal and find the measures, available technology and resources to proceed with the negotiations.”

Prudence Sebahizi (Chief Technical Advisor on AfCFTA at the AU Commission): “I don’t want to preempt the ongoing consultations with member states. Implementation of AfCFTA depends on member states readiness. We at the AUC can only facilitate the process where possible. If member states commit to start opening their borders on 1 July 2020, well and good. The private sector is waiting impatiently. The AfCFTA implementation can address challenges that are already caused by Covid-19 especially movement of essential products.”

COVID-19: Lockdown exit strategies for Africa (UNECA)

In the new report titled pdf COVID-19: Lockdown exit strategies for Africa (4.51 MB) , the ECA proposes seven exit strategies that provide sustainable, albeit reduced, economic activity. The report sets out some of the exit strategies being proposed and tried around the world and outlines the risks involved for African countries. With the lockdowns came serious challenges for Africa’s economies, including a drop in demand for products and services; lack of operational cash flow; reduction of opportunities to meet new customers; businesses were closed; issues with changing business strategies and offering alternative products and services; a decline in worker production and productivity from working at home; logistics and shipping of products; and difficulties in obtaining supplies of raw materials essential for production. Among the most sensitive issues facing policymakers is the impact of COVID-19 lockdowns on food security. The seven lockdown exit strategies being proposed by the think tank are identified from proposals and trials around the world.

Cesar Augusto Mba Abogo: 3 ways COVID-19 could actually spark a better future for Africa (WEF)

COVID-19 is an existential crisis. It is severely testing Africa’s social, economic and political resilience. In a post-COVID-19 world, the continent’s leaders will have to rethink many prior assumptions and find new balances for individual and collective behaviour. What I am absolutely certain of is that opportunities will emerge. Innovative minds previously imprisoned by institutional inertia and interest groups will rise to the challenges that we collectively face. What will the brave new world post COVID-19 look like in Africa? [Note: The author is Minister of Finance, Economy and Planning, Equatorial Guinea]

EAC states directed to support local production of essential medical products and supplies to combat COVID-19 in the region (EAC)

A joint consultative meeting of partner states’ Ministers and Cabinet Secretaries responsible for Health, Trade, Transport and EAC Affairs via video conference held on 8 May to discuss a regional approach to COVID-19 further directed partner states to facilitate farmers to continue farming activities during this pandemic and post COVID-19 period. The consultative meeting also directed partner states to support agro-processing and value chains as an import substitution measure. The Ministers requested the Ministries of Finance in the Partner States to establish special purpose financing schemes for small and medium enterprises, to cushion them from the negative effects of the COVID-19 pandemic.

The Ministers gave these directives in response to information availed to them that that the region’s key productive sectors are already experiencing a slowdown as a result of the COVID-19 pandemic, with sectors such as agriculture, trade, manufacturing and industry, tourism, offline retail and catering being the worst affected. Among the negative impacts on the regional economy are a food crisis in East Africa and severe disruptions in manufacturing and industry value chains. On the flipside are beneficial developments such as: increased production of face masks in the region; growing popularity of online retail using e-commerce platforms; growing popularity of online entertainment, and; increased Telecommuting and distance education.

SADC embracing electronic Certificate of Origin (SADC)

Currently, in the region, Botswana, Eswatini, Malawi, Namibia, Tanzania and Zambia have already developed their national module and are working on the component for transmission and receiving (outbound and inbound) of the e-CoO as per the specifications contained in the Framework and they will participate in the pilot phase. SADC Secretariat facilitated the backstopping mission on eCoO in these Member States in order to ascertain their readiness in the pilot exercise. Mauritius has already developed its eCoO module and is currently waiting to exchange with other Member States. It is planned that the e-CoO will go live in May 2020 in six Member States and it will eventually be rolled out regionally afterwards. This will make the SADC be one of the first Regional Economic Communities recognised by the Africa Union to implement the e-CoO regionally for trade facilitation.

Why COVID-19 makes a compelling case for the wider integration of blockchain (WEF)

If there were any lingering doubts over the value of blockchain platforms to improve the transparency of businesses that depend on the seamless integration of disparate networks, COVID-19 has all but wiped them away. We should look at this healthcare crisis as a vital learning curve that can show us how to build transparent, inter-operable and connective networks. Closer to home, it’s keeping economies moving. It’s facilitating cash-flow management for start-ups and ensuring timely payments for their products and pilots. It’s even helping consumers track their home office chair to improve their quality of life under lockdown conditions. The “visibility, traceability, and interoperability” of blockchain platforms to fortify, better connect and improve the resilience of supply chains will also be critical to getting the recovery underway in the world beyond the COVID-19 crisis. [The author, Mariam Obaid AlMuhairi, is attached to the Centre for the Fourth Industrial Revolution UAE at the Dubai Future Foundation]

Kenya: Court allows KRA to acquire new Sh1.2bn clearance system (Daily Nation)

The Kenya Revenue Authority is now free to continue rolling out the controversial Sh1.2 billion electronic customs clearance system after a five-year delay due to a legal battle over procurement. In a judgment issued by the Court of Appeal Nairobi, a three-Judge bench has upheld decisions made by the High Court and the public procurement oversight agency in dismissing a dispute involving the award of the technology advancement tender. The tender was for the supply, installation and commissioning of an integrated customs management system. Switzerland-based Webb Fontaine Group FZ LLC, disputed the procurement process and challenged the same at the Public Procurement and Administrative Review Board and subsequently at the High Court where its claims were dismissed.

Nic JJ Olivier, Sheryl L Hendriks: South Africa needs a national food security council to fend off starvation (Daily Maverick)

How is it that in countries across Africa, food security considerations were not initially considered as part of the precautionary actions taken in the wake of the Covid-19 pandemic? Decision-making in times of crisis is challenging. In the race to save lives, trade-offs have to be made. The sudden onset of the pandemic, its rapid evolution, and the enormous needs to be addressed may have led to Africa’s leaders failing to consider the food security implications of their measures. The suddenness and previously unthinkable extent of the radical curtailments caught ordinary people by surprise too. For millions of poor households across Africa, affected by the lockdowns, the threat of contracting the virus may be more distant than the very real fear of hunger. This is also true for South Africa with its pervasive presence of the triple challenge of deep poverty, persistent inequality and high levels of unemployment. Forced to remain at home by the intangible Covid-19 threat means an immediate loss of income in the short term for those who do have some form of income, with fears of redundancy and unemployment in the long term. And for those without any income (whether in the formal or the informal sector), the situation is at least as bleak as their dependence on a share of the limited income of family members has become a hollow memory.

East Africa: Impact of COVID-19 outbreak on supply chains, regional trade, markets and food security (WFP)

While the number of confirmed COVID-19 cases in East Africa so far is relatively low compared to other regions, disruption in supply chains is already affecting the trade and flow of commodities (pdf). Despite the comfortable stock of cereals in the global market, most countries in East Africa are food deficit and thus likely to face challenges. The pandemic is adding severity to the situation as the region is already facing multiple shocks including severe desert locust infestation and floods since the past few weeks. WFP estimates that 34 to 43 million people, within the nine countries, are likely to be food insecure during the next three months, an increase from 20 million during March-April.

CARE rapid gender analysis for COVID 19 East, Central and Southern Africa

COVID-19 in the ECSA region is a public health crisis, but one compounded with complex social-economic and political challenges and inequalities, particularly around gender. Lack of resources, limited health services, large vulnerable populations and low economic capacity means the impact will be profound. The outbreak will disproportionately affect women and girls in the ECSA region in significant ways, including adverse impacts to their health, education, food security and nutrition, livelihoods and safety and protection. Women are the primary care givers in the family and are also the key frontline responders in the health care system, placing them at increased risk and exposure to infection. The outbreak will also burden women by adding to their existing gendered household and community roles. Recommendations (pdf):

Tanzania: Avocados go from zero to Sh28bn-a-year crop (The Citizen)

Avocados have become Tanzania’s latest green gold, bringing in at least $12m (Sh27.6 billion) annually, up from zero five years ago, a new report reveals. Less than ten years ago, avocado exports never existed. But, data from Tanzania’s private sector horticultural apex body, the Tanzania Horticultural Association, as well as the Avocado Catalogue 2020 report, show that avocado exports jumped from 1,877 tonnes in 2014 to 9,000 tonnes in 2019, fetching the country $12mlast year. Taha’s chief development manager, Mr Anthony Chamanga, said that farm-gate prices also rose from Sh450 per kilogramme in 2014 to Sh1,500 in 2020 courtesy of Taha’s painstaking efforts to develop the avocado value chain in the country.

Kenya: Millers see costly flour on import freeze (Business Daily)

Millers say they will not be importing maize and warn Kenyans should brace for higher prices of flour in the coming days on the account of expensive raw material. The Treasury had granted millers permission to import maize at a lower tariff but declined to extend the duration as requested by millers. The Ministry of Agriculture objected to an extension on fears the imports would coincide with the harvesting of short-rain crop from south rift, impacting negatively on local prices. “We can confirm that no maize will come in. This will give the farmers a good opportunity to hold their maize and demand whatever price they deem fit,” said Cereal Millers Association. “Supply of maize in the market has started tightening and we expect the prices of flour to start going up very soon.”

In brief: