News
tralac’s Daily News selection
The AU has advertised the post of executive director for STATAFRIC, based in Tunis. The closing date for applications is 11 June.
African Business: Africa’s Top 250 Companies in 2020
As African leaders slammed the brakes on economic activities and put their countries or cities into lockdown to block the spread of the coronavirus, businesses and jobs were collapsing into intensive care and could be among the biggest casualties of the health crisis. This year’s Top 250 Companies survey (pdf) highlights the overall carnage in African share valuations in the last few years and even more so in March 2020. The survey ranks African or Africa-focused companies listed on public securities exchanges according to their market valuation, also known as “market capitalisation”.
Total value for all 250 firms on the list this year is $597.7bn, down 20% from last year’s total of $748.2bn. But last year had seen a 16% fall compared to total market capitalisation of $887.1bn in March 2018 and this year’s total value is 37% below peak value of $948.3bn in 2015. The market value of the 250th company – in other words the cut-off market capitalisation to join the Top 250 list – was $195m in 2020, compared to $394m in 2018. [Companion analysis: Africa’s Top 250 Companies by region in 2020]
ICC mobilises Sub-Saharan Africa regional network to fight impact of COVID-19 (ICC)
The virtual meeting, which took place on 14 May, aimed to augment the voice of African business into global discussions, identify ways to build private sector resilience, and pave the way for a sustained economic recovery from the COVID-19 pandemic. Chaired by ICC Secretary General John W.H. Denton AO, the meeting featured speakers Hubert Danso (CEO and chairman of Africa Investors), Kiprono Kittony (vice-chair for Africa of the ICC World Chambers Federation) and Babatunde Savage (ICC Regional Coordinator for Africa). The meeting also saw participation from new ICC Executive Board member Valentina Mintah, CEO of West Blue Consulting and Vice-Chair of ICC Ghana. Discussions centered around the following themes:
-
Regional and international instruments to support the private sector in Africa
-
Specific mechanisms to build the resilience of micro and small enterprises
-
Operationalizing the African Continental Free Trade Area
Dr Robert Mwesigwa Rukaari’s input for the ICC’s virtual meeting: The need to improve Africa’s balance of trade (New Vision)
What then can African countries do? We need to widen our export basket. We shall have to think of producing more than just the agricultural products, the furniture, footwear and garments. This calls for growing our production capacity as Africa and because of our limited resource envelope to achieve this, we shall need Foreign Direct Investment in the industrial sector. More so, Africa is largely well positioned to become the world’s food basket. Many countries on the continent are largely dependent on the sector and with proper planning and investment, they can turn into leading producers and suppliers of food around the world. This desperately needs to be harnessed. [Note: The author is the President of Uganda National Chamber of Trade and Investment]
SADC, World Bank reaffirm commitment to strengthen partnership for regional economic integration despite COVID-19 pandemic (SADC)
Through a virtual consultative meeting held on 12 May, co-chaired by the SADC Executive Secretary, Dr Stergomena Lawrence Tax, and Ms Deborah Wetzel, the Director for Regional Integration for the World Bank Group, the Southern African Development Community and the World Bank recommitted to enhance cooperation on regional economic integration in SADC, and strengthen response to COVID-19. This follows the Bank’s efforts to align its new three-year Regional Integration Strategy to SADC’s regional priorities for the period July 2020 to June 2023. During the meeting, the two parties underscored the need to strengthen collaboration to mitigate the socio-economic impact of COVID-19, which poses a risk to reverse progress made in reducing poverty and inequality. According to the preliminary findings of Secretariat’s analysis of the socio-economic impacts of COVID-19 in the SADC region, the pandemic will have short, medium and long-term negative impacts on all social and economic sectors, given its cross-cutting nature.
Monitoring the impact of COVID-19 on firms in Ethiopia (World Bank)
This document (pdf) describes the sampling design of the High Frequency Phone Survey of Firms (HFPS-F), implemented as a response to COVID-19. The survey aims at assessing the dynamics of the impacts of COVID-19 on establishments in Ethiopia. The HFPM-F will monitor the economic activities and responses to the COVID-19 crisis, particularly its effects on firm operations, revenues and jobs, by calling a sample of establishments every three weeks between mid-April and mid-September 2020 for a total of eight survey rounds. The final dataset will consist of a panel of 800 establishments (500 in Addis Ababa and 300 in four other cities; in the other cities, there will be seven instead of eight rounds).
Companies trading internationally strongly affected by COVID-19: evidence from Benin (ITC)
A survey conducted by the Chamber of Commerce and Industry of Benin reveals substantial effects on the economy. Nearly nine out of every ten enterprises interviewed in the country are affected, though some are more impacted than others are. The nature of the consequences suggests that many enterprises are facing a delicate financial situation. Several of them have already registered a drop of more than 60% in their turnover. The survey highlights the shock companies involved in international trade are facing and the disruption they experience in supply chains:
-
None of the surveyed exporting firms was spared, even though impacts range from weak to strong. Conversely, 11% of importing firms and one in five non-trading firms indicated that they did not feel any impact at all.
-
Nearly double the percentage of exporting and importing enterprises said they are strongly affected: 69% and 61% respectively said COVID-19 had a strong impact on them, compared to the 37% of enterprises not participating in international trade that said the same. [The author, Raymond Adjakpa Abile, is the Secretary General of the Chamber of Commerce and Industry of Benin]
Rwanda plans life beyond Covid-19 with food reserves (New Times)
Rwanda has drawn up a recovery plan that includes storing up an equivalent of maize and beans for 10 per cent of the population at 2,500 kilocalories per person per day, in a bid to ensure strong food reserves after the pandemic is defeated. “This shall be achieved by increasing resources for National Strategic Reserves to stock food, by supporting the districts to establish their own district food reserves and mobilising farmers to have community stores as well as storage facilities at the household level,” the Economic Recovery Plan says. A fund was also established to support businesses and small, medium enterprises in the sectors hit hardest by the pandemic. These Covid-19-related interventions are estimated to cost Rwf882 billion ($934 million) over the two fiscal years 2019/20 and 2020/21, equivalent to an increase in fiscal deficit of about 4.4 per cent of GDP on average per year according to government.
Kenya predicts 30% EAC export fall on Covid rules (Business Daily)
Kenya is predicting a drop by at least 30% of its exports to the East African markets as the public health measures adopted in the wake of Covid-19 outbreak slow cross-border trade. Kenya, which exported Sh140 billion worth of merchandise to the five EAC market last years, is particularly concerned about the huge number of truck drivers testing positive for Covid-19 at the borders with Uganda and Tanzania. Uganda and Tanzania remained the leading destinations of Kenyan goods accounting for Sh64 billion and Sh33 billion of Kenya’s exports to EAC respectively. “We believe with current delays at the border points, trade volumes will fall by at least 30 percent this year,” EAC and Regional Development Cabinet secretary Adan Mohamed told Citizen TV last week. “Trucks that normally take three days to move from Mombasa to Kampala now take eight days. If this continues for up to six months the drastic will affect the demand side as well.”
India draws 5 markers at WTO: says “no” to using pandemic as portal for trade commitments (Hindu Business Line)
India’s trade envoy JS Deepak on Friday drew five markers for combating Covid-19 at the World Trade Organization, pushing back against egregious efforts by major industrialised countries to extract trade-liberalisation commitments from India and other developing countries by using the pandemic as a portal. In a hard-hitting intervention at the virtual General Council meeting on 15 May. Deepak said: “The economic hardship and other negative repercussions of Covid-19 make carrying on with negotiations in a business-as-usual format untenable.” Deepak drew five markers.
-
First, India acknowledges “the importance of coordinating the global response in a way that avoids unnecessary disruption in the flow of vital medical supplies, food and other goods and services across borders.”
-
Second, India remains committed to taking emergency measures for combating Covid-19 on a “targeted, proportionate, transparent, and temporary” basis.
-
Third, attempts to prohibit the use of export restrictions on medical and agricultural products are untenable because “developing countries being unable to match the deep pockets of buyers in developed countries will see these products vanish in times of shortage.”
-
Fourth, “if WTO members are serious about trade-related measures aimed at combating Covid-19, then a useful starting point would be to enable the use of TRIPs (trade-related intellectual properties) flexibilities to ensure access to essential medicines, treatments and vaccines at affordable prices.”
-
And fifth, Covid-19 has underlined “the urgent need to build the capacity of developing countries and LDCs in areas like digital skills and broadband infrastructure, rather than negotiating binding rules on e-commerce, which will freeze the non-level playing field against their interests.”
South Africa’s trade envoy Xolelwa-Mlumbi Peter: ”We cannot agree to proposals for global rule-making that limit our policy options to respond to the crisis, enhance our preparedness for future crises and to pursue our plans for economic recovery. It is not advisable to make binding decisions in a policy environment that is manifestly uncertain, including on tariffs and export restrictions which are legal in the WTO rule book.”
The Gambia Systematic Country Diagnostic: Overcoming a no-growth legacy (World Bank)
The Gambia’s small size limits its ability to establish spillover effects from foreign direct investment. Foreign direct investments have played a key role in the economy, representing 33% of GDP in terms of stock in 2016, above Senegal (25%) and the average of ECOWAS countries (29%). However, The Gambia lags behind structural and aspirational peers in terms of FDI flows per capita. During 2012–16, FDI flows represented about $11 per capita, three times lower than the ECOWAS average of $36. FDI flows into The Gambia have been declining since 2007, when they reached $80m, or almost 10% of GDP. Because of the country’s small size, the interaction between foreign and domestic firms may be limited, hindering any positive benefits from FDI. Relative to the number of large enterprises (10 or more paid employees) in The Gambia (707 enterprises), the number of foreign companies is small. Only 24 foreign companies were operational in 2013, as reported by The Gambia Investment and Export Promotion Agency.
Like other small states, The Gambia has had difficulty diversifying its exports beyond a small set of trading partners. It exhibits an open economy with a specialized export structure (pdf). Merchandise exports are concentrated in fewer markets (and products) than most of its structural and aspirational peers. The Hirschman-Herfindahl (HH) Index of export products, a measure of economic diversification, was 0.45 in 2018, which illustrates an elevated level of concentration compared to peers in SSA, including Mauritania (0.31), Rwanda (0.38), Senegal (0.24), and Uganda (0.27).
