Building capacity to help Africa trade better

tralac’s Daily News selection


tralac’s Daily News selection

tralac’s Daily News selection

The inaugural virtual meeting of the Kenya-US Free Trade Agreement Negotiations Secretariat took place today, Kenya’s CS Trade and Industry Betty Maina has announced.

Ghana’s Foreign Affairs Minister, Shirley Ayorkor Botchway: ”While dealing with the pandemic and saving lives, Africa continent must prefer urgent action on plans and programmes that will advance continental trade and development. We must move ahead with the most ambitious steps towards pan African integration with the creation of the Africa Continental Free Trade Area, ensuring it is operationalised as soon as possible.”

Dr Arkebe Oqubay (Senior Minister and Special Advisor to the Prime Minister of Ethiopia): ”Multiple insights may be gained from Ethiopia’s early response to the pandemic, although the country will clearly encounter an inevitable surge in the coming months to which stronger responses will be required.”

Two cross-border trade updates:

  1. Traffic flow at Malaba border resumes as truck drivers agree to end sit-down strike. The drivers had used their trucks to block the road from Kenya, arguing that the standard operating procedures put in place by the Kenya and Uganda governments were a violation of their rights. The truck drivers were enduring long hours of waiting at the border to have their coronavirus test results. The drivers agreed to end the strike after the Kenyan authorities met owners of the trucks and threatened to take legal action against them for blocking the international road. Mr James Malinzi, the Eastern regional manager Uganda Revenue Authority said some of the trucks have developed mechanical problems that need to be addressed and this might affect the speed. He said during the strike, drivers parked three lanes that stretched over 50 kilometers that require to be cleared before trucks destined to Kenya from Uganda can get space to cross.

  2. West African food trade under strain as COVID-19 shuts borders. Trading across borders in West Africa, with its rutted roads and bribe-hungry police, has never been easy. But restrictions imposed by governments in response to COVID-19 are crippling the trade in perishable goods and livestock like never before, according to commercial data and interviews with traders. “If the trucks stop, the produce spoils,” said Boureima Diawara, whose traders’ collective slashed the number of trucks it runs to Dakar from up to nine a day to only one or two. The breakdowns in trade are contributing to fears of a spiralling food crisis. Brahima Cisse (CILSS regional markets expert: “There is an entire disorganisation of the market that makes the impact unprecedented. People in rural areas don’t even know where to go to sell their products to survive.”

Angola: Road Sector Public Expenditure Review (World Bank)

Considering its regional economic position, natural endowment, and its socio-economic development aspirations, it is becoming imperative to Angola to develop a safe, clean, and efficient transport sector. The government has recognized that the Angola’s economy needs the support of a well-integrated and efficient transport sector and made significant efforts to reconstruct its dilapidated road infrastructure and it has established a road maintenance fund. This study has made good use of the Angola’s Ministry of Finance BOOST data base to review and analyze the volume and structure of public spending in the road sector and identify any trends. The road network evaluation tools model (RONET), developed by the World Bank, is used to evaluate the preservation (maintenance and rehabilitation) requirements of the Angola road network. Extract (pdf):

Had the resources been spent efficiently, Angola could have built three times more kilometers of national roads and doubled the length of its current municipal road network. Real increases in spending have not been accompanied by commensurate increases in physical road output and quality. During the period (2008-2017), central government has spent a total of around $20.64bn on the national road network (fundamental and complementary roads), or around $2.52 million/km. This is a very high unit cost compared to the unit cost to build a new two-lane road which, on the high range, is estimated to be around 0.8-1.0 million/km. Considering the total amount of road sector expenditure during this same period, Angola could have added a total of around 25,795 km of new roads to its national network, three times more than the actual road length of 8200km reported by INAE and MINCON.

Agriculture products access to markets. Agriculture production value is predominant in the north and east of Angola. There are five provinces - Moxico Uige, Luanda Sul, Malanje and Luanda Norte – that account for two thirds of the total agriculture value of Angola. The access of agriculture production to main markets is in overall poor, almost three fourths of the total agriculture production value cannot reach markets. Of the overall agriculture production value, 71% cannot reach markets. Out of the 29% of the agriculture production value that can reach markets, only 37% of value can reach markets in less than 2 hours. A significant part of the agriculture value in the top five provinces that account for two thirds of the national value does not have access to markets. The distribution of access to markets varies per province (see Figure 8).

Zambia: Digital Economy Diagnostic Report (World Bank)

This digital economy diagnostic assesses Zambia’s strengths and weaknesses with respect to five pillars that together form the foundation upon which the benefits of digital transformation can be realized. This report suggests that the digital transformation strategy include four strategic thrusts:

  • promoting greater use of digital technologies in the economy

  • reducing government transaction costs and reducing the cost of doing business through digitally optimized government systems

  • improving the adoption of innovative digital solutions by enabling entrepreneurship

  • leveraging data and digital systems to improve sector-specific outcomes in secondary towns and rural areas.

Two key recommendations are provided (pdf):

First, develop an early-stage entrepreneurship strategy, which should include a subsection on technology entrepreneurship specifically. It appears that Zambia has not yet introduced a business life-cycle perspective into its policy and regulation framework. Such a strategy would necessarily entail collaboration between the Ministry of Commerce, Trade and Industry; the Ministry of Higher Education; and the Science, Technology and Innovation Council in its formulation. As illustrated by the emergence of several private initiatives over the past few years, the government also has a real opportunity to develop this strategy and the implementation plan in coordination with the private sector, thus leveraging financing and know-how. This is an opportune time to develop such a strategy, given the ongoing review of the MSME Policy and the Science, Technology and Innovation Policy. A framework for collaboration with the private sector in the implementation of these two policies to leverage private sector know-how and resources could also be included, and the institutional stewardship of the early-stage-entrepreneurship— including technology—agenda could be clarified

Second, seed and scale up (technology) entrepreneurship hubs and early-stage financing instruments through public-corporate and regional partnerships. Such hubs are likely needed at secondary school and university levels, and at the level of professionals that venture into starting their own businesses after several years of work experience. Each level needs a different approach, aligned with the capabilities of that level. To leverage scarce public resources, Zambia could consider public-private partnership funding for the operation of technology entrepreneurship hubs and for seed funds (that is, in the form of a revolving fund), and offering corporations tax incentives for in-cash or in-kind support to entrepreneurship endeavors such as internships, coaching, and facilities.

Louise Fox, Landry Signé: COVID-19 and the future of work in Africa. How to shore up incomes for informal sector workers (Brookings)

Donors and international financial institutions have promised substantial funds to support public sector budgets and the health sector, but support for informal sector workers, so far, is scant. Governments cannot ignore the damage already occurring to the livelihoods of these millions of people. The policy response should (extract):

  • Maintain household consumption among the bottom 75 to 80% of households, who have very limited savings. Limiting short-term household welfare damage, speeding up the overall economic recovery, and unlocking Africa’s business potential will depend on supporting demand in the economy. People need resources to buy needed consumption items. As in the US, cash transfers are the best option, and as Berk Ozler writes for the World Bank, experience shows that these programs are not hard for developing country governments to implement.

  • Protect the incomes of urban wage and salary employees. Although wage and salary work accounts for a small share of total non-farm employment—and tends to be more remunerative than informal sector work—wage and salary earners use their incomes to buy from informal sellers of goods and services, thus supporting the sector.

UNCTAD’s James Zhan, Christoph Spennemann: Ten actions to boost low and middle-income countries’ productive capacity for medicines

Building and expanding local productive capacity cuts across multiple policy sectors and requires concerted actions by all stakeholders in order to effectively address the five key bottlenecks [mentioned earlier]. Together, we can create a global enabling framework and national ecosystems to enable local manufacturing to contribute to both the local and global public health endeavor, and ultimately to achieving SDGs 3, 8 and 9. We envisage a two-pronged strategy to pursue our ten actions:

Our proposal addresses a gap in the international COVID-19 response by boosting productive capacity in LMICs. UNCTAD will closely coordinate and cooperate with existing initiatives, especially the WHO voluntary technology pool and the ACT Accelerator Global Response Framework, with a view to adding value and creating synergies.

UNCTAD will intensify collaboration with our five partner agencies (WHO, The Global Fund, UNICEF, UNIDO, UNAIDS) to implement the May 2019 Interagency Statement on Promoting Local Production of Medicines and Other Health Technologies. Other partners will also be welcome to join us at our World Investment Forum later this year to mobilize key global players to commit to longer term productive capacity building. Drawing the lessons from the COVID-19 crisis, we intend to increase LMICs’ resilience in pandemic preparedness beyond the pandemic.

COVID-19 heightens need for pharmaceutical production in poor countries (UNCTAD)

Those that have so far succeeded in establishing a local pharmaceutical industry capable of complying with international quality standards are mostly middle-income and low middle-income countries in Asia, such as India and Thailand. Productive capacity has remained largely untapped in Africa, where the majority of the least developed countries are located. Of the 40 vaccine manufacturers in 14 nations that are part of The Developing Countries Vaccine Manufactures Network, only one is African: the Biovac Institute based in Cape Town, which currently delivers over 25 million doses of vaccines each year for illness such as measles, polio and tuberculosis.

Biovac’s chief executive officer, Morena Makhoana, said Africa’s public health security requires ramped-up local production. Otherwise, the continent’s 1.2n people remain vulnerable to shocks in global supply chains and foreign governments’ trade policies. Since the pandemic began, nearly 80 countries have imposed some form of restriction on the export of medical supplies. “African governments should look at domestic capacity as an insurance for the next pandemic,” Mr Makhoana said. “We cannot continue to rely on external sources.”

Repurposing Africa’s manufacturing: A means to address medical equipment shortages and spur industrialisation (OECD Development Matters)

Other countries that are encouraging repurposing initiatives include Kenya, Ethiopia, Ghana, and Senegal. Based on our analysis (shown in figure 3, 4) most repurposing initiatives on the continent focus on producing PPEs and sanitizers, with only two initiatives manufacturing testing kits, in Kenya and Senegal. Educational institutes as well as textile and beverage companies are emerging as key drivers of these repurposing efforts, with PPEs like masks and gowns in large-scale production phase and ventilators in the prototype phase. A case in point, Mologic, a UK diagnostics company, is partnering with Institut Pasteur’s new diatropix facility based in Dakar, a local research institute and manufacturer, to develop and produce eight million rapid testing kits. This aims to significantly ramp up testing capacity and in turn enable Senegal and possibly neighbouring countries to conduct mass testing and screening. Such joint ventures between international and local manufacturers and institutes have the potential to boost African countries’ ability to rapidly scale up medical equipment production. [The authors - Rajkumar Mayank Singh, Antoine Huss, Jonathan Said, Kekeli Ahiable - are attached to the Tony Blair Institute]

Smart containment: How low-income countries can tailor their COVID-19 response


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