Building capacity to help Africa trade better

tralac’s Daily News selection


tralac’s Daily News selection

tralac’s Daily News selection

President Cyril Ramaphosa, as the AU Chairperson, convened a virtual meeting of the African Union Bureau and RECS today to discuss, inter alia, the Africa COVID-19 pandemic strategy and economic relief measures.

Today was Budget Day in Kenya, Rwanda, Tanzania and Uganda. Tomorrow’s compilation will carry an extensive set of budget documentation, commentaries and responses.

The Mauritius 2020-2021 Budget was presented last week (GoM)

Dr Renganaden Padayachy (Minister of Finance, Economic Planning and Development): Our “New Normal” will be the Economy of Life. That is why this budget is focusing on the following tryptic: Rolling out the ‘Plan de Relance de l’investissement et de l’économie’; Engaging in major structural reforms; Securing sustainable and inclusive development.

We also require a paradigm shift in our export strategy: Port dues and terminal handling charges for exports will be waived from July to December 2020 and reduced by 50% for the period January to June 2021. We are extending the Freight Rebate Scheme for exports to Africa; and the Trade Promotion and Marketing Scheme for exports to Japan, Australia, Canada and the Middle East. The Export Credit Insurance Scheme will be extended to cover all our exports. Government will support the first two years of operation of a “Made in Mauritius” warehouse set-up in Tanzania and Mozambique. To foster the transformation of the textile industry, a reputable international firm will conduct a comprehensive review of our export model. Companies will benefit from a 50% refund on the costs of certification, testing and accreditation of local laboratories. They will also be exempted from the payment of registration duty and land transfer tax for the purchase of immovable property.

Africa is our future. It is hand in hand that our socio-economic pathway will be written. Our Economic Recovery plan thus also focuses on reinforcing our partnerships with the rest of Africa. The MIC has earmarked Rs 10 billion to invest in African projects, including SEZ projects under a G2G framework.

Improving our Doing Business Environment. The reforms implemented by Government to facilitate business over the last three years have moved Mauritius amongst the top-ranking economies in the world for ease of doing business. We have to continue to facilitate business related public service delivery. This goes through e-services. An Integrated Single Window for Trade will be developed to connect all stakeholders within the port community. A Maritime Single Window will be introduced by the Mauritius Ports Authority to facilitate vessel clearances and reduce administrative bottlenecks at the port. The Corporate and Business Registration Department will become the central repository for all business information and licences through a digital platform.

Simon Evenett: Exports at risk from non-tariff measures - the experience of Commonwealth countries (The Commonwealth)

This International Trade Working Paper breaks new ground by combining three substantial databases of commercial policy change over the past decade to compute the shares of Commonwealth exports at risk from adverse policy changes and reforms by trading partners. The calculations undertaken for this study use the finest-grain trade data available globally, and the conservative methods employed imply that the resulting estimates almost certainly understate the scale of the threat to living standards. The study demonstrates that larger shares of Commonwealth member countries’ exports have been exposed to changes in other policies, undertaken by their trading partners, that have tilted the commercial playing field towards favoured, local firms. The principal findings of this study concerning Commonwealth export dynamics and concerning tariff and non-tariff measures are as follows:

  1. Overall Commonwealth export growth has been slower in the decade since the global financial crisis than in the years before. Although the slowdown has been less pronounced for Commonwealth exporters than for total world exports, this outcome is worrying, and it has likely diminished the contribution that integrating national markets has played in raising living standards.

  2. At the start of this year, 91.4% of the exports of developed country members of the Commonwealth faced tariffs and nontariff measures in destination markets. For developing country members of the Commonwealth, the corresponding percentage was slightly lower, at 88.5%.

  3. At the start of this year, the export exposure of developed and developing country members of the Commonwealth to policies that limit trade was twice the size of their exposure to policies reforming trade This discrepancy widens when attention is focused on non-tariff measures.

  4. There is considerable variation across groups of Commonwealth members in their exporters’ overall exposure to new technical and safety regulations imposed by trading partners. Seventy-eight per cent of developed country Commonwealth members’ exports have been exposed to such regulations, whereas a third of least developed country Commonwealth members’ exports have been so exposed.

  5. Except for the Pacific group, for every group of Commonwealth members, over half of the exports now compete against those of foreign rivals that benefit from state-provided export incentives.

  6. Given the composition of their exports, at the start of 2020 over half of exports from the Caribbean and American members of the Commonwealth faced import-competing rivals in foreign markets that have benefited from state aid. For the other groups of Commonwealth members, the comparable export exposure ranges from 14% to 31%.

  7. At present, Commonwealth exporters’ exposure to tariff increases is much less than their exposure to non-tariff measures. This finding still holds when export exposure to new technical and health regulations is stripped out. Non-tariff policies are where the action is.

  8. Although the focus in recent years has been on high-profile tariff increases, since the beginning of the most recent populist era (taken here to be 1 January 2017), Commonwealth export exposure to new tariff increases has been eclipsed by exposure to non-tariff threats. The notoriety of a trade policy instrument is not a reliable indication of the scale of the threat it poses to Commonwealth exports.

  9. The build-up of trade distortions that threaten Commonwealth exports started well before the most recent populist era. Recent high-profile tariff increases have only made overt a decade-long covert trend away from the principles of a level commercial playing field.

  10. The build-up of trade distortions threatening intra-Commonwealth exports has unfolded differently from those affecting extra-Commonwealth exports. For the former, export exposure to foreign rivals receiving state largesse for shipping abroad has exceeded exposure to potentially new harmful regulations. For the latter, the opposite applies.

COVID-19: Africa in urgent need of affordable broadband internet (ECA)

The ECA’s director of Technology, Climate Change and Natural Resources Management, Jean-Paul Adam, said the continent needs about $100bn to achieve universal, affordable and good quality internet access by 2030 (according to the World Bank). Presently, only 17.8% of households in Africa have internet at home and the continent accounts for only 21% of worldwide internet users. It is estimated that over a quarter of a billion school children in Africa have been affected by COVID-19 and most of them lack the digital tools to continue their education online. He cited affordability as one of the biggest barriers to internet access in Africa: “The average cost of 1GB of data on the continent is 7.12% of average income, with some countries having rates as high as 20%, which is way above the 1% – 2% deemed to be affordable.”

Global Investors for Sustainable Development Alliance: Statement of Action

The virtual meeting, convened by UN Secretary-General António Guterres (10 June) aimed at leading an urgent and coordinated response from the private sector, was chaired by UN Special Envoy for Climate Change and Finance, former Bank of England Governor Mark Carney. High profile attendees included GISD co-chairs Oliver Bäte (CEO of Allianz SE), Leila Fourie (CEO of the Johannesburg Stock Exchange), Brian Moynihan (CEO of Bank of America), Marcie Frost (CEO of California Public Employees’ Retirement System), Michael Corbat (CEO of Citigroup) and Anna Botín (Group Executive Chairman of Banco Santander).

We, the Members of the Global Investors for Sustainable Development Alliance, met in these extraordinary circumstances to send a strong message of unity and commitment. We reinforce the UN Secretary-General’s calls for wide ranging actions that match the scale of the crisis. We are determined to continue to transform finance and investment to bring the world on a trajectory to sustainable development. We are committed to make the post COVID-19 economy more sustainable and resilient to external shocks, such as climate-related ones. We will act within our companies, in our industries, and in partnership with public actors to enable a robust global response and recovery that is aligned with the 2030 Agenda for Sustainable Development. Some of our actions will be undertaken in partnership with policy makers and regulatory bodies. We will advocate for a coordinated international approach to financial regulation (pdf):

  • We will promote a regulatory environment that facilitates finance and investment for sustainable development and create more resilient economies.

  • Encourage rating agencies to better incorporate sustainable development considerations into their decision-making: We will work with rating agencies to increase the time horizon of their credit assessments and integrate social and environmental risks into their decision making, while also taking into consideration the different development stages and needs of countries.

  • Advance internalization of key externalities: We will accelerate private and public sector collaboration to develop and approve models that price-in carbon emissions and other ways to incentivize sustainable business practices [UN Secretary-General’s remarks]

  • pdf Statement of Action: COVID-19 and Beyond - Response and Recovery (132 KB)

OECD Economic Outlook: Volume 2020 Issue 1

With little prospect of a vaccine becoming widely available this year, and faced with unprecedented uncertainty, the OECD has taken the unusual step of presenting two equally likely scenarios – one in which the virus is brought under control, and one in which a second global outbreak hits before the end of 2020. If a second outbreak occurs triggering a return to lockdowns, world economic output is forecast to plummet 7.6% this year, before climbing back 2.8% in 2021. At its peak, unemployment in the OECD economies would be more than double the rate prior to the outbreaks, with little recovery in jobs next year. If a second wave of infections is avoided, global economic activity is expected to fall by 6% in 2020 and OECD unemployment to climb to 9.2% from 5.4% in 2019.

The economic impact of strict and relatively lengthy lockdowns in Europe will be particularly harsh. Euro area GDP is expected to plunge by 11½% this year if a second wave breaks out, and by over 9% even if a second hit is avoided, while GDP in the United States will take a hit of 8.5% and 7.3% respectively, and Japan 7.3% and 6%. Emerging economies such as Brazil, Russia and South Africa, meanwhile, face particular challenges of strained health systems, adding to the difficulties caused by a collapse in commodity prices, and their economies plunging by 9.1%, 10%, and 8.2% respectively in case of a double hit scenario, and 7.4%, 8% and 7.5% in case of a single hit. China’s and India’s GDPs will be relatively less affected, with a decrease of 3.7% and 7.3% respectively in case of a double hit and 2.6% and 3.7% in case of a single hit.


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