tralac’s Daily News selection
A tralac Special Feature on the Corporate Council on Africa’s inaugural Leaders Forum, Resilient US-Africa business engagement to drive post COVID-19 recovery, which concludes today:
Day 1 (23 June): The global financial response to COVID-19 in Africa
Day one of the Forum also featured a high-level panel discussion with private sector leaders and senior multilateral officials including Dr Donald Kaberuka (SouthBridge Group), Dr Vera Songwe (UNECA), Admassu Tadesse (Trade and Development Bank), Dr Albert Zeufack (World Bank’s Chief Economist, Africa) and Akin Dawodu (Cluster Head for Sub-Saharan Africa, Citi).
Panelists addressed debt relief for the continent and called for a coordinated African and global financial response to COVID-19 and economic recovery in Africa, emphasizing the role of the private sector and multilateral institutions. Dr Kaberuka, one of four AU COVID-19 response “envoys”, stated that “Africa is not going to the world looking for something, but we are trying to figure out how Africa can be part of this global financial response.” Dr Vera Songwe provided background on the elements and logic of the debt relief being sought for Africa, noting that “It is a no brainer for African countries to access the Debt Service Suspension Initiative which will give them immediate access to $13 billion in liquidity.”
Dr Zeufack emphasized the important role the World Bank and international financial institutions must play in Africa’s economic recovery from the pandemic. Trade and Development Bank President Admassu Tadesse noted that his institution was not only providing resources to governments and private sector companies, but supporting development projects urgently needed under the current circumstances.
Citi executive Akin Dawodu noted that Citi and other financial institutions were playing their part by “protecting their balance sheet, maintaining their capital adequacy and maintaining access to liquidity in general while providing working capital and financing short term needs to their corporate clients.”
ECA statement: Ms Vera Songwe, the Executive Secretary of the Economic Commission for Africa, hailed Africa’s efforts in tackling the health crisis collectively. She said there was nothing wrong with African nations asking for debt standstill to provide immediate stimulus to save jobs and livelihoods as the continent prepares to build back better. “The need for immediate liquidity is not an African-specific issue. It’s a global issue,” said Ms Songwe, adding the ECA will continue to work hard to ensure African countries have more resources immediately available to them to help combat the COVID-19 pandemic.
She said it was crucial for Africa to save small to medium enterprises that form 70% of Africa’s economy. “If banks don’t have the liquidity they need then the SMEs close down. We need to make sure that those 70% of our SMEs that are alive today, stay alive,” adding that 20 million African jobs were currently on the line due to the pandemic. She also said Africa needs to build strong institutions that will stop illicit financial flows as nations work on improving domestic resource mobilization. “As long as we continue to have leakages in our systems we will continue to suffer,” the ECA Executive Secretary said, adding it was great that African leaders had come out clearly to say that they will transparently use COVID-19 resources coming their way.
During a Fireside Chat moderated by CCA member, Bill Killeen (CEO of Acrow Bridge), President Nyusi noted the importance of having a collaborative approach to address the COVID-19 pandemic. In talking about Mozambique’s COVID-19 and post COVID-19 response strategy, President Nyusi said: “Our strategy is to lead the fight against the pandemic by opening the economy to make COVID-19 response management sustainable. Therefore, we are committed to ensuring that Mozambique remains an important destination for business now and after the pandemic.”
Day Two also featured a high-level panel moderated by Witney Schneidman (Senior Advisor for Africa, Covington & Burling LLP). Farid Fezoua (President and CEO, GE Africa) emphasized the importance of ensuring the safety of GE employees and customers: “We had to adapt fast and establish new safety protocols particularly for employees on the frontlines as well as our customers.” He mentioned that the pandemic has accelerated GE’s digital innovations: “We had adopted digital and remote work for a while, but COVID put us in real situations and leveraging technology tools in this regard has been key.
Gregory Rockson (CEO, mPharma) discussed how mPharma sent over 800, 000 test kits to countries across the continent by leveraging its supply chain infrastructure in Ghana. He urged that “Africa needs to build the critical infrastructure that is needed to prevent the next pandemic” by establishing regional alliances, where each region specializes to meet different needs across the health supply chain.
Jim Winkler (Economic Growth Division, Creative Associates) commended the innovative partnerships that have been established as a result of the pandemic. He highlighted how Creative Associates has been supporting innovation by local SME’s during the pandemic through the provision of funds to create guarantees, promote piloting, and facilitate export and trade.
Hon. Betty Maina, Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development, Kenya highlighted the need for greater self-sufficiency in terms of medical commodities: “It is important that countries build some level of security around medical commodities and medical supplies.” She said Kenya had prioritized building capacity in this area, adding: “The US-Kenya FTA provides an opportunity for us to create a much more predictable environment for investment by companies that supply these goods.”
Day 3 (25 June): Drivers of growth in post COVID Africa
In her opening remarks, USAID Deputy Administrator Ms Bonnie Glick noted the critical role the US government played in Africa to help tackle COVID-19. She stated that in Sub-Saharan Africa, “our US government contribution of assistance includes more than $361m to meet the critical needs of communities, governments and of course the health workers on the front lines of the pandemic.”
Day Three of the Forum also featured a high-level panel moderated by Dr Acha Leke (Chairman, McKinsey Africa) who in his opening statement impressed upon the audience the need to reimagine society. Panelists discussed the impact of COVID-19 on their economies, business and growth drivers and their outlooks for the future. Dr Sarah Alade, Special Advisor to the President on Finance and The Economy, emphasized Nigeria’s Economic Sustainability plan, a $6bn initiative to stimulate the economy and prevent business collapse in the face of COVID-19. This initiative will prioritize investments in the healthcare sector, job creation, infrastructure, and manufacturing. Dr Alade stressed the need for an enabling business environment to sustain self-sufficiency: “the whole idea is that whatever businesses we have, we want to ensure that they continue to produce. We also intend to create jobs using labor-intensive methods. We need to support our youth with strong innovator and entrepreneur systems in order to enable them to solve the problems that the continent will face, and to create jobs.”
Mohamad Darwish (IHS Nigeria) urged African economies to diversify from reliance on natural resources, to create enabling business environments that support SMEs and investment, and to further invest in ICT. He acknowledged that “these challenges create avenues for improvement and a better future, especially in the telecom sector.”
Aida Diarra (Sub-Saharan Africa, VISA) highlighted VISA’s $200m commitment to support SMEs over the next five years with the goal of enabling 50 million SMEs globally to digitalize. She stressed the importance for African countries to create a business environment that is conducive to innovation and remarked on the impact the AfCFTA will have on enabling e-commerce, affirming that “it is about formalizing the SMEs and giving them a chance to enter the formal ecosystem and enabling the digital payment service providers.”
Karim Senhadji (OCP Africa) commended the AfCFTA as a vital tool to increase intra-Africa trade and highlighted the importance of digitalization, research and development as keys to transforming Africa’s agricultural sector. He noted that “we have to promote innovation and entrepreneurship. We need to support our youth with strong innovator and entrepreneur systems in order to enable them to solve the problems that the continent will face, and to create jobs.”
Riva Levinson (KRL International) closed out the session by calling for a global response to the global pandemic: “The COVID-19 pandemic has underscored the truth that a novel viral infection anywhere is a viral contagion everywhere.” She stated “this is what this week’s CCA Leader Forum has been about: reimagining the world we find ourselves in.”
Day 4: Today’s final day, Resiliency in Action: sustaining regional and bilateral trade post-COVID-19, will be moderated by Florizelle Liser (President and CEO, Corporate Council on Africa). It will highlight how trade in Africa may be affected in the longer term and will consider the future and potential impact of the AfCFTA and of US-Africa trade arrangements. This session will feature President Uhuru Kenyatta and President Nana Addo Dankwa Akufo-Addo.
Diarise (29-30 June): The African Economic Research Consortium will host its 52nd Plenary Session on “Business Environment, Competitiveness and Economic Growth in Africa” on Monday. The official opening and keynote address be given by Hon. Betty C. Maina (Cabinet Secretary, Ministry of Industrialization, Trade and Enterprise Development, Kenya). Papers will then be presented by: Dr Shantayanan Devarajan (Georgetown University), Prof Ernest Aryeetey (ARUA), Prof. Pramila Krishan (University of Oxford)’.
The AERC will host a special session on “African economies amid COVID-19: impacts and the road ahead”, on Tuesday, to reflect on pertinent issues and identify policy and administrative responses by drawing lessons from global experiences. The keynote address will be delivered by Mr Abebe Selassie (Director of Africa Region, IMF). Other presenters include: Prof Benno Ndulu Pathways (Prosperity Commission on Technology and Inclusive Development), Stephen N. Karingi (UNECA) and Hanan Morsy (AfDB).
Promoting equity through structural transformation: Impact of regional free trade agreements on East African regional integration (ECONEWS Africa)
What are the likely implications of the AfCFTA and Tripartite Free Trade Area on integration initiatives in the East Africa Community? The formation of these two economic blocs is aimed at consolidating the African market and expanding intra-African trade through better harmonization and coordination of trade policies. While the EAC relies on importation of a wide range of products for which it has potential to produce, including agricultural and industrial products. Kenya simulation results indicate that substantial trade creation effects or welfare gains will rise following removal of tariffs and other trade barriers. The following 10 policy suggestions are made in view of the study findings (extract, pdf):
EAC should strive to fully implement the Customs Union and Common Market Protocols in order to harmonize its position in the on-going negotiations on the TFTA and the AfCFTA because this is the starting point for the consultations on harmonization. This would strengthen partner states on various trade issues thereby supporting its trade and investment agenda. Piecemeal implementation of the two protocols would generate barriers which hinder structural transformation and realization of the potential benefits of integration.
The EAC countries should effectively address non-tariff barriers to allow for expansion of industrial production and trade amongst its members. Despite potential for self-reliance in agricultural and other products, it is notable that the region heavily relies on imports from elsewhere. Other than infrastructure deficits, the other barriers include SPS, stringent standards requirements, cumbersome customs procedures, multiple fees/levies among others. These have greatly hindered development of industries and participation of small-scale producers in various value chains, hence constraining job creation and income generation.
EAC partner states should strive to remove all forms of restriction on the movement of persons and professionals in the spirit of the Common Market protocol. Additionally, effective implementation of the protocol on free movement of persons adopted by the AU would be critical in facilitating cross border trade in goods and services.
About services, the removal of restrictive measures in various service sectors including finance, transport, business, education, tourism, communications and distribution services cannot be overstated. These range from restrictions on ownerships, economic needs tests, non-recognition of qualifications, restrictions on number of services suppliers among others. Services have become essential tools for supporting production, value addition and industrial development. Effective participation of the EAC countries in the TFTA and AfCTA can only be realized if trade costs are reduced, including restrictive regulatory environments.
The EAC region should strive to be strategic to minimize losses in the wider economic blocs, while at the same time consolidating integration. For instance, the revival of cotton growing in the EAC region is critical for long term and sustainable development of the textile sector. Hence, strategies should focus on addressing issues affecting all segments of the cotton value chain from production, ginning, milling and markets. Presently, the focus is mainly on EPZs tackling value chains at the milling and marketing levels, hence ignoring the lower ends which hold the key to success needed against other competitor countries. Availability and proximity of raw materials including cotton lint plus other associated accessories (including buttons, needles currently being imported) will go a long way in increasing employment opportunities together with household incomes for a greater portion of domestic populations. [The author: Dr Christopher Onyango]