tralac’s Daily News Selection
The 2nd G20 Trade and Investment Working Group meeting concludes today
South Africa’s May merchandise trade data will be posted tomorrow
The outlook for 2020 for sub-Saharan Africa is considerably worse than was anticipated in April and subject to much uncertainty. Economic activity this year is now projected to contract by some 3.2%, reflecting a weaker external environment and measures to contain the COVID-19 outbreak. Growth is projected to recover to 3.4% in 2021 subject to the continued gradual easing of restrictions that has started in recent weeks and, importantly, if the region avoids the same epidemic dynamics that have played out elsewhere. Africa’s authorities have acted swiftly to support the economy, but these efforts have been constrained by falling revenues and limited fiscal space. Regional policies should remain focused on safeguarding public health, supporting people and businesses hardest hit by the crisis, and facilitating the recovery. The region cannot tackle these challenges alone, and a coordinated effort by all development partners will be key. Extract: The crisis impact is set to wipe out almost 10 years of progress in development (pdf).
Real per capita GDP in the region is projected to contract by 5.4% in 2020, before recovering by 1.1% in 2021. This will bring the per capita GDP seven percentage points below the level projected before the COVID-19 outbreak, in October 2019, and almost back to its level in 2010 (Figure 1.8). COVID-19 is likely to cause the first increase in global poverty since 1998, when the Asian Crisis hit. According to World Bank estimates, in sub-Saharan Africa the pandemic could push about 26 million more people into extreme poverty in 2020, and up to 39 million in case downside risks to growth materialize. At the same time, income inequality is expected to increase, as lockdowns disproportionally affected informal sector workers and small- and medium-sized companies in the services sectors. For example, almost all households surveyed in Kenya said that their income decreased, and about half said that they are “cooking less frequently” and “altered their diet.” In Uganda, about half of the households said that they cannot sustain their lifestyle even for 1 day of quarantine, which reflects the high share of people working “hand-to-mouth” in the informal sector.
WTO election: There is no AU candidate yet, says Okonjo-Iweala (The Cable)
Ngozi Okonjo-Iweala, Nigeria’s candidate for the World Trade Organisation director-general election, says it is false to believe that the African Union already has a consensus candidate. In an interview with The Telegraph, Okonjo-Iweala said efforts to get the backing of the entire continent is ongoing. “The notion that there’s an AU candidate at the moment is not true. We’re working extremely hard to make sure we bring Africa to support me and it’s going quite well,” she said. ECOWAS recently endorsed Okonjo-Iweala’s candidate and the Republic of Benin withdrew its candidate to support her.
Okonjo-Iweala, who currently chairs the Global Alliance for Vaccines and Immunization (GAVI) backed by the Bill Gates Foundation, said the WTO needs a fresh pair of eyes to break out the challenges it faces. “The issues aren’t just technical. If they were, they would have been solved long ago. I’m not from the WTO but that’s good. We need a fresh pair of eyes and ears that stands back and looks at things from a different perspective and picks up where the intersections are and where we can make progress. I see the job of the next director-general as restoring the WTO, breaking out of the challenges it faces and restoring it to serve the multilateral trading system that the world needs. China and the US are members so I’ll be looking to see how I can serve their interests so that the system can be stronger. But my desire is to be there for all members.”
Grand Ethiopian Renaissance Dam: Communiqué of the Extraordinary AU Bureau of the Assembly of Heads of State and Government
The Meeting of the Bureau was held pursuant to consultations undertaken by His Excellency, President Ramaphosa, in his capacity as the Chairperson of the Union with the three Negotiating Parties concerning the Grand Ethiopian Renaissance Dam, namely, Egypt, Ethiopia, and Sudan. The Bureau of the Assembly noted that the three negotiating parties are founding members of the former Organisation of African Unity, and the African Union and have significantly contributed to the unity, integration and the development of the continent. They further noted the potential the GERD project possesses for Africa.
The Bureau of the Assembly received with appreciation a report from the Chairperson of the AUC, H.E. Moussa Faki Mahamat, which, inter alia noted that more than 90% of the issues in the Tripartite Negotiations between Egypt, Ethiopia and Sudan have already been resolved. The Bureau of the Assembly was addressed by President Abdel Fattah al Sisi (Egypt); Prime Minister Abiy Ahmad (Ethiopia); and Prime Minister Abdalla Hamdok (Sudan), with regards to their respective positions pertaining to the GERD matter.
In this regard, the Bureau of the Assembly decided to lend renewed impetus to the Tripartite Negotiations and urged the three Parties to expeditiously work towards finding a mutually acceptable and amicable solution on the outstanding technical and legal issues in the negotiations process. The Bureau of the Assembly welcomed the undertaking by the three Parties to refrain from making any statements, or taking any action that may jeopardize or complicate the AU-led process aimed at finding an acceptable solution on all outstanding matters. The Bureau of the Assembly and the participating Heads of State and Government agreed to reconvene in two weeks from the date of issuance of this Communique to consider a report on the outcome of negotiations of the outstanding issues concerning the GERD matter.
Most of COMESA member states have put in place policy measures to minimize the effects of Covid-19 as well as support to post crisis recovery in the services sector. Such measures include stimulus packages, tax holidays, granting of grace periods for postponement of bookings and relaxing the liquidity requirements for commercial banks. Besides, Member States have adopted guidelines on movement of goods and services during the Covid-19 pandemic. As countries develop exit strategies, there is need to reduce restrictions and/or liberalize services sectors to:
Ease movement of professionals like medical personnel, engineers, technicians, essential goods and services across borders
Reduce costs of communication – mobile, internet and financial services to increase/expand the benefits of digital technology
Safeguard and ensure smooth and continued operation of the logistics networks that serve as the backbone of regional supply chains
Consider improving digital infrastructural foundations to improve internet; and
Consider the inclusion of internet service workers within ‘essential services’ not subject to work from home restrictions to avoid disruptions over the period of Covid-19. [The authors: Benedict Musengele, Jane Kibiru]
The East African Community to date has been a grand experiment in more than just free trade between Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. It also seeks to transform the region into a single market that allows free movement of goods, people, services, labour and capital, and create a single investment area. The coronavirus pandemic has curtailed this dream in the short-term but the experience has been a learning curve, and UNCTAD, TradeMark East Africa and other regional partners have used the moment to help the region’s national trade facilitation committees (NTFCs) improve their skills and work more effectively by offering them ground-breaking online training.
A trio of regional trade stakeholders came together to deliver the first regional online training programme on trade facilitation for East African NTFCs, led by UNCTAD, in cooperation with the EAC Secretariat, and with financial support from TMEA. More than 130 NTFC members from Burundi, Kenya, Rwanda, Tanzania and Uganda completed the nine-week training. Flavia Busingye, the EAC Secretariat acting director customs, noted that the online trade facilitation training was a great opportunity for the region to reinforce its capacity to address unprecedented demands due to COVID 19. She was optimistic that the training would greatly enhance the regional capacity on trade facilitation interventions and facilitate faster clearance of goods amid the coronavirus pandemic. The online training was delivered under exceptional conditions, with participants usually undertaking the training from home while tele-working, many of them with unstable internet connections.
Concerns over cargo at Dar es Salaam, Mombasa ports (The East African)
Rwandan importers are pushing for talks to resolve a longstanding problem of cargo that has overstayed at Tanzanian and Kenyan ports, and now face imminent auction to clear charges and penalties accrued due to delays attributed to the Covid-19. The East African has learnt that 2,064 containers that arrived between December and May this year are stuck at the Dar es Salaam port, port of Mombasa and Naivasha ICD due to delays in processing logistics and paperwork. This is in addition to introduction of new operational protocols governing borders and the drivers’ strike at borders of Benaco and Malaba respectively. Importers say that while they had successfully received respective governments’ extension of free demurrage days from 14 days to 55 days, and nine days to 90 days for Tanzania and Kenya respectively, nothing substantive has taken place to resolve the matter.
Editorial comment: Without a budget, EAC secretariat will lose its vision
On women and youth, the MCO urged Member States to pay particular attention to the low level of representation of women and youth in elected political positions, noting that, whilst women form more than 50% of registered voters across the SADC Region, they remain greatly marginalized in elected positions, thus reflecting poorly on performance to achieving the set targets under the SADC Protocol on Gender and Development. [Downloads: SADC calls for new thinking in the face of emerging threats to regional peace and security]
Tanzania’s exports of cloves, sisal, gold go up (The East African)
Cashew nuts, sisal, cotton, cloves and gold boosted revenue from exports to $9.982 billion in the year ending April, from $8.618bn in the same period in 2019, according to the Bank of Tanzania’s monthly review for May. Month-on-month, exports also increased to $634.3m in April, from $605.7m in the same period last year. Released last week, the BoT monthly economic review for May says exports of goods increased by 30.3% to $5,897m in the year ending April, was driven by traditional and non-traditional exports. Traditional exports almost doubled, from $553.7m last year to $1.032bn, driven by cashew nuts, cotton, cloves and sisal exports. “Meanwhile exports of coffee, tea and tobacco show a decline,” the report noted. [Download: Bank of Tanzania Monthly Economic Review, May 2020, pdf]
Sasol to sell stakes in Mozambique pipeline, power plant - sources. Struggling petrochemicals producer Sasol has appointed advisers to sell its stakes in a power plant in Mozambique and a gas pipeline running from the country into South Africa, two sources familiar with the matter told Reuters. Sasol, the world’s top producer of motor fuel from coal, is trying to shed assets to pay off its debt pile and avoid a rights issue of up to $2bn, but has not previously flagged the Mozambique assets as up for sale. It has appointed South Africa’s Nedbank to manage the sale of its 50% stake in the Republic of Mozambique Pipeline Company (ROMPCO), the joint venture operating the pipeline that runs 865 kilometres from Mozambique into South Africa, the sources said. The sources said the company had also appointed Deloitte to sell its 49% stake in Central Termica de Ressano Garcia, Mozambique’s first permanent large-scale gas power plant which, at a capacity of 175 megawatts, meets almost a quarter of the country’s energy demand, according to Sasol’s website.
UK Export Finance set to back Total’s $20bn Mozambique LNG project - source. Britain’s export credit agency UK Export Finance (UKEF) is set to back a $20bnliquefied natural gas project in Mozambique, a source with direct knowledge of the matter told Reuters on Friday. UKEF listed the project, led by French energy major Total, as under consideration for financing last August. A decision to contribute will draw criticism from campaigners who have opposed such a move.
Attracting private solutions and participation in the power sector in Sub-Saharan Africa: findings from a survey of investors and financiers (World Bank)
This paper develops a classification of investor risks and surveys 51 private investors and financiers in the power sector in Sub-Saharan Africa. It finds that the average investor assigns more weight to power sector policy and regulatory framework risks than to the wider sector and country context risks. And, despite many challenges, investors perceive three segments as ready for private solutions in Sub-Saharan Africa: power generation, off-grid electrification, and mini-grids. Investors see lower readiness in distribution, transmission, and retail.
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