Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

Diarise: As part of the AU’s commemoration of Africa Integration Day 2020, tralac will on 4 July host a webinar, Leveraging the AfCFTA for Africa’s development – Lessons from COVID-19 experience. The keynote speaker is Mr Wamkele Mene (AfCFTA Secretariat SG). The panel is composed of David Luke (African Trade Policy Centre), Jason Blackman (DHL Express – Sub-Saharan Africa), Etiyel Chibira (Cross-Border Road Transport Agency, South Africa), Wilfried Deudjui Mbouwe (Cameroon National Shippers’ Council) and Ahmed Bennis (Africa Economic Zones Organisation). The webinar will be moderated by Trudi Hartzenberg (Executive Director, tralac).

A reminder: The AfCFTA was supposed to take operational effect today (1 July) but the timeline has slipped, under the complications caused by the COVID-19 outbreak but also the slow pace of negotiations themselves. “Everybody can see, objectively, nothing can be done on the 1st of July,” AfCFTA’s secretary general, Wamkele Mene, told Agence France-Presse. A new date for January 2021 has been proposed by ambassadors at the AU’s headquarters in Addis Ababa. The recommendation has yet to be adopted by heads of state. Mr Mene cautioned that the proposed date is itself subject to change: “It really all depends on the pandemic.”

Chuku Chuku: Putting the AfCFTA, Brexit, and COVID-19 to work for Africa (Brookings)

In just one year, three events have permanently reshaped Africa’s trade relationship with the United Kingdom: The entry into force of the AfCFTA on 30 May 2019, the official withdrawal of the UK from the European Union (Brexit) on 31 January 2020, and the COVID-19 pandemic in which we are currently mired. If policymakers act fast to seize the opportunities that this “ABC” triangle of events offer and reset UK-Africa trade relations, a win-win partnership can emerge. While UK trade with Africa peaked in 2012 at $51bn, by 2019 it had almost halved to $27bn, representing only 2.4% of total UK trade. Yet untapped export potential from Africa to the UK is large (Figure 1), with significant gaps in apparel ($165.6m), electronic equipment ($142.6m), and cocoa products ($91.7m). With the cloud of uncertainty surrounding the COVID-19 pandemic dissipating, it is now up to the parties in Africa and the UK to move to the next item on the agenda, namely, prepare a UK-Africa Economic Partnership Agreement that is a win-win for both parties.

South Africa: pdf Trade statistics for May 2020 (589 KB)  (SARS)

The South African Revenue Service yesterday released trade statistics for May 2020, recording a trade surplus of R15.94bn. April 2020’s trade deficit was revised upwards by R0.93bn, to R35.95bn. The May surplus is attributable to exports of R101.85bn and imports of R85.91bn. Exports increased from April 2020 to May 2020 by R49.92bn (96.1%) and imports decreased from April 2020 to May 2020 by R1.97bn (2.2%). Exports for the year-to-date (1 January to 31 May) decreased by 5.2%, from R506.44bn in 2019 to R480.09bn in 2020. Imports for the year-to-date of R467.12bn are 9.1% less than the R513.66bn imports recorded during the same period in 2019. The cumulative trade surplus for 2020 is R12.97bn.

South Africa: Amsa seeks safeguards on steel imports amid demand concerns (IOL)

ArcelorMittal South Africa (Amsa) has approached the International Trade Administration Commission for safeguards on imports of structural steel products amid concerns over poor demand and rising steel imports. An Amsa spokesperson said the safeguards would not only apply to the company, but to the entire local steel industry. “Amsa, in collaboration with Evraz Highveld Steel, has applied for safeguards on structural steel products produced in the Highveld Mill,” said the spokesperson, adding that the company had not indicated any level for the safeguard duty. In response, Itac confirming it had initiated an investigation for remedial action in the form of a safeguard measure for structural steel. Itac said that all countries that might be impacted by the safeguard had been contacted and requested to provide written comments on the matter.

The World Bank realigns, from today, its Africa Region into two Vice Presidencies:

  • Hafez Ghanem takes on the role of Vice President for Eastern and Southern Africa

  • Ousmane Diagana becomes Vice President for Western and Central Africa

The World Bank has established a $425m Regional Infrastructure Financing Facility for Eastern and Southern Africa: the project aims to expand long-term finance to private firms in selected infrastructure in the power sector, as well as in the transport, logistics and social sectors. This is the first regional facility of this kind in Africa. Through the Trade Development Bank, the RIFF will provide long-term infrastructure finance that would contribute to job creation and would present cross-border benefits in terms of trade and investment flows or transfers of technology. In the context of the COVID-19, the RIFF’s focus on off-grid solar solutions will contribute to preserve households’ livelihoods by supporting micro-entrepreneurial activities that play a critical role in income generation in poor communities.

New UNCTAD policy papers:

  1. COVID-19 and tourism: assessing the economic consequences. The world’s tourism sector could lose at least $1.2 trillion, or 1.5% of global GDP, having been placed at a standstill for nearly four months due to the coronavirus pandemic, UNCTAD said in a report published today (pdf). It warned that the loss could rise to $2.2 trillion, or 2.8% of the world’s GDP, if the break in international tourism lasts for eight months, in line with the expected decline in tourism as projected by the UNWTO. UNCTAD estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2% of global GDP. Developing countries could suffer the steepest GDP losses. Jamaica and Thailand stand out, losing 11% and 9% of GDP respectively in the most optimistic scenario of UNCTAD’s estimates. Other tourism hotspots such as Kenya, Egypt and Malaysia could lose over 3% of their GDP.

  2. G20 countries respond to COVID-19 with investment reforms. The coronavirus pandemic has accelerated in G20 countries a trend towards policies designed to safeguard national security interests against threats associated with international investment, according to a joint report by UNCTAD, the OECD and the WTO. It is the 23rd edition in its series and outlines the investment measures implemented by G20 members from mid-October 2019 to mid-May 2020. Extract (pdf):

    The report, jointly prepared by the OECD and UNCTAD Secretariats, covers investment and investment-related measures that G20 members have taken between 16 October 2019 and 15 May 2020. It documents policy actions that G20 Members have taken in the last months preceding the pandemic and in response to the unprecedented economic crisis that followed, just a decade after the Global Financial Crisis. Many countries were still preparing and refining their investment policy responses, when this report was finalised for release; this report takes a snapshot of their actions as of mid-May 2020. FDI has been on a downward trajectory since 2016 and is expected to decline sharply as a consequence of the pandemic and the resulting supply disruptions, demand contractions, and pessimistic outlook of economic actors. Even under the most optimistic scenario – in which the economy begins to recover in the 2nd half of 2020 – FDI flows in 2020 are expected to fall by more than 30% compared to 20195 and could plunge by 40% (Figure 1). This decrease is accentuating and accelerating the steady decline of FDI flows observed in the past five years (Figure 2). Reinvested earnings – which play an increasingly important role in FDI flows – will drop substantially in the short term, as the crisis will depress earnings and investors are expected to reinvest a smaller share of their earnings than they have done in the recent past. Equity capital flows will also decline as many new investments, both mergers and acquisitions and greenfield investments, have been put on hold. [Summary report (pdf)]

  3. The changing international investment agreements landscape: new treaties and recent policy developments (pdf). Change in the IIA regime is underway. In 2019, the number of IIA terminations (34) exceeded the number of new IIAs (22). This brought the total to 3,284 IIAs and 349 effective terminations. By the end of the year, at least 2,654 IIAs were in force (see figure 1).

    • Several other developments will affect the international investment policy landscape, including the agreement by EU member States to terminate intra-EU bilateral investment treaties, Brexit and the entry into force of the agreement establishing the African Continental Free Trade Area.

    • Policy responses taken by governments to address the COVID-19 pandemic and its economic fallout could create friction with existing IIA obligations. This highlights the need to safeguard sufficient regulatory space in IIAs to protect public health and to minimize the risk of investor–State dispute settlement (ISDS) proceedings, while protecting and promoting international investment for development.

    • Progress on the reform of the IIA regime is visible in treaties concluded in 2019. Nearly all new IIAs contain features in line with UNCTAD’s Reform Package for the International Investment Regime, with the preservation of States’ regulatory space being the most frequently seen area of reform. Countries also continued to implement ISDS reform elements in new IIAs. To support the IIA reform process, UNCTAD will launch its IIA Reform Accelerator later in 2020.

  4. Special Economic Zones and urbanization: This joint UNCTAD-UN Habitat discussion paper builds on an earlier exchange between experts on this subject in February 2020 at the Tenth Session of the World Urban Forum in Abu Dhabi.

UNSC debate: Water cooperation between States ‘key’ to Blue Nile dam project (UN)

The Blue Nile is “critical for the livelihoods and development” of Egyptians, Ethiopians and Sudanese, the top UN official for Political and Peacebuilding Affairs told the Security Council on Monday, urging those States to reach a construction agreement on the Grand Ethiopian Renaissance Dam. Under-Secretary-General Rosemary DiCarlo underscored via videoconference that “transboundary water cooperation is a key element in the implementation of the SDGs”. She also warned that “climate change, combined with projected demographic growth and socio-economic changes, will increase water management challenges worldwide. Through the generation of hydroelectricity, the GERD will significantly boost Ethiopia’s energy sources, allowing it to increase electrification, accelerate industrialization, and export excess electricity to the region”, the top UN political official said.

ILO Monitor: COVID-19 and the world of work

For this edition of the ILO Monitor, the information available to track developments in the labour market has increased substantially. In particular, the following data sources have been incorporated into the model: labour force survey data for the first quarter and for April and May 2020; and administrative data on the labour market (e.g. registered unemployment and up-to-date mobile phone data from Google Community Mobility Reports). Additionally, the most recent Google Trends data and COVID‑19 Government Response Stringency Index (hereafter “Oxford Stringency Index”) values, along with data on the incidence of COVID-19, have been used in the estimates. The modelling itself was carried out over several days. The results were finalized on 17 June, with the latest data update spanning the period from 10 to 15 June 2020 depending on the source. In Africa, the total working-hour loss in the second quarter of the year is estimated at 12.1%, or 45 million FTE jobs, up from the previous estimate of 9.5%. In terms of sub-regions, estimates for working-hour losses in the second quarter of 2020 indicate that Northern Africa experienced the sharpest decline (15.5%), followed by Southern Africa (12.2%), Central Africa (11.9%), Western Africa (11.6%) and Eastern Africa (10.9%).

AfDB Covid-19 crisis response: two appraisal reports to be implemented over 18 months, starting in June 2020 and closing in December 2021.

The European Union’s support for Africa’s COVID-19 continental response

pdf Heads of WTO and development banks voice support for trade finance amid COVID-19 crisis (479 KB)

IMF’s Abebe Aemro Selassie: remarks at IEA Africa Ministerial Roundtable on COVID-19’s impact on Africa’s energy sector

IMF: Vietnam’s success in containing COVID-19 offers roadmap for other developing countries


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