tralac’s Daily News Selection

tralac’s Daily News Selection
Photo credit: Reuters

16 Jul 2020

Okonjo-Iweala unfolds plans to rejuvenate WTO (ThisDay)

While noting that micro, small and medium scale enterprises have been bruised by the COVID-19, she stressed the need for discussions on how to integrate such businesses in the multilateral trading system, which is very important:

“One crucial thing arising from COVID-19 and the impact it has had on economic growth and the predicted contraction of the world economy and economies around the world is that MSMEs have been badly affected. So, they need liquidity. So we need to make sure that for them to survive, they should have adequate liquidity to keep their businesses going. My worry is that there have been countries globally who have been able to make this liquidity available to their MSMEs and there are others, like many developing countries and least developed countries who have not. And, one of my roles as African Union envoy, with my other five colleagues, has been to see how we can facilitate and encourage additional resources from outside and inside to these MSMEs, so that they can regain their position and be able to stand, not only to keep jobs but to thrive in the future and create more jobs. So, I am very keen. I think it is a very important sector and the WTO would work hard to make sure such types of enterprises are supported.” [AFP: WTO leadership rivals map path for solving ‘existential crisis’]

Soromfe Uzomah: How global disruption can have local implications (Microsoft 4Africa)

The global impact that the Covid-19 pandemic has had not only on public health, but on business, cannot be underestimated. It’s prudent to consider the impact such a global disruption of trade has on small and medium businesses. Anticipating and mitigating the impact of unforeseen global events on supply chain management is crucial if SMEs who are reliant on goods from an affected area are to survive. [Note: The author is head of strategic partnerships: Microsoft 4Afrika]

14th European Union - South Africa Ministerial Dialogue: SA and EU move towards rebuilding frayed relations (Daily Maverick)

The meeting had been particularly important to bring together South Africa’s Minister of Trade and Industry, Ebrahim Patel, and EU trade commissioner Phil Hogan, who had been battling to align their diaries for some time. Eventually, they had held two preparatory meetings over the last week and then the full ministerial meeting on Tuesday. Finance Minister Tito Mboweni and EU International Co-operation Commissioner Jutta Urpilainen also attended. Kionka said the ministerial conference discussion had three basic components.

The most robust and “pithy” discussion had been on “trade irritants”, Kionka said, including the steep increases in tariffs which South Africa had recently imposed on chicken imports from the EU. These had risen from 0% to 35% in September 2018, before dropping to 25% in March 2022. She confirmed that the EU had registered a dispute about those through the dispute settlement mechanism of the trade agreement between the EU and the SADC region. But so far there had been no headway, Kionka said. But she said South Africa had scored a victory on another important issue because, in response to the logistical challenges posed by Covid-19, the EU and South Africa had now all agreed to accept electronic certificates (instead of the usual paper ones) to verify the origin of all traded products and also the health and phytosanitary (plant health) requirements for all animal and plant products from both sides. An official added that South Africa had insisted that all required processes to re-authorise exports to the EU of racehorses and heated game and poultry meat had to be finalised as soon as possible.

Conversely, though, the EU had failed to persuade South Africa to lift the sanitary and phytosanitary restrictions it had been using to completely block imports of poultry from Belgium and France since 2017. “Minister Patel is a pretty tough negotiator,” she remarked. She noted that Patel had made the point that the EU had enjoyed an overall trade surplus with South Africa over the past 10 years. “What he didn’t say was that South Africa has enjoyed a surplus in that period on agrofoods.” [The author: Peter Fabricius; Joint EU-SA press release: Trade, economic transformation and green recovery after COVID-19]

Surveys of the socio-economic impact of COVID-10: Kenya, South Africa, Morocco

  1. Kenya: The KNBS survey is aimed at measuring the impact of COVID-19 on health, labor market, transport cost and housing sectors. The survey is also aimed at assessing the awareness of COVID-19 and the appropriate protective measures. The COVID-19 Household Socio-Economic Impact Survey is a longitudinal survey set to be implemented in 6 waves on a biweekly basis. Data collection for the first wave was undertaken between 2nd and 9th May 2020.

    Labour force participation rate of the population age 18 years and above in the seven days preceding the survey was 56.8%. About two in three (65.3%) males were in the labour force while slightly more than half (51.2%) of the females were found to be outside the labour force in the reference period. Almost half of the respondents who were absent from work said that it was due to lockout or stay away instructions as guided by the Government and/or employers. Nine out of ten persons who were absent from work due to stay away or lockdown were not sure when they would be returning to work.

    Overall, there has been a 51.7% increase in the cost of transport. Migori County recorded the highest increase while Turkana County recorded the least at 77.2% and 24.4% respectively. Nationally, 30.5% of households were unable to pay rent on the agreed date with the landlord . The results show that at least 21.5% of the households in Kenya who usually pay rent on the dates agreed with landlords were unable to pay rent for the month of April 2020. Reduced income/earnings (52.9%) was the main reason for inability by households to pay rent. Only a small proportion of households (8.7%) received waiver/relief from their landlords for the same month.

  2. South Africa: NIDS-CRAM 2020 Coronavirus Rapid Mobile Survey. Given that all in-person data-collection activities have ceased, the decision was made to conduct a telephonic follow-up survey of a pre-existing nationally representative household panel survey; the National Income Dynamics Study. With the permission of the South African Presidency and after ethical clearance the NIDS-CRAM research team was granted access to the sampling frame and telephone numbers of all individuals surveyed in NIDS 2017. The first wave of NIDS-CRAM ran from the 7th of May to the 27th of June and used 50 call-centre agents to survey a representative sub-sample of 7,000 respondents from NIDS 2017. Among many other topics, the 20-minute survey asked respondents about their current and retrospective employment, household hunger, receipt of grants, COVID-19 risk perceptions, knowledge and behavior, among many other questions.

    The aim of this synthesis report is to present an overview of the high-level findings from the NIDS- CRAM Working Paper Series which is made up of 11 papers. All of these papers use the NIDS- CRAM Wave 1 data as their primary source and report on various aspects related to employment, poverty, hunger, grants, migration and adherence to COVID-19 prevention strategies. All papers have undergone peer-review. The papers and the data on which they are based are all freely available for anyone to download and use. [Download the complete set of papers, here; Ferial Haffajee: The day the bottom fell out of South Africa – a triple pandemic has hit us]

  3. Morocco. This World Bank Economic Monitor presents the current outlook for Morocco given the recent COVID-19 developments. The post-pandemic economic recovery is projected - with unusually large uncertainty - to be a protracted one, with growth only returning to the pre-pandemic trend by 2022. Faced with the risk of a protracted pandemic, moving from mitigation to an adaptation phase is key to ensuring a resilient, inclusive, and growing Moroccan economy. Despite potential volatility in the economic recovery phase, Morocco has an opportunity to build a more sustainable and resilient economy by developing a strategy to adapt, similar to its approach to the environment front. Impact on firms and households (pdf): The recent survey released by the HCP on the impact of COVID-19 on the economic, social and psychological situation of households reveals that 34% of households lost their source of income (Figure29). Figure 30 indicates also that 83% of the household is relying on social solidarity as sources of incomes while 22% are using their savings to mitigate losses of incomes. This has been partly mitigated by government assistance to compensate for job loss (19% of households) - Figure 31.5 The results showed that the services sector is the most affected, with 245,000 workforce reductions. However, 60% of households with a member who lost a job have difficulty accessing government assistance including 54.5% in urban areas and 68% in rural areas. These percentages amount to 21% at the national level, 19% in urban areas and, 26% in rural areas calling for an acceleration of government support.

    Moroccan women are likely to be disproportionately impacted by the economic and health consequences of the pandemic. Female labor force participation in Morocco stood at 21.3% before the pandemic started and has concentrated in the agricultural and industrial sectors. The latter is negatively impacted by the crisis and lockdown measures. Further, 38.5% of employed women are working in the services sector, one of the most affected sectors. Moreover, around 17% of women in non-agricultural employment are working in the informal sector, leaving them more vulnerable. Given that 52% of RAMED beneficiaries are women, some women have received support for income losses as head of households (18.4% of Moroccan women are heads of household).

  4. A five-nation survey by GeoPoll in Sub-Saharan Africa has found that 60 percent of those employed prior to the COVID-19 pandemic have not been able to work as a result of the outbreak, and nearly half of those are unsure if they will have jobs to go back to. Of the five countries surveyed in Sub-Saharan Africa: Ivory Coast, Kenya, Mozambique, Nigeria and South Africa, an even larger proportion, at four out of five of those polled in the survey of 2,500 respondents, reported that their income has decreased during the pandemic, with those in informal jobs, particularly in trade and agriculture, reporting the most widespread and largest falls in incomes. Overall, some 60% of formal sector workers reported income falls, but 88% of informal sector workers reporting reduced earnings. The main areas of GeoPoll’s study are:

    • Ability to work and income change since the outset of COVID-19

    • Concern over expenses and the ability to pay for basic needs

    • Usage of loans, savings, and income to pay for expenses

    • The impact of COVID-19 on loans and mobile money services

    • Receipt of aid and opinions of government priorities.

    The study was conducted by SMS from June – July 2020, with 500 respondents per country or 2,500 total, and a nationally representative sample by age, gender, and location. [Note: Download the full PDF report, a 16-page report including breakdowns and analysis by country, job type, income level]

North Africa Economic Outlook 2020: Coping with the COVID-19 pandemic (AfDB)

The latest projections for 2020 indicate a loss of 5.2 points of growth in the region, from a growth rate of 4.4% to -0.8% if the pandemic were to last until June 2020 (baseline scenario) and a loss of 6.7 points with a growth rate of -2.3% if the pandemic were to persist until December 2020 (worst-case scenario). In 2019, for the second year in a row, North Africa was the second-best performing region in Africa with a growth rate estimated at 3.7%. Extract (pdf):

North African countries also experienced high current account deficits on average, at 4.4% of GDP in 2019. The 2020 pre-COVID-19 outlook indicated a slight deterioration of the regional current account deficit, at 5.6% of GDP. However, the strong impact of the crisis on commodity prices and trade will significantly affect North African economies. North African countries have important trade relationships with China and European countries as well as important tourism receipts and remittances. The worst-case scenario, which assumes a reduction of the global demand by 7.9% and an international price of oil at USD 20 per barrel in 2020, projects a current account deficit of 11.4% of GDP in 2020, mainly driven by a double-digit deficit in oil-exporting countries (20% of GDP and 19.8% of GDP in Algeria and in Libya, respectively) but also in Mauritania (17% of GDP) and Tunisia (12.2% of GDP) whose main trading partners are China and European countries.

The COVID-19 pandemic will push further the negative contribution of net exports to growth with the expected widening of the trade deficits. The current account deficit in North Africa, initially projected at 5.6% of GDP in 2020, is likely to reach 10% of GDP with reduced trade in volume and reduced prices of oil and other commodities. Negative net exports point to saving investment imbalances in the region (i.e., the countries spend more than they save), especially in Libya. This is regardless of the openness to trade of those economies. Indeed, Algeria and Egypt are the least open to trade with a ratio of exports plus imports to GDP at 58% and 48% respectively in 2018, compared to 111% for Tunisia. However, the ratio of net exports to GDP is comparable in the three countries. In addition, the openness to trade of Algeria and Egypt has declined since 2008 (from 71.6. and 71.7 respectively). For the other four countries of North Africa, despite significant volatility since 2008, openness to trade remains unchanged.

Africa will need a lot of energy to power its COVID-19 recovery, says Vera Songwe (ECA)

Speaking during a Res4Africa webinar on scaling up renewable energy investments in Africa, Ms Songwe said actions to ensure there is enough energy to power Africa’s rebuilding efforts should focus on three key aspects - infrastructure, supply and cost of energy. She said following the outbreak of the COVID-19 pandemic, trade, education and health had moved to ICT platforms, consuming about 40% of the continent’s energy. “So for us to be able to have on the continent a viable ICT sector that will allow our economies to build back better, we are going to need a lot of energy,” said Ms Songwe, adding private investments will play a crucial role, especially with the launch of the AfCFTA. The ECA Executive Secretary said the issue of the continent’s energy was not transition but energy substitution. Only two countries in Africa, Uganda and Seychelles, have viable electricity sectors, said Ms Songwe, a situation she said needs to be addressed with only 19 nations operating at expenditure while the rest are operating at excessive losses. Cost reflective tariffs are part of the problem affecting the continent’s power sector, she said, adding; “We must ensure that on the continent tariffs are cost reflective.” [RES4Africa Foundation, Enel Foundation: Scaling up Africa’s renewable power]

World Bank: Debt Report 2020 Edition III. This is the first of a new series of Debt Reports for 2020 to be published online, at regular intervals, over the course of the year. Their aim is to provide users with analyses of evolving trends and developments related to external debt and public debt in individual countries and regional groups, with primary emphasis on low- and middle-income countries, and to keep users abreast of debt-related issues and initiatives.