tralac’s Daily News Selection
SA and the IMF: The IMF’s executive board will meet on Monday, 27 July, to consider South Africa’s request for a Covid-19 response loan.
AfCFTA negotiations update: The African Union Commission will convene a meeting of senior trade officials on Tuesday, 28 July, to receive the report of the chief negotiators and to provide guidance on the way forward for the virtual meetings.
Nigeria and the AfCFTA: The Manufacturers Association of Nigeria will host a webinar, AfCFTA Rules of Origin: implications for growth of the manufacturing sector, on Wednesday 29 July. (See more below)
The USA and Africa: President Trump plans to host African heads of state at the White House in September for an investment event.
The International Chamber of Commerce’s 11th annual Global Survey on Trade Finance reveals that banks are optimistic about the evolving nature of trade finance, though unsurprisingly expect various industry-wide challenges and disruption as a result of the COVID-19 pandemic. SCF and digital trade are confirmed as key growth priorities for banks, with 86% and 84% of respective respondents calling them an ‘immediate or near-future priority’. However, there is a divide between global and non-global banks on their supply chain finance offerings and investments in digitalisation. Some 64% of global banks surveyed currently offer SCF platforms, compared to just 13% of local banks and 38% of regional banks. Similarly, while 83% of global banks have a digital strategy, only 46% of local banks report having one – highlighting a growing gap between players of different scale and reach.
Meanwhile, to quantify the likely impact of the pandemic on the trade finance industry, the report contains results from two additional projects. The first is analysis from BCG to model scenarios on how COVID-19 could disrupt trade, suggesting that trade flow values could fall by anywhere between 11% and 30% in 2020. Findings also indicate that the longer any lockdowns persist, the more severe the global and systemic impact will be, as businesses of all sizes – domestic and international in nature – fight to meet financial and commercial obligations and to remain viable. ICC also conducted a supplementary COVID-19 survey to understand banks’ sentiment regarding the initial impact of the pandemic on trade finance, with banks across geographies reporting an average 0-10% decrease in their trade flows in the first quarter of 2020, and most expecting at least a 20-30% decline for the full year.
The Nigerian economy can benefit up to $65bn in revenue from the optimization of the AfCFTA in the next 10 years. Mr Francis Anatogu, the Executive Secretary, the National Action Committee on Africa Continental Free Trade Area Agreement, stated this on Monday during a virtual press briefing on the activities of the Committee. He said whilst the exact projections for what Nigeria might benefit from the deal is still being worked out, Nigeria could earn up to 10% of the African export market share: “What I can tell you is that Africa on an annual basis imports goods from the rest of the world worth about $540bn per annum. They also import services worth about $140bn or $150bn per annum. So that is the size of the market we are targeting. Obviously Nigeria will take a significant percentage of that market. Our estimation is that Nigeria will take a tangible percentage of that market.”
He explained that “if altogether Nigeria gets 10% of Africa’s market worth $650bn of the market share per annum, then we are targeting $65bn in trade for Nigeria per annum” he said. “Can that be achieved over 5 years period? Most likely not, but it is something we can aim to achieve by 2030 when we achieve full liberalization. But like I said this is work in progress, the projections will become apparent in about a month or two.”
SADC Macroeconomic Peer Review Panel: extracts from the communiqué (SADC)
The purpose of the Panel’s Virtual Meeting (pdf) was to review progress made by individual Member States towards the achievement of agreed SADC Macroeconomic Convergence targets as well as to identify risks to the Region’s economic outlook and devise policy measures to mitigate the risks. In this regard, the Panel also considered a report on the impact of the COVID-19 pandemic on Member States’ performance against MEC targets. The Panel also considered peer review reports on the Democratic Republic of Congo and the United Republic of Tanzania, being the second time that the two Member States have been peer reviewed since the SADC Macroeconomic Peer Review Mechanism was launched in May 2013 in Maputo. The Panel commended the Kingdom of Eswatini and Mozambique, and Madagascar for undertaking the peer reviews for the United Republic of Tanzania and the Democratic Republic of Congo, respectively. The Panel agreed that Angola, Namibia and Zimbabwe be the next member states to be peer reviewed during 2020/2021.
COMESA’s Digital Trade Facilitation programme: update
COMESA has developed an online portal to be used by Member States to exchange information on availability of essential products within the region. This is in response to a directive issued by the COMESA Council of Ministers in May this year to develop the platform to support regional trade, during the Covid-19 pandemic. Secretary General Ms. Chileshe Kapwepwe launched the prototype platform to representatives of Member States, during a virtual meeting earlier today. The focal points will coordinate with the private sector in populating the platform with information on essential supplies. This is expected to boost local production and address shortages in supply from outside the region. Ms. Kapwepwe said the platform will enable Member States to share information on availability of products and their potential to produce and supply all different types of goods. It will connect buyers to suppliers of essential goods thereby promoting and fostering regional intra-COMESA trade.
Emmanuel Okogba: Resolving Nigeria-Ghana trade disputes (Vanguard)
It is cheering news that the hundreds of Nigerian-owned businesses shut in Ghana are being reopened after over six months of closure. This might be part of a gradual easing of months-long tensions between the two West African Anglophone countries over trade disputes and a diplomatic spat, with Ghana more on the offensive. These culminated in telephone calls between President Muhammadu Buhari and Ghana’s Nana Akuffo-Addo. Ghanaian state officials and the Ghana Union of Traders Associations have been systematically harassing and closing businesses and shops belonging to Nigerians in Ghana over alleged ineligibility to operate in the country. Under Ghanaian law, any foreign-owned business that does not have evidence of at least $300,000 in its deposit account or goods worth that amount cannot operate in that country.
The law was made at the instance of indigenous traders who complained that Nigerians were unfairly dominating the small-scale trading turf in Ghana. The Ghana Investment Promotion Centre, GIPC, Act was made apparently to protect the primary interests of Ghanaians. However, the National Association of Nigerian Traders, NANT, insists that their activities are protected by the Economic Community of West African States, ECOWAS, Protocol on Free Movement of Goods and Persons. The situation worsened after the August 2019 closure of land borders by the Nigerian government over smuggling and security challenges. Ghanaian traders and manufacturers complained bitterly that hundreds of truckloads of goods meant for the Nigerian market were “seized” in Nigeria due to the closure and retaliated by shutting Nigerian businesses. The main issue here is the conflict between the protection of national interests and the welfare of citizens which clashes with the ideals of sub-regional cooperation for the economic and social benefits of all within the region.
UNCTAD’s new online NTM training course: managing non-tariff measures amid COVID-19
To help countries better respond to the pandemic, with policies that don’t hinder trade, UNCTAD has trained 207 trade experts from 67 countries on NTMs, with 156 trainees – 86 men and 70 women – successfully completing a new online course. The training (15 June to 10 July) covered the objectives and implications of NTMs, formed part of UNCTAD’s ongoing efforts to help developing countries alleviate the socio-economic impacts of COVID-19. Over 85% of the participants said the training deepened their knowledge on NTMs, while 76% of them noted that it helped them better understand the policy issues faced by their countries in international trade. “The part most relevant to my work was the information on the analysis tool,” said Ahmed Abdelmaksoud, an Egyptian customs and international trade senior manager, referring to the UNCTAD Trade Analysis Information System. The system provides information on the NTMs applied by more than 190 countries. The online course also covered the connection between NTMs and the UN Sustainable Development Goals.
COVID-19 revenue administration implications: potential tax administration and customs measures to respond to the crisis (World Bank)
This note brings together the thinking that is occurring in global and regional teams on governance and institutional approaches to dealing with Coronavirus 2019 (COVID-19), with a focus on revenue administrations. It presents the governance and institutional reforms that can support revenue administration responses to COVID-19. The pandemic will bring a new normal where work practices should change. Usually, shocks trigger responses, and one of the responses here can be automatization of tax and customs services over the medium term, and a massive acceleration in the use of digital and virtual technologies.
Chantal Line Carpentier, Katrin Kuhlmann: Trade policy can ensure inclusive prosperity in wake of COVID-19 (UNCTAD)
We propose a new approach in three areas so trade can be a true engine for sustainable development and is:
better aligned with the economic and social development priorities and environmental commitments in the SDGs, the Paris Agreement, and the Sendai Framework for Disaster Risk Reduction
developed and implemented through more transparent and participatory processes
differentiated and tailored to countries’ specific needs.
Substantively, the new model we propose would mean reassessing trade rules in terms of their ability to advance economic, social and environmental dimensions of the SDGs and other international efforts, macroeconomic policies, business and human rights principles, and a balanced approach to the rule of law. This would build on existing models such as the AfCFTA that highlights a new approach to trade and development and aligns with the SDGs. It would include a stronger focus on trade and global health in line with SDG 3 (on good health and wellbeing) and development of a comprehensive food security and trade approach to deliver on SDG 2 (on ensuring zero hunger). Strengthened labour provisions will also be needed to advance SDG 8 (on decent work and economic growth). Further, it would entail meaningful initiatives on reduced inequalities (SDG 10), gender equality (SDG 5), and micro, small and medium-sized enterprises (MSMEs). In addition, it would call for a serious approach to trade and climate change, sustainability and the circular economy in support of SDGs 12 to 15. [Note: The full text of the original analysis can be accessed here]
Dorothy Tembo: Redesigning global supply chains post-Covid lockdowns (The Hindu)
What are the lessons that we can learn from the Great Lockdown? Third, the importance of supply chains in international trade means that their resilience will matter significantly for the future of trade. Lead firms often have a significant role in directing supply chains, making decisions about production practices, branding, sourcing and sales. ITC supports multiagency and partner platforms that advocate for stronger partnerships between major buyers and suppliers — and a fairer distribution of risks between different players. For example, brands and retailers could commit to a range of actions to limit the deleterious effects of Covid-19 and any future crises on their supply chains, including:
Paying manufacturers for finished goods and goods in production; and maintaining quick and effective open lines of communication with supply-chain partners about the status of business operations and future planning
Resilient supply chains can transmit knowledge, provide stability and generate agility. There are proposals on linking supply-chain players to the multilateral trading system, for instance, by creating supply-chain councils. The post-pandemic period presents a unique opportunity to embrace new concepts, fields of work and partnerships. Implementing some of these proposals could strengthen the multilateral trading system and help it regain its power to build prosperity in a changed world and achieve the United Nations Sustainable Development Goals.
Addressing heads of WTO member delegations for the last time as Chair of the Trade Negotiations Committee, Director-General Roberto Azevêdo emphasized that the year ahead would be a defining one for the WTO. The Twelfth Ministerial Conference (MC12), now postponed to 2021, would be a key milestone for members’ efforts. “As originally scheduled for this past June, MC12 would already have marked a critical juncture for the organization. Multilateral agreements on fisheries subsidies and agriculture, together with advances in the joint statement initiatives, would have sent a powerful signal that the WTO could continue to provide certainty and predictability for global trade for the next 25 years. Failure to agree, meanwhile, would have called all of this into question. Now, MC12 will have to do this and more. It will mark a key decision point for the direction of the post-COVID global economy. Will we react to the ongoing shocks with renewed cooperation, leading to shared growth and resilience? Or will we move further on the path towards costly fragmentation? Your work in the months ahead, including in this body, will help provide the answer.” To maximize their prospects for success at the next Ministerial Conference, the outgoing Director-General urged members to swiftly agree on his successor, and then “work with her or him to chart a course for MC12 and beyond”. The existing WTO rulebook continues to provide “a vital anchor of predictability and certainty in the global economy,” DG Azevêdo said. [Items proposed for consideration at the 29 July meeting of the Dispute Settlement Body]
Today’s Quick Links:
Pinelopi Koujianou Goldberg: Keep borders open
“Inequality defines our time”: UN chief delivers hard-hitting Mandela day message
World off track in meeting 2030 Agenda, UN deputy chief warns: calls for solidarity in COVID-19 recovery
South Africa: Medupi Power Project – 4th Monitoring Report