Building capacity to help Africa trade better

tralac’s Daily News Selection


tralac’s Daily News Selection

tralac’s Daily News Selection

The 10th BRICS Trade Ministers Meeting takes place today. On the agenda: responses to the corona virus outbreak, the strategy for BRICS Economic Partnership 2025, the Multilateral Trading System and other key areas of cooperation.

Mills Soko, Mzukisi Qobo: Why one of three African candidates fits the bill as the new head of the WTO (The Conversation)

Okonjo-Iweala does not have WTO experience. But she knows and understands the workings of multilateral institutions, honed over many years as an international public servant. She is a seasoned global finance expert, economist and development practitioner with decades of international experience. Her global finance expertise, in particular, would serve the WTO well given the nexus between trade and finance in the world economy, accentuated by the current economic crisis. By not being a WTO insider, she would bring a much-needed fresh perspective to the institution.

EAC Partner States adopt import duty measures to boost local production amidst COVID-19 pandemic (EAC)

EAC Partner States (Burundi, Kenya, Rwanda, Tanzania, Uganda) have adopted various measures on EAC Common External Tariff with the aim of boosting local production in the region. The new import tax changes will be effective in the new fiscal year which commences on 1 July 2020 after being approved during the Pre-Budget Consultations of the Ministers/Cabinet Secretary of Finance that was held via video conference on 13th May 2020. The EAC Ministers have been holding the Pre-budget Consultations prior to reading the National budgets as a way of harmonizing fiscal measures in the region. The decisions of the Ministers/Cabinet Secretary for Finance on the CET measures were finally endorsed by the meeting of the Sectoral Council on Trade, Industry, Finance and Investment on 3 June 2020 via video conference.

The import duty measures in the EAC Gazette issued on 30 June 2020 can be put into three main categories which are Duty Remission for Industrial Inputs, Stays of Application, and Amendments of the East African Community Customs Management Act, 2004. The duty remission measures adopted by the EAC Partner States will ensure that local manufacturers can import raw materials and inputs which are not available in the region at a lower rate. These duty remission measures are strictly specific for the gazetted manufacturers who have applied for the importation of a specific amount of input/product at the reduced import duty rate.

Since most of EAC Partner States opted for stay of application of the EAC CET and applied higher duty rates ranging from 35% to 60%, it gives a positive indication that EAC Partner States may soon conclude the comprehensive review of EAC CET as countries have shown some commonalities on the maximum tariff or the level of protection they require. In addition, the ranges of CET measures contained in the EAC Gazette are in line with the EABC Budget Proposals which were submitted to the EAC Secretariat. All EABC customs proposals on duty remission and stay of applications were adopted by EAC Partner States at different degrees/levels. [Note: Various downloads available]

Kenya: Diaspora disappointed by Kenya Airways’ cancellation of US flights (Daily Nation)

Kenyans living in the US and Canada say they are disappointed by news that Kenya Airways plans to drop direct flights to the US and China when it resumes international routes on August 1. It was reported this week that the national carrier would be forced to cut the routes it serves by half to 27 due to the devastation caused by the Covid-19 pandemic. “Trade between Kenya and the US stands at only $1bn. This flight cancellation undermines the ongoing bilateral free trade agreement being negotiated between the US and Kenya to grow the volume of value added exports from Kenya into US markets” said Prof David Onsarigo Monda of City University, New York. Prof Monda says the cancellation will likely hurt the horticulture sector and Kenya’s tourism industry. “Diplomatically, the flight cancelation disrupts direct access to two major global diplomatic centres in New York and Nairobi. New York hosts the UN headquarters while Nairobi hosts UNEP and Habitat. Kenya is also set to become a non-permanent member on the UN Security Council beginning January 2021. This flight cancellation sends all the wrong messages,” he added.

Kenya: Cash from Kenyans in America hits historic high (Business Daily)

Cash sent home by Kenyans living in North America hit a historic high of Sh15.7 billion ($145.95m) in May, defying the tough economic situation facing workers in the region since the Covid-19 pandemic struck. Data from the Central Bank of Kenya shows the remittances from the region, which includes Canada, the United States and Mexico, rose by Sh2.5 billion (19.6%) from Sh12.76 billion ($118.71m) in April. This saw North America deepen its share of total remittances to 56.5% of the Sh27.78 billion ($258.15m) sent to Kenya in May. This is in contrast with May last year when the region accounted for 48.6% of total remittances. The CBK singled out the US as among the countries which brought in the highest remittances. However, the May remittances represented a recovery from a six-month low of Sh22.4 billion ($208.21m) recorded in April. The rise came in the period remittances from Europe also recovered from Sh3.75 billion ($34.9m) to Sh4.59 billion ($42.65m). Remittances from the rest of the world rose by 27%, to Sh7.48 billion ($69.5m)

Tanzania: M-Pesa global transfers climb 300% (The Citizen)

Vodacom Tanzania’s international money transfer service netted Sh102 billion between March and June 2020, to cement the growth in the overseas money transfer platform. International transfers jumped up by 300% in the quarter, while remittances hit Sh16 billion which is a 44% increase over the same period. Vodacom Tanzania has recently rolled out mobile money transfer services across nearly all countries. “We continued to widen our partner network, with the launch of ‘Mama Money’ and ‘Remitly’ during the quarter, which enabled customers to receive money from South Africa,” said Vodacom in a regulatory statement to the Dar es Salaam Stock Exchange.

Nigeria: 5.7% of Nigerian households receive remittances from abroad — NBS (Economic Confidential)

Nigeria received $17.57bn in direct Diaspora remittances in 2019, up by 56.4% from $11.23bn in 2018. The NBS, however, disclosed that the average remittance received per household is $224 or N84,741 while over 80% of the remittances received is spent on consumption. The NBS disclosed this in its National Living Standard Survey Report for 2018/2019. The report stated: “Large share of households, 54% report receiving remittances: 52.7% receive remittances from someone in Nigeria and 5.7% from abroad. The state of Kebbi has the largest share of household-remittance-recipients, at 81.4% and state of Sokoto has the lowest number at only 5.6%. The average value of domestic remittance is N62,492 and of international remittance is N84,741. More than 80% of households who receive remittance report using the transfers for consumption purposes.”

Tanzania’s largest bank to enter DRC in continental expansion plan (Ventures Africa)

CRDB Bank Plc plans to enter seven new countries in East and Central Africa as part of an expansion plan that began in 2012 but was put on hold four years later over financial constraints. With improved cash flows and close to $3bn worth of assets, the Tanzania lender, largest by assets and market share, has reignited its ambitious plan with hopes to join regional banking giants – Equity and Kenya Commercial Bank – in the race towards attaining pan-African status. Dar-listed CRDB has identified the Democratic Republic of Congo as the first point of entry through Greenfield Investments. A number of top East African banks have set sights on Kinshasa, which has attracted the likes of Kenya’s Equity Group and KCB.

Uganda registers trade surplus despite Covid-19 pandemic (Daily Monitor)

Despite the slowdown in international trade due to Covid-19 pandemic, the Ministry of Finance, Planning and Economic Development has revealed that Uganda recorded a trade surplus with the European Union of $0.3m (Shs118 million) and the Middle East $87.70m (Shs324 billion) in May 2020. The Ministry said in the Performance of the Economy report of July 2020 that export earnings increased by 40.4% in May 2020 to $290.93m (Shs1.07 trillion) from $207.15m (Shs765 billion) in the previous month. “This was the first time since January 2020 that exports were registering an increment, implying that the supply chain disruptions caused by the Covid-19 pandemic is starting to ease. However, in comparison with the same period last year, export earnings decreased from $349.61m (Shs1.3 trillion) in May 2019 to $ 290.93m (Shs1.07 trillion) in May 2020,” said the Ministry. They added: “The Middle East was the leading destination for Uganda’s exports accounting for 44.4% of all exports. It was followed by the EAC at 23.1% nd the European Union at 12.5%.”

However, during the under review, the Ministry said there was a reduction in exports to all trade blocs save for the Middle East where exports increased to $128.9m (Shs476 billion) in May 2020. “Earnings from export commodities such as cotton, tea, tobacco, fish, oil re-exports, base metals & products recorded drops. Nonetheless, the value of some export commodities like coffee, gold, maize and beans increased during July compared to the same month last year.” Download (pdf):

  • Figure 17 (pdf): Merchandise exports by destination, May 2019 cf May 2020

  • Figure 20: Merchandise imports by origin, May 2019 cf May 2020

Kenya: Ugandan sugar imports drop 96% (Business Daily)

Sugar imports from Uganda in June fell 96% on account of higher cost for the commodity as traders opted for cheaper alternatives from other regional countries. Data from the Sugar Directorate indicates that the volumes from Uganda fell to 43 tonnes from 1,180 tonnes in May. The cost of a tonne of sugar from Uganda was Sh64,574, compared to Sh56,463 and Sh57,129 from Malawi and Swaziland, respectively. The price of Ugandan sugar increased slightly in the review period from Sh64,420 in May. “Mill white/brown sugar from Malawi and Swaziland were the cheapest with an average price of Sh56,463 and Sh57,129 a tonne respectively. Sugar from East Africa Community, precisely from Uganda was landing at an average price of Sh64,574 per tonne,” said the directorate. [What can Uganda do with her milk surplus?]

Kenya: Taxi hailing firm Little gets Sh324m for West Africa expansion (Business Daily)

Kenyan e-hailing taxi firm Little has received a Sh323.85 million ($3m) from its parent firm for its expansion to West Africa. Little received the funds from Craft Silicon to launch operations starting with Ghana’s capital Accra, where the firm is piloting the app service. Due to current travel restrictions, the firm said it will run the pilot, training and recruitment of drivers virtually. “West Africa is a large market, and if Little have to be a key player in Africa, we need to be present there in addition to East Africa. Hence the march towards West Africa,” said Little CEO and Craft Silicon Founder, Kamal Budhabhatti.

South Africa: President Ramaphosa signs Border Management Authority Bill into law (Presidency)

The new law provides for the establishment, organisation, regulation, functions and control of the Border Management Authority, the appointment of its Commissioner and Deputy Commissioners and officials. The law also provides for their terms of office, conditions of service and functions and powers. Furthermore, the law provides for the establishment of an Inter-Ministerial Consultative Committee, Border Technical Committee and advisory committees, for the review or appeal of decisions of officers, and the definition of certain things offences and the levying of penalties. The legislation therefore contributes to the security of the country and the integrity and ease of trade and the general movement of persons and goods in and out of the country.

The Chairperson of the Portfolio Committee on Home Affairs, Adv Bongani Bongo, has welcomed the signing into law of the Border Management Authority Bill. “While we are aware that the legislation-making process has taken longer than initially intended, we are happy that the delay has strengthened the law to make the agency effective,” Adv Bongo said. The committee is also hopeful that the new border agency will move with speed to ensure that South Africa’s borders are secure. The committee has highlighted the importance of an implementation plan with targeted milestones for the Act. The committee has also urged the Department of Home Affairs and the National Treasury deliver on their commitment to conclude an implementing protocol within six months of signing of the Act to enable the seamless functioning and co-ordination of border management areas. The committee will exercise its oversight obligations by heightening it engagements with the department on the implementation of the Act.

Today’s Quick Links:

Despite oil gloom, Total rallies $14bn for Mozambique project

Kenya: IFC announces $50m loan to Equity Bank to support Kenyan SMEs during Covid-19

Nigeria’s Access Bank gets $50mln IFC loan

Implications of COVID-19 on Nigeria’s employment generation

Tanzania seizes eight flower farms abandoned by defaulters

Kenya microfinance needs to be regulated, says CEO of KBA

Middle East, SSA: IFC exceed 2019 fiscal commitments with $4.6bn invested


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