tralac Daily News
Amid SA’s economic gloom, exports boom thanks to gold price, citrus (Business Insider SA)
South Africa’s economy is expected to shrink by 8% this year due to the pandemic, but there’s one unlikely bright spot: exports.In August, the value of South African exports amounted to R130.2 billion – the largest number on record. This is largely due to the rocketing price of gold, which has gained 23% over the past year as Covid-related uncertainty unnerves investors across the world. Another export highlight was citrus. In July and August, South Africa exported almost R8 billion in citrus, according to SA Revenue Services. This was thanks to a solid local harvest – but also strong demand, especially in Europe, for vitamin C as the coronavirus caused consumers to become more conscious of protecting their immune systems. In all, South Africa may export almost 10 billion pieces of citrus fruit this year, in what is expected to be one of the best seasons on record.
Presentation to the Portfolio Committee on Trade and Industry by Ambassador X Carim, DDG Trade Policy, Negotiations and Cooperation, 13 October 2020. Outline: Guiding Principles; African Economic Integration; SACU, SADC, TFTA, AfCFTA; Trade Relations with the EU: SADC-EU EPA; Trade Relations with the UK: SACUM-UK EPA; SACU-EFTA FTA; SA-US Trade Relations; BRICS; and SA Approach to MTS/WTO
Ramaphosa under pressure to outline decisive plan to boost SA economy (Eyewitness News)
With President Cyril Ramaphosa expected to table government’s economic recovery plan on Thursday, he is under pressure from all quarters to come up with bold and decisive action rather than more rhetoric and promises. Ramaphosa is expected to address a joint sitting of both houses of Parliament at 2pm and it will be broadcast live. Cosatu’s Matthew Parks agreed it was time for Ramaphosa to show his hand. “We’re in the worst economic crisis in 100 years, we have lost 2.2 million jobs in the last quarter, we’ve pushed past 51% unemployment, we are in serious danger of heading into economic depression unless government decisively intervenes with the assistance of the private sector to get the economy out of its deep hole to create jobs, rebuild the state, deal with corruption, and collapsing SOEs, particularly Eskom,” Parks said.
Zimbabwe’s debt stifling its economy (The East African)
Experts are warning that Zimbabwe’s appetite for Chinese loans is pushing the country’s foreign debt to unsustainable levels. According to former finance minister Tendai Biti, who held the post between 2009 and 2013 when Zimbabwe made some steady progress towards clearing its foreign debt, President Emmerson Mnangagwa’s government contracted a staggering $2.5 billion in external debt between July 2019 and July this year. This has pushed Zimbabwe’s external debt to $4.8 billion.
Kenyan county revenues drop Sh4.6bn on Covid heat (Business Daily)
Revenue collection by counties for the year ended June dipped by Sh4.55 billion in the wake of restrictions imposed to curb the spread of the coronavirus disease, new data shows. The Controller of Budget (CoB) says that Sh35.77 billion was raised in the period, reflecting an 11.2 percent fall from Sh40.3 billion a year earlier. The restrictions in the last quarter of the year hurt businesses where counties rake in billions from rates, cess and parking fees. Kenya imposed a dusk-to- dawn curfew in March, banned movement into and out four counties including Nairobi and Mombasa and suspended international flights after recording the case of Covid-19 infection.The directives forced traders and motorists to stay at home, businesses to close and others reduced operating hours, leaving counties with reduced revenue streams in the race to hit their annual collections targets.
Kenya will prioritize environmental conservation in its industrialization agenda as part of efforts to support sustainable development, a government official said on Wednesday. Francis Owino, principal secretary, State Department for Industrialization said in Nairobi that climate change is one of the greatest threats faced by the country and has the potential to negate socio-economic gains made by the government. “Even as we push for industrialization, we will adopt environmental standards to safeguard the quality of air, water and soil,” Owino said during celebrations to mark the World Standards Day.
Imports from Uganda to Kenya dropped in August due to border delays and reduced economic activities in the wake of Covid-19. Uganda exports to Kenya stood at $46.9 million (Sh5.1 billion)as of August 2020 a slight decline from $48.3 million (Sh5.2 billion)the same period last year, according to the Uganda Bureau of Statistics. On the other hand, the value of Kenya’s exports to Uganda increased to $88 million (Sh9.6 billion) a jump from $53.9 million (Sh5.9 billion )in the same period last year, even as delays at the Malaba and Busia borders continue to affect cargo movement.
With numerous major natural tourist attractions, Tanzania is feeling the impact. The World Bank’s 14th Tanzania Economic Update (TEU) forecasts economic growth to slow to 2.5% in 2020, from the 6.9% growth reported in 2019. Tourism operators in Tanzania are forecasting revenue contractions of 80% or more in 2020. And nationwide, the crisis could push 500,000 Tanzanians below the poverty line, with those employed in the informal economy likely to be impacted the most. According to a Government of Tanzania study on the impacts of COVID-19 on the tourism sector, without the pandemic, the 2020 season would have attracted approximately 1.9 million tourists and generated US$2.9 billion of forex.
Members of the business community in Tanzania are working on a special strategy that would enable the country to best utilise the trade and investment opportunities that are available in neighbouring Malawi. Grouped under the auspices of Tanzania Private Sector Foundation (TPSF), the business community believes Malawi has numerous untapped potentials in the areas of commercial agriculture, manufacturing and mining that could be utilized for the benefit of the peoples of both countries. The strategy, according to the acting TPSF chairperson, Ms Angelina Ngalula, would take into account the business environment in Malawi and come up with a database of potential business and investment areas. “The strategy will make it easy for Tanzanians to understand the business environment there. It will entail potential areas of doing business, including costs of establishing a business or factory, taxes and other matters,” she said yesterday.
Rwanda approves cannabis production for export (The East African)
Rwanda has approved the cultivation and export of cannabis even as the use of the stimulant for medical or recreational purposes remains illegal in the country. The government is targeting to grow its export earnings from the global cannabis market valued at the $345 billion according to analysts New Frontier Data. The decision has caused confusion with some warning it could be detrimental to the youth if tough controls are not enforced.
Mauritius, with the support of ECA, will organize a national consultative meeting on Thursday 15 Oct. to guide the development of the country’s African Continental Free Trade Area (AfCFTA) implementation strategy. Scheduled for the capital city Port Louis, the meeting is expected to kick-start reflections on how Mauritius can seize the opportunities of the AfCFTA to deepen its level of trade integration with the rest of Africa. The collaboration comes under the mandate of the Commission through the African Trade Policy Centre to help AfCFTA member-states to prepare for the agreement’s implementation to start next year.
Daily oil production in Equatorial Guinea fell in September to 103,000 barrels, a drop of 15,000 barrels a day, according to data released by the Organisation of Petroleum Exporting Countries (OPEC).OPEC’s latest monthly report, published on Tuesday and based on secondary sources from the organisation, shows that oil production in Equatorial Guinea fell in September after high results in August. In the last 20 years, the exploitation of oil resources has been the main pillar for the growth of this economy. To avoid a high dependence on oil exploration, the African Development Bank (AfDB) committed last September to support economic diversification in the country through a program that will focus, among others, on agricultural transformation.
Cameroon’s private sector is currently ill-prepared to leverage a spate of opportunities offered by the green economy but a comprehensive set of measures which Government should spearhead, can turn the issue around, says a new study being finalized by the United Nations Economic Commission for Africa (ECA). The “Study on Leveraging the Potential of the Private Sector to Stimulate Green Growth and Job Creation in Cameroon” explores five sectors in which both government and the private sector should focus for maximum results. They are: energy, agriculture, and manufacturing, waste treatment and forest resource management.
IFC, a member of the World Bank Group, and the Africa Agriculture and Trade Investment Fund (AATIF) today announced an investment to help Société Africaine d’Ingrédients (SAF Ingrédients) build an onion dehydration plant in Senegal—the first in sub Saharan Africa—that will create hundreds of jobs and boost the country’s agriculture exports. The unique project involves decommissioning an existing onion dehydration plant (built in 2003 and closed in 2014) near Dijon, France, and relocating it to St. Louis in northern Senegal. Support from IFC and AATIF will also help SAF Ingrédients develop a 760-hectare onion farm and establish a large out-grower network of onion farmers.
The African Continental Free Trade Area: development accelerator or more of the same? (How We Made It In Africa)
Economic growth, industrialisation, sustainable development, regional cooperation and integration in Africa are just a few of the desires and expectations riding on the African Continental Free Trade Area (AfCFTA). At this time of Covid-19-induced economic and social woes, the AfCFTA has been hailed as a continental comeback strategy, and as a way for Africa to reposition itself on a global stage. The formation of new markets, the projections for higher employment numbers, more diverse products and the stimulation of industrialisation pathways are part of the vision for the AfCFTA as African economic integration is realised.
An online tool designed to help businessmen and businesswomen in Africa understand how best to trade between African countries came a step closer to becoming fully operational in August 2020 as a demonstration version came onstream. The African Trade Observatory (ATO) – a mechanism being implemented by the International Trade Centre (ITC) to help the new African Continental Free Trade Area (AfCFTA) function when it goes live in 2021 – has begun testing the online dashboard to give real-time trade statistics to African users. Such information will include intra-continental trade flows (traded values, traded quantities, the use of tariff preferences, taxes and fees paid at the border), and information on market conditions (such as taxes applicable at the border and regulatory requirements). The transfer of raw data from providers to the ATO team will be automated where possible to make the collection of quantitative information sustainable.
Stalled Trucks at Borders Cast Pall on African Free Trade Pact (BloombergQuint)
Hundreds of trucks have been parked at Benin’s border for more than a year since its eastern neighbor Nigeria abruptly curbed imports. To the west of Benin, officials in Ghana’s capital have shut Nigerian-owned stores to comply with a law that curbs foreign participation in its retail trade. Such actions embody the hurdles that must be overcome if Africa is to fulfill its vision of instituting a continental free-trade agreement. For now, protectionism remains the name of the game for West Africa’s economic powerhouses, whose governments are preoccupied with overcoming the devastation wrought by the coronavirus.
How to mobilise funds for the implementation of a dedicated clean energy project for the grid? This is a real headache for independent power producers (IPPs), especially the less experienced ones. To address this issue, the Renewable Energy Performance Platform (REPP) launched online networking sessions on October 13th, 2020. The aim is to enable IPPs to make contact with investors.
Over 50,000 truck drivers have successfully been uploaded to the Regional Electronic Cargo and Driver Tracking System (RECDTS) since it was rolled out in September. Principal Secretary State Department of East African Community Kevit Desai made the disclosure on Tuesday when he led a team from his Ministry and the private sector representatives to Malaba One Stop Border Post in response to complaints by industrialists that grain imports contained aflatoxin. The East African Community Secretariat and its Partner States rolled out the Regional Electronic Cargo and Driver Tracking System, designed as a mobile phone application to enable the issuance of the EAC Covid-19 digital certificates that are mutually recognized by Partner States.
Kenya approves move to set up EAC seamless airspace (The Citizen)
Kenya has moved the region closer to achieving an open airspace following the decision by the Cabinet to approve establishment, implementation and management of the East African Community (EAC) Seamless Upper Airspace. The development, which has been elusive for many years, comes at a time the call for creation of a common airspace has been getting louder from different stakeholders who have argued that the move will lower high cost of air transport in the region.
A report from the Fifth Trade and Trade Facilitation Sub-Committee meeting of COMESA which was held virtually has indicated that the region’s average growth slowed down in 2019 to 5.2% from 6.0% in 2018 and is projected to decrease to 0.6% in 2020. The slowdown in growth was experienced in most COMESA member countries except Egypt, Ethiopia, Malawi, Rwanda and Seychelles that registered improved economic growth in 2019 compared to 2018. The impressive growth of above 5% in both years in these countries, reflected among others, improving growth fundamentals, with a gradual shift from private consumption toward investment and exports
There has been a notable increase in the number of Non-Tariff Barriers during the COVID-19 pandemic period as countries increasingly took discretionary measures to contain the spread of the virus. COMESA Director of trade Dr Chris Onyango told delegates attending the fifth Meeting of the COMESA Trade and Trade Facilitation Sub-Committee last week, 6-8 October 2020, that during the COVID 19 era, measures put in place by Member States have disrupted global value chains, radically reduced dependency on imports and rallied States towards the path of protectionism.
The impact of the COVID-19 pandemic on the lives and livelihoods of the African citizenry, continues to be a matter of great concern on the continent. As the world contends with the “new normal” and continues to navigate through the destruction caused by the pandemic, Africa remains optimistic that the proactive initiatives undertaken since the outbreak of the pandemic in March 2020, have been effective in containing the spread of the virus and will enable the continent realize a gradual recovery of the socio-economic gains negatively affected by the pandemic. It is against this backdrop that the 37th Ordinary Session of the Executive Council of the African Union (AU) kicked off on 13 October 2020 with great optimism that Africa has an opportunity to reimagine an Africa post-COVID-19 and derive new ways of addressing the challenges of peace and security, socio-economic under-development, and poverty. The COVID-19 context prompted the holding of a virtual ministerial conference to enable the designated representatives of government from AU Member States to fully participate in the discussions from their respective capitals through the use of information technology.
Amidst climate concern, stakeholders insist oil key to Africa’s future (The Guardian Nigeria)
Stakeholders in Africa’s energy sector have insisted that crude oil still has a major role in the continent’s future despite growing concern over climate change. The stakeholders, who gathered at the African Refiners Association (ARA) Week 2020, however, stressed the need for clean energy transition and climate change mitigation policies to address looming challenges. “It is important to note at this point that the future of our continent does not just lie in our ability to unlock value from our vast natural resources or powering an industrial and economic revolution, but also in our ability to implement proven refining solutions that consider the broader public health implications of our business decisions,” he stated.
The EU is looking to reset relations with Africa and change the narrative from aid donor to equal trade partner. Brussels had planned to reboot the alliance this year but the coronavirus pandemic has so far derailed efforts. Beyond investment, politicians in Brussels are looking at ways to shake up their economic partnerships. Job creation is key to the new strategy, which will be discussed at this week’s EU summit. “We need to invest in the infrastructures, in the digitalisation and to invest in education that is key if we want to increase the employment rate,” said Jutta Uriplainen, EU commissioner for international partnerships.
The EU is Africa’s largest trade partner, but China is increasingly becoming a key player on the continent. Brussels has set aside €4.6 billion in guarantees for projects with public and private investors in Africa. The goal is to create 10 million jobs by 2023. “We need to guarantee that we advance in terms of trade, but at the same time we need to guarantee the protection of the natural resources, we need to guarantee a cooperation in terms of climate change and our priorities in Europe have to be the same in the agenda with Africa: equality, rule of law and democracy,” said Garcia.
Nigerian governor to address UK business leaders on Brexit opportunities (Bdaily Business News)
A Nigerian state governor will next month showcase the post-EU opportunities for UK companies in Africa’s largest economy – when he becomes the first African to address an influential group of British business leaders. Nigerian state governor to tell Institute of Directors: “There is a huge status to buying British in Nigeria, but in recent years, Britain has prioritised Europe in its trading relationships, allowing counties like China and Japan to take advantage. Brexit is the perfect opportunity to think again”.
Nigeria: Leading the World Trade Organization: The Case for Nigeria’a Okonjo-Iweala (The Street Journal)
The selection process for the leadership of the World Trade Organization in Geneva is down to two finalists. Both are women – Ngozi Okonjo-Iweala, Nigeria’s former minister of finance, economy and foreign affairs, and Yoo Myung-hee, the first woman to serve as South Korea’s minister of trade. Okonjo-Iweala, Africa’s candidate, is the better woman to revive the WTO. The institution has been weakened by great-power rivalry between the United States and China, a political assault on globalization that has been heightened by the Covid-19 global health pandemic. It also has faced increasing institutional irrelevance in recent years, as countries have tilted toward bilateral and regional trade deals following a breakdown in global trade negotiations.
Mr David Malpass, President of the World Bank Group, has commended the Federal Government for removing subsidies on petroleum products. He said this in Washington D. C. on Wednesday at the opening press conference for the World Bank at the ongoing 2020 International Monetary Fund (IMF)/World Bank virtual annual meetings. Malpass was responding to a question on whether the World Bank saw an opportunity or problem regarding the enormous youth population in Nigeria accompanied with rising unemployment and the burden of COVID-19.
IFC and Union Bank Partner to boost Nigeria’s trade finance (African Review)
IFC, a member of the World Bank Group, has announced a finance guarantee facility to Union Bank to boost access to finance for local business, enable increased international trade for Nigeria and help protect the country’s economy from the impact of the COVID-19 pandemic. The US$40 million facility, under IFC’s Global Trade Finance Program (GTFP), will support Union Bank to establish working partnerships with nearly 300 major banks within the GTFP network, thereby broadening access to finance and reducing cash collateral requirements for Nigerian businesses. The facility will enable the continued flow of trade credit into the Nigerian market at a time when imports are critical, and the country’s exports can generate much-needed foreign exchange.
Zambia’s debt demand shows limits of China’s chequebook diplomacy (The Africa Report)
Zambia’s request for blanket debt-service suspension from creditors edges the country closer to default and highlights the limitations of China’s debt diplomacy. The government has decided to ask all external creditors to agree to debt service suspension on the same terms, Zambia’s finance ministry said in a statement on October 13. The only foreign-currency denominated debt that Zambia will continue to pay is from multilateral agencies, plus debt for a few priority projects, the statement adds.
Is global logistics industry prepared to deliver Covid vaccines? Not quite (Business Standard)
The medical industry’s dash to produce the world’s first coronavirus vaccines in just a few months is heightening the urgency for the workhorses of global trade to be ready for the historic charge to defeat the disease. Only 28% of companies involved in supply-chain logistics feel well prepared to handle Covid-19 vaccines and 19% characterized their readiness as very unprepared, according to a survey released Wednesday that showed a wide swath between optimists and pessimists. The poll, conducted in mid-September by the International Air Cargo Association and Pharma.Aero, is part of an effort to coordinate widespread delivery of the immunizations.
World Bank avails more funding for global Covid response (Engineering News)
Some of the latest economic and poverty data from international institution, the World Bank, shows that “desperate inequality” is being caused by the Covid-19 pandemic and the subsequent economic shutdowns, which have led to recessions in various countries. While the recessions in advanced economies are less severe than what had been feared, in most developing countries is has become a depression, especially for the poorest, which may see extreme poverty, globally, rise by 150-million as early as 2021.
The international community has made substantial progress towards reaching a consensus-based long-term solution to the tax challenges arising from the digitalisation of the economy, and agreed to keep working towards an agreement by mid-2021, according to a Statement released today. The OECD/G20 Inclusive Framework on BEPS, which groups 137 countries and jurisdictions on an equal footing for multilateral negotiation of international tax rules, agreed during its 8-9 October meeting that the two-pillar approach they have been developing since 2019 provides a solid foundation for a future agreement.
Fiscal Policy for an Unprecedented Crisis (IMF Blog)
The COVID-19 crisis has devastated people’s lives, jobs, and businesses. Governments have taken forceful measures to cushion the blow, totaling a staggering $12 trillion globally. These lifelines have saved lives and livelihoods. But they are costly and, together with sharp falls in tax revenues owing to the recession, they have pushed global public debt to an all-time high of close to 100 percent of GDP. The October 2020 Fiscal Monitor examines countries’ experiences managing the crisis and discusses what governments can do in the different phases of the pandemic to save lives, reduce the impact of the recession, and revive growth and job creation.
Whether COVID leads to isolationist policy or protectionist policy is up for debate, what we do know is that countries from Egypt and Jordan to Pakistan, Taiwan and China are stockpiling agricultural commodities to boost strategic food stockpiles and protect their food supplies. Food stockpiling is a precautionary measure against potential disruptions that could be caused by COVID-19 outbreaks. “COVID-19 has forced consumers to shift from just-in-time inventory management to a more conservative approach which was labelled just-in-case,” said Bank of America Corp. analysts led by Francsico Blanch, head of global commodities. “The result is that consumers are holding more inventory as a precaution against future supply disruptions.”
G20 to extend debt relief for poor countries by six months (Eyewitness News)
G20 nations announced Wednesday a six-month extension to a debt suspension initiative for the world’s poorest countries ravaged by the coronavirus pandemic, triggering criticism from campaigners who said it did not go far enough. The 20 most industrialised nations had pledged in April to suspend debt service from the world’s most vulnerable countries through the end of the year as they faced a sharp economic contraction caused by the pandemic. The initiative will now be extended until the end of June next year, G20 finance ministers and central bankers said after a virtual meeting hosted by the group’s current president Saudi Arabia.
Organised by the Norwegian-African Business Association, H.E. Dr Amani Abou-Zeid, Commissioner for Infrastructure and Energy, participated in the high level opening of the ‘Nordic-African Business Webcast 2020’, together with H.E. Ine Marie Eriksen Søreide, Minister of Foreign Affairs of Norway, Mr. Raymond Carlsen, CEO of Scatec Solarand and Mr. Samalia Zubairu, President and CEO of Africa Finance Corporation. The commissioner highlighted the need to invest in digitalisation in all sectors as high priority for the Continent, with an urgent need to scale up access to affordable energy as without it no development strategy can be deployed. The third priority area for Africa recovery is capacity development especially for youth, women and girls who are the African development actors to harness efficiently existing and future opportunities.
Global trade has grown and developed in ways that the negotiators of the Customs Valuation Agreement could never have foreseen. The reshaping of value chains will give rise to new and emerging business models and trade developments that in all likelihood will require further interpretation of the application of the Customs Valuation Agreement, at least at the technical level.