tralac Daily News
South Africa is facing a significant shortfall in revenue collection due to the coronavirus lockdown and other economic factors, says the Parliamentary Budget Office (PBO). In a presentation ahead of finance minister Tito Mboweni’s Medium-Term Budget Policy Statement (MTBPS) next week, the PBO said the cost-of-revenue collection ratio continued to decline from 0.97 in 2014/15 to 0.78 in 2019/2020. “Covid-19 economic conditions together with continued digitalisation of business activities and continued base erosion and profit shifting will negatively affect all of these tax revenue sources,” it said.
Experts urge govt to prioritise informal-trading-friendly policy (Engineering News)
With 60% of South Africa’s economic activity happening in the informal sector, national, provincial and local government alike need to realise the importance of empowering these entrepreneurs to contribute more to the gross domestic product of cities, University of the Witwatersrand associate Professor Margot Rubin said on October 20. Rubin noted that challenges facing entrepreneurship in South Africa include inconsistent policy regimes that have been in place for a long time.
South African businesses: Key to success may be close to home (The Africa Report)
A string of high-profile failures in Western markets has highlighted the brighter prospects that lie in continental expansion for many South African corporates. New Frontier’s ill-fated investment in the UK is just one recent example of South African companies betting big on markets outside Africa, only to see the value of these foreign operations nosedive. Beyond banking and insurance, examples of successful expansion into Africa abound. MTN’s transformation into a multinational behemoth owes much to its early push into Nigeria, in 2001. Shoprite launched its first foreign operation, in Namibia, in 1990, and today is Africa’s largest food retailer, with a presence in 14 countries outside South Africa.
Stakeholders in the public and private sector have been engaged in vibrant discussions bordering on the theme for the 2-day National Conference on the Implementation of the AfCFTA Agreement at the Accra International Conference Centre from October 20-21, 2020, themed “Empowering Ghanaian Businesses to harness the benefits of the African Continental Free Trade Agreement under the framework of the National Export Development Strategy”.
Rwanda unemployment rate falls to 15 per cent (The New Times)
Unemployment rate fell to 15 per cent in the last three months from May to August, the National Institute of Statistics of Rwanda (NISR) said in its latest labour force survey released on Wednesday. The third quarter report shows unemployment fell sharply from the historic 22.1 per cent that was recorded in May due to the Covid-19 pandemic, to 15 per cent at the end of August.
President Museveni has commissioned multibillion road works for the construction of the 100 km Rwekunyu-Apac-Lira-Puranga road with an original contract price of Shs 337,526,153,350 in a 36 months projection duration. Once complete, the road is expected to improve access to markets, improve access to social services, enhance increased inter-regional trade volumes and reduce transport costs as well as travel time in the fast-growing northern part of Uganda
South Sudan’s currency loses more value amid plans to change it (The East African)
South Sudan’s currency drastically depreciated against the dollar last week, just after the government announced plans to change it, an indication that more currency hoarders had surrendered the now seemingly old notes. On October 9, the country’s Council of Ministers decided to change the national currency in an attempt to mop up hoarded cash it claims is to blame for the decline of the economy, according to the Information Minister. Although details of how the new currency will be rolled out have not been announced yet, the pound immediately depreciated against the dollar.
Uhuru tariff cut dims Kenya Power revenue by Sh4.8bn (Business Daily)
Kenya Power chairman Mahboub Mohamed said the revenue drop from the unplanned tariff review forced the company to take up short-term loans to cover for the resultant financial hole. “The review dimmed the company’s revenue prospects by Sh4.8 billion of the total projected revenues in the tariff application, thereby necessitating stop-gap measures in short-term borrowings to enable the company meet its financial obligations,” said Mr Mohamed.
Fitch Forecasts 72.8% Debt-To-GDP By End Of 2020 (Modern Ghana)
In its latest ratings report on Ghana, Fitch stated, “We forecast debt at 72.8% of GDP by end-2020, which includes the outstanding stock of GH¢7.6 billion (2.1% of GDP) in the Energy Sector Levy Act bonds. We expect debt to continue rising through 2022, although at a slower pace. “We expect gross reserves to end 2020 at US$6.6 billion, broadly the same as in December 2019, as some foreign-exchange intervention by the BoG to support the currency is offset by new inflow from debt and 4Q cocoa receipts. The import compression will slightly improve reserve coverage to 2.8 months of current external payments, from 2.7 in 2019.”
Mozambique: Sharp Fall in Transit Trade in Maputo Port (allAfrica.com)
The port of Maputo recorded a drop of 13 per cent in the volume of cargo in transit handled in the January-August period this year, compared with the same months in 2019. In the first eight months of 2019, the port handled 8.1 million tonnes of cargo in transit, compared with only seven million tonnes in the same period this year. For businesses in much of South Africa, it is much quicker and more convenient to use Maputo than the South African ports of Durban or Richards Bay. But South African trade went into sharp decline when the Pretoria government imposed one of the most severe lockdowns in the world, in an attempt to halt the spread of the coronavirus pandemic.
Zimbabwean President Emmerson Mnangagwa on Thursday set out the legislative agenda for the Third Session of the Ninth Parliament of Zimbabwe, which mainly focuses on further driving economic growth. In his virtual address to the joint sitting of both the National Assembly and Senate, Mnangagwa exhorted Parliament to expedite some of the Bills to accelerate economic growth. He said it was encouraging that despite the impact of COVID-19, the country’s exports grew by 4.9 percent to 1.96 billion U.S. dollars in the first half of 2020, from 1.86 billion U.S. dollars recorded during the same period last year. Imports declined by 5.9 percent from 1.96 billion dollars in the first half of last year to 1.84 billion dollars this year..
Government officials and experts in Burkina Faso are meeting next weekto develop the country’s strategy for the implementation of the African Continental Free Trade Area agreement (AfCFTA) ahead of its commencement next year. Besides sensitizing participants on the theme of AfCFTA, the meeting will also hold discussions on the risks and opportunities associated with the implementation of the agreement for the country and the implications for stakeholders. The two-day meeting in Ouagadougou from 26 Oct. to 27 Oct. is being organized by the country’s trade and industry ministry in collaboration with international partners including the United Nations Economic Commission for Africa, the International Trade Center and the African Union Commission.
The ongoing public demonstrations in Lagos, the commercial capital of Nigeria and the fatalities that occurred as a result of the use of live ammunition on protestors at the Lekki toll booth on Tuesday, are threatening to further exacerbate the existing tensions between Nigeria and Ghana, which have been created by an ongoing dispute over the status of NIgerian retail traders in Accra and Kumasi, as well as the fate of their shops. This is because Ghanaian president Nana Akufo Addo is the incumbent chairman of the Economic Community of West African States, ECOWAS, and he is therefore coming under increasing pressure at home to publicly criticize the intolerant stance taken by the government of Nigerian president Muhammudu Buhari which led to several confirmed deaths in Lagos on Tuesday.
2nd African Union Mid-Year Coordination Meeting
Heads of State and Government from the Regional Economic Communities (RECs) and the Regional Mechanisms (RMs) together with the African Union Commission, held a virtual meeting on 22nd October 2020 to take stock of the progress made in the area of integration and different aspect of development in the continent. The coordination meeting was expected to formalize the framework that will help to strengthen the collaboration between the African Union, the RECs / RMs and the Member States with the view to advance the implementation of the continental development agenda, through a well-established division of labor in accordance with the Heads of State meeting held in Niamey, Niger, in July 2019. These entities are expected to better serve the goal of rapid continental integration and the overall objectives of Agenda 2063.
“The report on the status of regional integration and the insightful perspectives provided by Chairpersons of the RECs show that commendable progress has been made in the integration process, and that implementation of the AfCFTA is a priority. With the finish line now in sight, we must make this final push; and ensure all outstanding issues on Phases 1 and 2 are finalised in order for us to start trading by the 1st of January 2021.... It is imperative that we strengthen the RECs as building-blocks for Africa’s continental integration. Intensified coordination and harmonisation will bring us closer to the realisation of the African Economic Community in line with the principles of the Abuja Treaty.”
President Nana Addo Dankwa Akufo-Addo has said Africa playing host to several currencies impedes the effective implementation of the Africa Continental Free Trade Area (AfCFTA). Akufo-Addo believes a single currency market will aid in the smooth running of the AfCFTA. He made this known in a speech read on his behalf by the Minister of Foreign Affairs and Regional Integration, Shirley Ayorkor Botchwey. “Africa has more than 40 currencies, which are characterised by frequent volatility, illiquidity and rarely traded status on the global financial market, which makes trading among African countries difficult. This constitutes one of the biggest barriers to the effective implementation of the AfCFTA and the development of the continent”.
President Abdel Fattah El Sisi affirmed on Thursday that despite the coronavirus repercussions on the entire international community, especially African countries, those challenges have prompted African leaders to strengthen joint cooperation with a view to harnessing energies, and finding effective and innovative solutions that help overcome the current difficult circumstances. Delivering a speech via video conferencing, Sisi said Egypt has been keen to be at the forefront of African countries providing medical aid and lab equipment, and transferring technical expertise to support its brotherly African states.
President Nana Addo Dankwa Akufo-Addo has urged African Union Member States, who have not signed and ratified the legal instrument for the African Investment Bank and Monetary Fund, to expedite the process of accession. He encouraged them to ensure that efforts were coordinated leading to the operationalisation of the African Monetary Institute, the establishment of the Pan African Stock Exchange, and the setting up of African Payment and Settlement System in 2020. “Since the adoption of the protocols for the establishment of the African Investment Bank and African Monetary Fund in 2009 and 2014, respectively, the signatures and ratifications registered have not reached the requisite number to enter into force,” he said.
African Union 2nd Mid-Year Coordination Meeting closes with a resolve to strengthen collaboration between the AU, RECs, RMs, the Member States, and other continental institutions, in line with the principle of subsidiarity
Trade Experts Call for Implementation of AfCFTA (THISDAYLIVE)
African trade experts have called for the swift implementation of the African Continental Free Trade Area (AfCFTA) to lift the continent out of an economic downturn caused by COVID-19. Speaking at a trade forum in Dakar, Senegal, AfCFTA Secretary-General Wamkele Mene, was quoted in a statement to have said the pandemic had, for the first time in 25 years, caused a contraction of GDP of between two to five per cent in sub-Saharan Africa. “This decline will manifest itself in reduced exports and loss of employment, among other challenges,” Mene said.
AfCFTA is key to post-COVID recovery – Islamic Trade Finance (The Africa Report)
Implementing the African Continental Free Trade Area (AfCFTA) agreement is fundamental to the post-pandemic economic recovery, Hani Salem Sonbol, CEO of the International Islamic Trade Finance Corporation (ITFC), tells The Africa Report. The agreement is “one of the solutions for Africa,” says Sonbol, speaking from Jeddah in Saudi Arabia. The ITFC is working closely to help launch the accord early in 2021, he adds.
Trade and fiscal policy experts have posited that Africa can use digital technology and the African Continental Free Trade Agreement (AfCFTA) to leapfrog development and also affect the world’s economy, especially China and the United States. This was the broad context of discussion at the fourth annual Babacar Ndiaye lecture. “The AfCFTA is a big move for Africa to take its destiny in its hands. The continent sees it as something it has to do to take itself out of poverty and become a global power. Africa with all resources divided into 55 countries, 84,000 kilometres of borders. The colonial masters made colonies not trade, with themselves. They couldn’t use the powers they have to create a value chain globally and develop a trade advantage. This is what the AfCFTA is here for,” the Afreximbank president said.
The African Continental Free Trade Area is going to harmonize investment rules between its member countries and the rest of the world in order to create a level playing field after it starts trading next year, said Stephen Karingi of the Economic Commission for Africa. The investment protocol to replace the rules would help to attract foreign direct investors to come and establish businesses in Africa, Mr. Karingi, Director for Regional Integration at the ECA, made the statement recently at a Nordic-African Business Webcast.
The virtual United Nations World Data Forum ended Wednesday with the Economic Commission for Africa’s (ECA) Director for the Africa Statistics Centre, Oliver Chinganya, stressing the importance of current, reliable and trusted data to ensure Africa leaves no one behind as it implements the 2030 Agenda for Sustainable Development and Agenda 2063, the continent’s blueprint for development. Speaking on a panel discussing the theme; Balancing Data and Data Protection: Learning from African Experiences, Mr. Chinganya said building trust in a field littered with many players is difficult but critical if it is to be used to unlock Africa’s full potential through evidence-based policymaking that will change people’s lives at the grassroots level.
The International Organization for Migration (IOM) has launched the first Continental Strategy on Migration for Africa for the period 2020-2024. The Strategy provides an excellent opportunity to further develop synergies for more robust migration dialogues and outcomes across regions and with all relevant partners. The IOM’s Continental Strategy was conceived to reinforce commitment towards safe, orderly and regular migration within and outside the African continent. Through multi-stakeholder engagement, it is expected to give impetus for adaptive measures for better migration management and scale up the positive impacts, opportunities and benefits of migration for the whole of society.
Southern African Development Community (SADC) is in the process of developing a Regional Migration Policy Framework in order to promote regular, safe and orderly migration. The Migration Policy Framework will outline key strategies and actions for regional response, as well as the roles and responsibilities of various actors in migration governance and also assist SADC Member States to align to Global, Continental and Regional frameworks on migration. Once in operation the Regional Migration Policy Framework will facilitate and promote the development and implementation of National Migration Policies as well as tailored National Action Plans.
Rising aflatoxins in food import worry East Africa states (Africa Science News)
The East Africa partner states have expressed fear that there is increasing levels of aflatoxins in the foodstuff imported into the region. “The fight against aflatoxin can be won by putting in place the necessary legislation, regulations, standards, coordination, infrastructure, capacity development, and innovation,” he said, noting that efforts are being put in place to promote safe trade through the construction of Busia Jumuiya market,” said Kevit Subash Desai. EABC Executive Director, Dr. Peter Mathuki said Aflatoxin in foodstuffs, as well as COVID-19 pandemic, have caused a heavy toll on cash flow among East African Member states, frustrating normal volumes of business exports across East Africa countries.
With difficult recovery ahead, policy makers have fewer resources at their disposal as they cautiously lift restrictions and reopen economies. Transformative reforms are urgently needed for rekindling resilient growth, which will be difficult without external support, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Sub-Saharan Africa.
African countries are now cautiously starting to reopen their economies and are looking for policies to restart growth. With the imposition of lockdowns, regional activity dropped sharply during the second quarter of 2020, but with a loosening of containment measures, higher commodity prices, and easing financial conditions, there have been some tentative signs of a recovery in the second half of the year. “Overall, the region is projected to contract by 3.0 percent in 2020, the worst outlook on record. Tourism-dependent economies faced the largest impact, while commodity exporting countries have also been hit hard. Growth in more diversified economies will slow significantly, but in many cases will still be positive in 2020.
Multilateral development finance institutions on Wednesday pledged to continue to collaborate in their efforts to mitigate the adverse impact of the COVID-19 pandemic and accelerate the recovery of economies and livelihoods. At an extraordinary virtual meeting to discuss the impact of their responses to the pandemic and the worsening debt situation, the organizations said that sustaining their joint efforts would protect livelihoods, especially among vulnerable populations, preserve macroeconomic stability and promote a stronger private sector role after COVID-19.
Closing the infrastructure gap in Africa will take collaboration and sustained financing, development agencies say. This was during an online panel event last week to discuss the role of development finance in the post-Covid-19 environment and investing in Africa’s future. The panel was put together by the US International Development Finance Corporation (DFC) and the Atlantic Council. The continent’s largest development finance institutions have emphasized that a sustained and collaborative approach among development partners to scale up project development activities, will boost the number of bankable projects attracting investor interest and contribute to closing the infrastructure finance gap in Africa.
An economist in the US government has challenged African women to advocate for inclusion of gender responsive trade mechanisms under the African Continental Free Trade Area (AfCFTA) agreement. International economist and advisor at the US Department of Agriculture, Ms Pauline Simmons said in an October 14, virtual meeting that women should hold their governments accountable in implementing AfCFTA commitments. “Timely and accurate information is important to identify market opportunities, reduce risks and maximise profits. You cannot trade if you don’t have data,” she said. “You have to work with your governments to ensure you have data that informs of available demand,” she added.
Africa’s WTO Moment | by Kingsley Chiedu Moghalu (Project Syndicate)
If she is chosen to head the World Trade Organization, former Nigerian finance minister Ngozi Okonjo-Iweala, an experienced development economist, would make a broken institution relevant again. She has the gravitas to build bridges between the US and China, on the one hand, and between the WTO and Africa, on the other. Despite being widely regarded as the world’s next frontier for investment and development, Africa is essentially an onlooker in the world trading system, accounting for a meager 2% of global exports. Although the continent is a growing market for the products of globalization, it does not benefit much from world trade, owing to its limited presence in globalized value chains. Instead, Africa trades mainly in agricultural goods and natural resources, whereas most world trade is in manufacturing and services.
As policy-makers in Brussels and Addis Ababa plough ahead with plans for what is billed as an ambitious ‘strategic partnership’ between the EU and Africa, civil society groups complain that they have been repeatedly shut out from having any influence over EU-African relations. “We have never been asked to participate (in AU-EU summits) and we don’t know the agendas,” Million Belay, co-ordinator of the Alliance for Food Sovereignty in Africa, told EURACTIV. That needs to change says Belay and fellow civil society leaders, who also insist African governments need to take more ownership of the ‘strategic partnership’, because there is a prevailing sense that the blueprint has been drawn up by Europe for Africa.
Last month the European Commission unveiled its New Pact on Migration and Asylum (New Pact). The pact’s goals of rebuilding trust and developing workable compromises within the European Union’s (EU) 27 states could well be achieved at the expense of external partnerships. The New Pact says all available tools should be used to enforce more returns. These include offering an additional 10% in development assistance to countries that cooperate and applying restrictive visa measures for those who don’t. The African Union (AU) and most African countries have resisted intensified returns policies, maintaining that returns must be voluntary. The overwhelming majority of African migration is intra-continental and the continent is working towards free movement, free trade and regional integration.
NDF joins the Sustainable Energy Fund for Africa to accelerate the green transition in Africa (Nordic Development Fund)
This week, NDF joined the Sustainable Energy Fund for Africa (SEFA). SEFA is a special fund designed to catalyse private sector investments in early-stage renewable energy and energy efficiency markets to accelerate the transition to more inclusive and green growth in Africa. SEFA is also a delivery vehicle for the African Development Bank’s (AfDB) New Deal on Energy for Africa (NDEA). NDF’s total contribution to SEFA is EUR 10 million.
Several members made presentations during the committee meeting regarding initiatives they have taken to facilitate trade during the COVID-19 pandemic. The United States, Brazil, Colombia and Japan issued a joint call for accelerated implementation of the TFA, arguing that cross-border trade is a critical channel for getting essential products to those who need them. The committee also reviewed more than 70 notifications from members outlining steps taken or planned to implement provisions of the TFA.
Secretary-General urges support for poorest countries (The Commonwealth)
The Commonwealth Secretary-General has called for “swift, coordinated, multilateral action” to support the world’s poorest nations, which are now even more vulnerable in the face of the COVID-19 pandemic. “While some progress has been made in poverty eradication, the levels of poverty remain alarmingly high, with poverty gaps closing only slowly.... We need swift and coordinated multilateral action to address the challenges arising from the pandemic, and their effects in compounding existing vulnerabilities in the world’s poorest countries.”
There are nine actions that policymakers, corporations and the global community can take to ensure that ‘building back better’ after the COVID-19 pandemic unlocks women entrepreneurship and creates more equal and sustainable societies.
Healthcare is being transformed the world over, instigated by the fourth industrial revolution and hastened by a common, invisible and deadly enemy – COVID-19. E-health can bring innovation to the healthcare sectors of LDCs, which are mostly low-resource environments with inadequate healthcare infrastructure and services, as well as poor access to information. The way forward is anchored in a digital foundation driven by governments to level the playing field by ensuring uniform access to technologies.
The OPEC Fund for International Development (the OPEC Fund) and the West African Development Bank (BOAD) have signed a Framework Agreement to further strengthen their development cooperation in the member countries of the Western African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte-d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. The agreement focuses on increased engagement and knowledge-sharing between the two institutions and ensures enhanced cooperation in co-financing public and private sector projects, as well as supporting international trade and regional integration.
While metal and agricultural commodities have recouped their losses from the COVID-19 pandemic and are expected to make modest gains in 2021, energy prices, despite some recovery, are expected to stabilize below pre-pandemic levels next year, the World Bank said. Oil prices fell dramatically in the early stages of COVID-19 and have only partially regained pre-pandemic price levels, while metal prices declined relatively modestly and have returned to levels that preceded the shock, according to the semi-annual Commodity Markets Outlook report. Agriculture prices were relatively unaffected by the pandemic, but the number of people at risk of food insecurity has risen as a result of the broader effects of the global recession.
The UK has officially signed an economic partnership agreement with Japan, marking an historic moment, as the UK’s first major trade deal as an independent trading nation and offering a glimpse of Global Britain’s potential. The deal brings together two of the world’s most technologically advanced nations, placing the UK at the forefront of shaping new global standards on digital trade.