tralac Daily News
How the virus worsened South Africa’s debt woes (Bloomberg / Engineering News)
South Africa is faces surging debt as the havoc wrought by the coronavirus pandemic compounds a deterioration in public finances caused by overspending, mismanagement and alleged graft during former President Jacob Zuma’s nine-year rule. “South Africa’s debt position is going to be unsustainable over the next five years because the fiscal consolidation measures are unfeasible,” said Mpho Molopyane, an economist at FirstRand Group’s Rand Merchant Bank.
Done deal for Dar-Kampala oil project (Dailynews)
Tanzania has finally sealed the Host Government Agreement (HGA) with TOTAL in implementing the East African Crude Oil Pipeline Project (EACOP), after protracted negotiations. The long-drawn-out move in reaching an agreement with the French firm was due to unresolved harmonisation issues between Dar es Salaam and Kampala, two East African countries. Speaking shortly after signing the agreement with the French multinational integrated Oil and Gas Company, the Attorney General of Tanzania, Dr Adelardus Kilangi, who also led the country’s team on the negotiating table, said the deal signalling Tanzania’s readiness and commitment in welcoming potential investors to the country.
Govt asks banks to support import substitution (Dailynews)
The government has called upon financial institutions to channel their lending in areas which will enhance import substitution. The pledge came during Minister of State in the Prime Minister’s Office (Investment) Angellah Kairuki’s tour of various banks in Dar es Salaam. Ms Kairuki said that the move would make country not to depend on foreign goods that could easily be produced locally and save the economy’s foreign reserve. She said one of the key areas was the pharmaceutical industry.
Kenya shilling hits record low of 108.85 on import pressure (Business Daily)
The Kenya shilling dropped to a record low of 108.85 units against the dollar on Monday, market data showed, on demand for the greenback by importers. This was despite a fall in the Central Bank of Kenya(CBK) dollar reserves to a five-month low of $8.223 billion (Sh888 billion) or 4.99 months import cover – a sign that the regulator may have acted to support the local currency. The shilling has come under intense pressure after reopening of the economy as imports pick up despite slower recovery of dollar-earning exports and tourist receipts.
Doing Business Roadmap To Improve Cameroon’s Environment (Cameroon-Tribune)
The 11th session of Cameroon Business Forum which is the main forum for dialogue between the State and private sector took place at the Auditorium of the Prime Minister’s Office in Yaounde on October 22, 2020 and ended with adoption of the roadmap on priority actions to improve Cameroon’s ranking in Doing Business report. Prime Minister, Head of Government, Chief Dr Joseph Dion Ngute chaired the session that took place on the theme, “COVID-19: Proofing the business environment.” As he closed the event, Prime Minister Dion Ngute called on the public and private sector actors to ensure the success of reforms put in place to caution the impact of the COVID-19 pandemic in the country’s socio-economic life. He said the topics presented and Doing Business roadmap adopted were all intended to make the business environment in the country attractive.
COVID: 4% of Kenyan business professionals expect their firms to fold (Kenya Broadcasting Corporation)
4 percent of business professionals in Kenya expect firms they work for to fold on account of COVID-19 according to a survey conducted by the Africa Business Panel. South Africa had the highest number of professionals who expected their firms to wind up at 10, followed by Nigeria at 5 percent and Ghana 3 percent. The COVID-19 pandemic has seen caused disruptions in the continent as a result of stringent measures undertaken by the states to suppress the spread of the viral disease. According to the Panel, 62 percent of African companies indicated that they are struggling but will survive.
Zambia’s private sector shows slow recovery from COVID-19 in September (Xinhua / CGTN Africa)
The private sector in Zambia eased the slowdown imposed by the COVID-19 pandemic during the month of September following government’s decision to ease some restrictions to stimulate economic activity, results of a survey showed on Monday. While the business environment remains volatile due to the pandemic, the decline in business activities was much slower during the month of September compared to previous months.
Somalia’s economic growth is forecast to contract significantly due to the negative impacts of COVID-19 (coronavirus), the locust infestation and extreme flooding. The economy is projected to contract by 1.5 percent in 2020, down from earlier estimate of 3.2 percent before the pandemic. The latest World Bank Somalia Economic Update says COVID-19 has impacted all sectors of the economy leading to declines in revenue for both Federal and state governments. The pandemic has limited livestock exports, trade taxes and remittances, with direct impact on poor households, services and core government functions.
African governments have been urged to embrace the Africa Centres for Disease Control and Prevention (Africa CDC)’s Trusted Travel Platform to protect local economies and lives as the continent prepares for its largest free trade area. The COVID-19 pandemic has affected several economic sectors on the continent since its onset. Trade and supply chains have been disrupted while some sectors - such as aviation, tourism and hospitality - have been among those hardest hit by the pandemic, resulting in massive job losses and lost revenue. The African Union Commission recently launched the ‘saving lives, economies and livelihoods’ campaign that seeks to reduce the spread of infections within and across borders by creating a unified public health corridor for safe travel on the continent.
African money transfer firms thrive as pandemic spurs remittances (news.trust.org)
Despite predictions of a historic drop in remittances due to a pandemic-induced global economic slump, Africa’s money transfer companies have seen a boom. “We saw an increase of transfers as the diaspora wanted to help their family,” said Patrick Roussel, who heads mobile financial services for the Middle East and Africa at French telecom company Orange – a dominant player in French-speaking Africa. “We’ve seen an influx of new customers, and we see them mainly coming to us from the informal market,” said Andy Jury, chief executive of Mukuru, the company Takawira now uses.”
African member countries of the Food and Agriculture Organization of the United Nations (FAO) will come together for the first ever virtual session of the Regional Conference for Africa, from Monday 26 October. The Government of Zimbabwe is hosting and chairing the biennial event. The 31st Session of the Regional Conference for Africa will also look at the impacts of COVID-19 on food security and nutrition, and ways to build more-resilient food systems. A publication by FAO and the African Union, “Regional Outlook of Gender and Agribusiness in Africa”, will be launched that contains policy recommendations and new data based on a review of 40 country gender assessments of agriculture and rural livelihoods.
Magufuli’s bold actions rattle EAC, benefit Tanzania (The East African)
When John Pombe Magufuli took over the reins as president of Tanzania in November 2015, the East African Community was already pulling in two opposite directions. Kenya, Uganda and Rwanda were already coalescing around the “Coalition of the Willing,” as it came to be known — to accelerate the regional integration agenda, from functional issues like trade and tourism to more ideological ones like political federation. At the East African Legislative Assembly, opinion is divided whether President Magufuli is responsible for the slow pace of integration after missing summit meetings. The Heads of States Summit hasn’t met for two years.
Thoughts On Re-Opening Leisure Travel (Mmegi Online)
It is well documented that the coronavirus (COVID-19) is hurting the country’s key revenue earners namely mining, SACU’s customs and excise duties and tourism. These key revenue lines have been suffering due to closed borders since March with tourism on its deathbed. It is encouraging on the mining side that diamond sales have improved since August with De Beers reporting that demand has risen. The same cannot be said for tourism as border exits and entries remain restricted to essential travel.
How to make EAC economic integration dream a reality (Business Daily)
A recent Ugandan High Court ruling in a case involving a Kenyan bank is a manifestation of confusion that continues to cloud the process of integrating East African Community (EAC). The ruling, which has since been appealed, may entrench scepticism about the adopted EAC Protocols on the Establishment of Customs Union, Common Market, Monetary Union, and Political Confederation. Even though the BoU has since circulated press statements clarifying that its regulatory powers are limited to financial institution business conducted by BoU-licensed entities in or outside Uganda and that these powers do not extend to activities of foreign banks outside Uganda.
Women, migrants the hardest-hit by Covid-19 pandemic (The Citizen)
Sectors dominated by women and migrant workers in Southern Africa are the hardest-hit by the Covid-19 pandemic, according to a new report, as workers across the region face lower quality lives, loss of income and a battle for a “living wage”. The Southern African Trade Union Coordination Council released a study into the impact of the pandemic on workers in the Southern African Development Community (SADC) region this week, with findings calling for a coordinated effort by governments to improve the lives of migrant workers. The findings largely pointed to the cases of Zimbabwe, Mozambique and Malawi as top providers of migrants and Botswana, Namibia and South Africa as top recipients in the SADC region.
“In recent months we have seen devastating floods, an invasion of desert locusts and now face the looming spectre of drought because of a La Niña event. The human and economic toll has been aggravated by the COVID-19 pandemic,” WMO Secretary-General Petteri Taalas said in a statement. The report aims to fill a gap in reliable and timely climate information for Africa, which translates into a lack of climate-related development planning, said Vera Songwe, Under-Secretary-General, and Executive Secretary of the United Nations Economic Commission for Africa (UNECA). The agricultural sector is key to building climate resistance, since it is the dominant employer and it relies on the use of water and energy – both heavily implicated in climate change, WMO’s Regional Strategic Office Director, Filipe Lucio, said.
A new take on trade (UNA-UK)
The COVID-19 pandemic has gravely impacted the global economy. Countries have sought to contain the spread of coronavirus by limiting the mobility of people, suspending many non-essential activities and implementing social distancing. While these measures have saved countless lives, they have also created the worst recession since the Great Depression of the 1930s. The global economy is now expected to shrink by about 5 per cent in 2020.
While many countries have now begun to resume economic activity, the potential negative effects of the pandemic are far from over. In the absence of reliable vaccines or better treatments, the risk is that further waves of contagion could derail the economic restart. Given the uncertainty, it is essential that policymakers remain vigilant and continue to devise policies that protect their economies against worsening conditions. As part of this, trade policies will be essential to create a more resilient global economy.
Mukhisa Kituyi, Secretary-General, United Nations Conference on Trade and Development (UNCTAD)
This year marks 20 years since the formalisation of the partnership between the African Union (AU) and the European Union (EU). During that two decades, the partnership has matured and withstood numerous challenges. As it forges ahead, it will continue to be tested by issues such as the COVID-19 pandemic and global trends in governance, peace and security, trade, and multilateralism. These, and the impacts of poverty and inequality within and between countries, also provide opportunities to consolidate and deepen mutual understanding and promote a paradigm shift. Now, in 2020, four priority areas represent the greatest opportunities for increased collaboration and impact of the partnership: Peace, security and governance; Investing in people; Migration and mobility; and African sustainable structural transformation.
As the United Kingdom gets closer and closer to a widely feared no-deal exit from the European Union, its private sector is already making moves to cement alternative trade and investment counterparties. One of them is Ghana, a traditional major trade and investment partner which has lost ground to various counterparties in both western and eastern Europe over the past couple of decades because of the more favourable terms and conditions offered it by being part of a continental free market. Instructively the governments of both countries are currently engaged in negotiations which, if successful, would allow the two countries to continue the preferential trade terms applicable through the ECOWAS – EU Economic Partnership Agreement.
Trade routes have been significantly disrupted this year in efforts to contain COVID-19. The effects of this are already showing: global growth is set to contract by 4.9% and growth in sub-Saharan Africa will contract by 3.2%. This will get worse if continued restrictions further impede trade. The World Trade Organisation has warned that at worst, global trade could collapse by a third this year, and at best, it will contract by 13%, similar to the recorded drop after the 2009 financial crisis. Trade enables formal firms to flourish, which will be essential for economic recovery. It also protects the urban poor operating in the informal economy against poverty and hunger. The continuation of trade is even more essential for their survival as they operate without an adequate safety net.
Stakes are high for Africa in US presidential election (The Africa Report)
In a week’s time, Americans will see their votes counted in an election seen universally as the most consequential for half a century. Consequential for the direction and stability of the country for decades, and for the international system it has dominated. Africa has not figured in any of the presidential and vice-presidential debates, or in much of the campaigning. Yet it has a serious stake in the outcome as shown by a clutch of Trump administration actions in the last few months.
UNCTAD, AU to remove trade barriers in Africa (The Nation)
Breaking down non-tariff barriers is vital to better trade and stronger African integration. To this end, the African Union (AU) and United Nations Conference on Trade and Development (UNCTAD) are seeking ways to help people trade easier, the UNCTAD has said. In a statement said the AU, UNCTAD and other partners are on a mission to ease trade on the continent and make the African Continental Free Trade Area a viable reality for economic development. According to the statement, one way to do so is to eliminate a costly and complex suite of irritants to freer trade: non-tariff barriers (NTBs).
COVID-19 and migrant remittances: Supporting this essential lifeline under threat (Brookings Institution)
In Africa, one out of five people sends or receives international remittances. Since 2009, the flow of remittances to the continent has nearly doubled; they now comprise more than 5 percent of GDP in 15 African countries. In 2019, migrant workers sent about $85 billion to their relatives on the continent. Worryingly, under COVID-19, precarious working conditions facing expatriates and operational difficulties facing remittance service providers (RSPs) have resulted in a major drop in this essential lifeline. In fact, remittance inflows to Africa are projected to decline by 21 percent – $18 billion in 2020. In comparison, global remittances to African countries fell by 5 percent during the global financial crisis of 2008.
The World Trade Organization (WTO) since 1998 has maintained a moratorium on customs duties for electronic transmissions of digital products and services. But now, despite a strong consensus among economists and trade policy experts that countries around the world greatly benefit from duty-free e-commerce and digital trade, some countries have begun pushing for the moratorium to end. This would be a terrible mistake, according to new report from the Information Technology and Innovation Foundation (ITIF) and the Global Trade and Innovation Policy Alliance (GTIPA), a worldwide network of independent think tanks that support trade liberalization and integration.
WTO members participating in the negotiation of rules on e-commerce shared updates on the work done to streamline the negotiating text at a plenary meeting on 23 October. The co-conveners, Australia, Japan and Singapore, encouraged members to propose constructive solutions and show flexibility in an effort to deliver a consolidated negotiating text by December this year.
Global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019, due to the economic fallout from COVID-19, reveals UNCTAD’s latest pdf Global Investment Trends Monitor (2.43 MB) released on 27 October. In the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects. “The FDI decline is more drastic than we expected, particularly in developed economies. Developing economies weathered the storm relatively better for the first half of the year,” said James Zhan, UNCTAD’s investment and enterprise director. “The outlook remains highly uncertain.”
Millions of used cars, vans and minibuses exported from Europe, the United States and Japan to the developing world are of poor quality, contributing significantly to air pollution and hindering efforts to mitigate the effects of climate change, according to a new report by the UN Environment Programme (UNEP). The report shows that between 2015 and 2018, 14 million used light-duty vehicles were exported worldwide. Some 80 per cent went to low- and middle-income countries, with more than half going to Africa.