Building capacity to help Africa trade better

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tralac Daily News

tralac Daily News
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Full Quarterly Bulletin - No 298 - December 2020 (South African Reserve Bank)

Following a fourth successive quarterly contraction in the second quarter of 2020, the real gross value added (GVA) by the primary sector increased markedly in the third quarter, supported by a significant rebound in the real GVA by the mining sector and a further sizeable increase in real agricultural output.

The continued expansion in agricultural output reflected favourable weather conditions as well as the bumper maize and citrus harvests. The rebound in mining production was broad-based and reflected the easing of the lockdown restrictions, supported by higher international commodity prices and increased demand from China, in particular.

The value of South Africa’s net gold and merchandise exports surged to an all-time high in the third quarter of 2020, along with a more muted increase in merchandise imports as global trade recovered following the easing of COVID-19 lockdown restrictions and the related rebound in economic activity. As a result, South Africa’s trade surplus widened significantly to 9.0% − the largest ratio of GDP since the third quarter of 1988. Mining, manufacturing and agricultural exports all increased strongly in the third quarter of 2020, boosted by higher international commodity prices, increased global demand and an improvement in loading rates at domestic ports. The value of merchandise imports increased, although by a much lesser extent than exports, in the third quarter of 2020 and remained well below the level of a year earlier, reflective of weak domestic demand.

The larger trade surplus coincided with a significantly smaller shortfall on the services, income and current transfer account, which resulted largely from a significantly smaller deficit on the income account, as South Africa recorded a first quarterly dividend surplus in almost 25 years. As a consequence, the balance on the current account of the balance of payments switched from a deficit in the second quarter of 2020 to a notable surplus of 5.9% in the third quarter − the largest surplus as a ratio of GDP since the third quarter of 1988.

Dept invests in innovation in tourism sector (SAnews)

The Department of Tourism is set to introduce a programme that will stimulate and encourage innovation in the travel sector. The department, in collaboration with the Technology Innovation Agency (TIA), will implement the Tourism Technology Grassroots Innovation Incubation Programme (TTGIIP). The programme aims to stimulate entrepreneurship and new start-up enterprises in the tourism industry, underpinned by technology, innovation and new business ideas that have the potential to enhance services in tourism. The department and the TIA are co-funding the two-year project, with the TIA being the implementing agent. The department said developments in technology have played a fundamental role in the growth of the tourism and travel industry, and now with the impact of COVID-19, the “use of digital solutions is ever more apparent”.

Communications and Digital Technologies SOEs merge (SAnews)

The Department of Communications and Digital Technologies has embarked on a process to merge some of its entities in line with the state owned enterprises (SOE’s) rationalisation plan. These mergers are in line with last year’s State of the Nation Address by the President, committing government to undertake a process of rationalisation of SOEs, in an effort to ensure that they serve strategic economic or developmental purposes. “The Universal Service and Access Agency of South Africa will be repurposed to establish a state-owned digital fund company,” the Ministry of Communications and Digital Technologies said on Tuesday.

PM Abiy, Kenyatta commit to increased trade (The East African)

Ethiopian Prime Minister Abiy Ahmed marked his two-day state visit to Kenya last week with an inspection of the progress of the Lamu port construction, and the launch of the Moyale one-stop border post on Wednesday along with Kenyan President Uhuru Kenyatta. The leaders committed to boosting trade between the two countries by reducing trade barriers and jointly funding projects, and to allocate more resources for infrastructure projects to ensure the seamless flow of people and cargo between their two countries. The Ethiopia-Kenyan border stretches for over 830km, making the Moyale border post a significant trading point between the two countries.

Kenya loses bid for tax on EAC bottle imports (Business Daily)

Kenya has lost a bid to impose a 25 per cent excise tax on imported bottles from the East African region after the court ordered that the move be frozen. The order by the East African Court of Justice presents a major relief for local beverage manufacturers who were hit by the directive that saw them absorb extra cost as they could not pass down the costs to consumers given the low sales during a pandemic year, according to the manufacturers’ petition to Parliament in April. Previously, the bottles had no excise duty on them but the government introduced it in April, causing Tanzanian bottle manufacturer Kioo Limited to move to court seeking to freeze the tax contained in the Business Laws (Amendment) Act. The order served to Attorney-General Paul Kihara will be a major relief to the brewers and manufactures of other beverages using glass bottles who had decried the new tax that came at the height of a pandemic disrupted business season.

Zim engages Francophone countries (The Herald)

Zimbabwe’s attendance at today’s inauguration of Guinean President alpha Conde cements the already existing relations between the two countries and opens doors to trade throughout West Africa, Vice President Kembo Mohadi has said. VP Mohadi said it was critical for Harare and Conakry to forge bilateral relations beneficial to citizens, especially in the context of the African Continental Free Trade area (AfCFTA), which is set to revolutionise trade from next year.

U.S. move is first step on Sudan’s long road to get debt relief: IMF (Reuters)

The International Monetary Fund on Monday said it stood ready to help Sudan as it moves toward a broader package of debt relief after Washington’s removal of the country from its list of state sponsors of terrorism. Carol Baker, IMF mission chief for Sudan, said removal of Sudan from the U.S. list eliminated one of the hurdles toward debt forgiveness under the Heavily Indebted Poor Countries (HIPC) initiative launched in 1996. But Sudan remains in arrears to the IMF, the World Bank and the African Development Bank, and cannot receive fresh funds from them until it clears up those debts, she said. To reach that point, four other key conditions must be met that are outside the control of the IMF, including strong performance by Sudanese authorities under an IMF staff-monitored economic program for at least six months, Baker said.

Declare services export sector priority sector − Dr Obiora (Vanguard)

As the Buhari-led administration continue to harp on diversifying the economy to non-oil sectors, the National President of the Association of Outsourcing Professionals of Nigeria, AOPN, Dr Madu Obiora, in this interview tasked the government on declaring the services export sector a priority sector and also showcase Nigeria as reliable and quality service destination in Africa, as he spoke on other salient issues that would boost the economy.

Nigeria suspends licensing of free trade zones (Premium Times)

The Federal Government has suspended the issuance of licences for the operation of the Free Trade Zones (FTZ) in the country. According to the Minister of Industry, Trade and Investment, Adeniyi Adebayo, Nigeria is yet to see the potential of FTZs as an instrument for economic growth due to poor implementation. Mr Adebayo said this Monday at the inauguration of the panel set up for the evaluation of the performance of FTZs in Abuja. According to a statement by the minister’s spokesperson, Ifedayo Sayo, all applications for FTZ licences will henceforth not be processed pending the completion of the panel’s assignment. The panel’s key objective is to provide a set of recommendations to inform government strategy on FTZs based on a thorough evaluation off the current operations of FTZs.

Manufacturers may not open next month over COVID-19, Forex crises (Vanguard)

Manufacturing sector operators have indicated that many factories may not open for activities next month due to the impact of COVID-19 fallouts as well as scarcity of foreign exchange supply. Dropping this hint at the 2020 Workshop of the Commerce and Industry Correspondents Association of Nigeria, CICAN, the Acting Director General of the Manufacturers Association of Nigeria, MAN, Mr. Ambrose Oruche, said that the manufacturing sector has been near dearth before lockdown, because of the neglect by government. He stated: “During the lockdown caused by the COVID-19 pandemic most countries stopped sending their raw materials to us and then most industries began to shut down. After that there was a foreign exchange (Forex) issue that was threatening the survival of the manufacturing sector. “It would be difficult for some of the manufacturing companies to come back in January 2021.

World Bank Group to Boost Nigeria’s Efforts to Reduce Poverty

The World Bank Group (WBG) discussed a new five-year Country Partnership Framework (CPF) from 2021 to 2024 and approved a $1.5-billion package to help build a resilient recovery post-COVID19. Nigeria is at a critical juncture. With the sharp fall in oil prices as a result of COVID-19, the economy is projected to contract by over 4% in 2020, plunging the country into its deepest recession since the 1980s. Government revenues could fall by more than 15 billion dollars this year, and the crisis will push an additional 5 million Nigerians into poverty in 2020.


Informal Trade And Dynamics Of African Trade In The Wake Of Covid-19 Key Features Of 2020 African Trade Report (Africa.com)

The African Trade Report, produced annually by the African Export-Import Bank (Afreximbank), will be launched on 15th December. This year’s report focuses on Informal Cross-Border Trade (ICBT) and provides ground-breaking insights into the scale, composition and approaches to informal cross-border trade in Africa. It is estimated that the formalisation of informal cross border trade could potentially increase official trade numbers by between 30-50%, depending on the region. “ICBT has been a key contributor to job creation, income growth and household consumption, as well as to the development of competitive cross-border regional value chains” explained Professor Benedict Oramah, President of Afreximbank, while emphasizing the importance of ICBT to the continent’s economies.

The Report was done in collaboration with the UN Economic Commission for Africa (ECA). According to Dr. Hippolyte Fofack and Dr. David Luke, Head, African Trade Policy Centre at the ECA, this year’s report will help put in place the structures to better account for ICBT as well as help formalise these value chains.

AfCFTA: Afreximbank supports factoring as a viable alternative source of finance for SMEs (Afeximbank)

“SMEs constitute the greatest proportion of the continent’s industrial fibre, accounting for about 80% of businesses and employing not less than 70% of the continent’s workforce,” noted Ms. Awani. “Given that access to finance remains a key constraint to SME operations, availability of sustainable trade finance, especially for SMEs, will remain the key lubricant to propel the AfCFTA, the single largest trading bloc globally, towards the realization of its aspirations,” she added.

The African Export-Import Bank (Afreximbank) considers factoring as a viable alternative financing instrument for supporting Small and Medium-sized Enterprises (SMEs) at a time when traditional commercial bank lending is tightening while trading is about to begin under the African Continental Free Agreement.

Local Sourcing in Africa Can Aid Economic Growth and Poverty (BORGEN)

Many countries in Africa have turned to local sourcing for economic stimulation as COVID-19 progresses. The new change in business trade is proving to be successful thanks to some initiatives and programs that made local sourcing in Africa possible. One of the initiatives responsible for the growth of local sourcing in Africa is the U.N.’s Sustainable Development Goals (SDGs). The initiative calls for an increase in local raw material sourcing to 50% over the next few years. Farming Better Futures is a program associated with the SDGs.

Visa openness solutions can boost Africa’s economic recovery, the 2020 Africa Visa Openness Index reveals (TravelDailyNews)

A record 54% of the continent is accessible for African visitors who no longer need a visa to travel or can get one on arrival; in 2020, The Gambia joins Seychelles and Benin in allowing visa-free access for all African travelers; 24 countries offer e-Visas reflecting 44% of the continent. The upward trend in African countries liberalizing their visa regimes and welcoming African travelers continues, according to the 2020 Africa Visa Openness Index published by the African Union Commission and African Development Bank on Thursday. This fifth edition of the Index highlights the negative impact of the COVID-19 pandemic, which threatens to reverse Africa’s economic gains of recent years, affecting sectors from tourism through to investment. As travel restrictions ease and safety measures are put in place to contain the pandemic, sustaining progress and momentum on more comfortable continent-wide travel is vital.

Truck drivers hail guidelines on movement of goods to curb COVID-19 in SADC-EAC-COMESA Region (SADC)

The outbreak of COVID-19 has affected economies globally, prompting countries to impose measures which have restricted movement of goods, services and people across borders in efforts to contain the spread of the pandemic. When COVID-19 broke out, most border posts were closed for the general public and only allowed the movement of essential goods such as medical supplies. Truck drivers have played a crucial role of delivering goods to various destinations. The introduction of these measures has helped greatly to curb the spread of COVID-19.

SADC records notable progress in financial markets and regional integration (SADC)

There has been notable progress in the area of payments systems in the Southern African Development Community (SADC).At national level, all the 16 SADC Member States are implementing Real Time Gross Settlement System (RTGS) which facilitates quicker transactions and brings about efficiency in payments. In her report to the 40th SADC Summit hosted virtually by Mozambique in August 2020, SADC Executive Secretary, Her Excellency Dr Stergomena Lawrence Tax, said at regional level, harmonisation of payments and clearing systems through the SADC-RTGS is ongoing. The SADC RTGS supports the modernisation and harmonisation of payments and clearing systems both domestically and regionally with the objective of improving safety of payments and efficient settlement and payment processes in the region. It is also intended to lower transaction costs as it removes the need for correspondent banks.

FDI in the region records double digit growth as China invests $7b (The East African)

Foreign Direct Investments (FDIs) into East Africa more than doubled in 2019 buoyed by China’s increased interest in the region’s manufacturing, construction and services sector. EAC’s Trade and Investment Report (2019) shows that FDIs into the region surged to $11.5 billion in 2019 from $5.7 billion in 2018, with all East African Community countries except Tanzania posting increased inflows during the year. Inflows to Tanzania declined by 16 percent to $2.6 billion in 2019 from $3.1 billion. According to the report China was the largest investor in 2019, accounting for 59.7 percent of the total FDI inflows into the region, with significant realised investments in construction, manufacturing and services. Inflows to Uganda increased by almost 20 percent mainly on account of investments in the extractives sector as well as major infrastructure projects like power dams and roads.

Related: EA loses billions in tax exemptions and remissions in five years (The East African)

Comesa counts pandemic linked economic losses (The East Africans)

According to a new report, Comesa has experienced contraction in economic growth, with only six countries out of 21 expected to post positive growth for 2020. The pandemic has wiped out 4.6 percentage points from Comesa’s economic growth this year, and see the bloc slump to a 0.6 percent growth, just 12 months after it grew 5.2 percent in 2019. The report titled Socio-economic impacts of the Covid-19 pandemic: Evidence from Comesa region echoes the International Monetary Fund’s October 2020 regional economic outlook for sub Saharan Africa. Both note that Covid-19 will see contraction cut across all countries and sectors, but countries that are oil, resource and tourism dependent are the most hit, while more diverse non-resource economies like Rwanda, will be more resilient. It agrees with the assessment that agriculture based businesses have only experienced a marginal impact of Covid-related restrictions.

What do FTAs mean for African women? A critical look into the African Continental Free Trade Area (CADTM)

The AfCFTA pursues the same goals of trade deals that African countries have engaged with in recent decades, but unfolds them now on a much broader scale. It is the continental extension of a corporate driven trade agenda previously imposed on distinct African blocs through numerous trade and investment deals and processes. It is important to bear in mind that a large part of trade within Africa, both within countries and across borders, is informal. The track record of past FTAs in regard to the position of women, addressing their concerns in these processes and subsequent benefits have not been good at all. In fact, feminist critiques of free trade and investment policies and agreements in other regions mesh very strongly with the experiences in Africa.

Unpacking the misconceptions about Africa’s food imports (Brookings)

Sub-Saharan Africa’s spiraling food import bill −  which stood at $43 billion in 2019 −  has attracted mounting attention as a worrisome trend. For years, many pundits have wondered why Africa seems increasingly unable to feed itself, despite having much of the world’s remaining unutilized arable land. This alarming narrative is largely inaccurate. Our research, which disaggregates sub-Saharan Africa’s (SSA) agricultural trade performance by country and type, shows that four countries −  Nigeria, Angola, the Democratic Republic of the Congo (DRC), and Somalia −  account for most of SSA’s net agricultural import position. The rest of the countries in the region are actually net agricultural exporters. This is good news not only today, but for Africa’s future economic growth through trade, as we explain below. Three key facts emerge from our analysis.

New ECA and GSMA report urges an overhaul of mobile services to boost e-commerce in Central Africa (UNECA)

A new report by the UN Economic Commission for Africa (ECA) and the Global System for Mobile Communications Association (GSMA) has outlined practical measures that Governments and key stakeholders in the mobile telephony sector can adopt to boost the subregion’s sustainable development through electronic commerce. The report titled “The Role of mobile services in Enabling E-commerce in Central Africa and policy implications” was reviewed in an online meeting today by experts from government, the private sector, academia, the development community and civil society from Africa and Europe, Monday. It encourages Central African States to overhaul their overall business environment in order to facilitate transactions in the sector which can bring about socially inclusive economic growth.

This is Africa’s digital shift opportunity (The Exchange)

Africa rarely positively leads on the global scene but this does not mean that nothing good is happening on the continent. Even though the Covid-19 has hot the continent leading to massive losses just like elsewhere in the world, it is noteworthy that 19 of the top 20 fastest-growing countries in the world are in Africa. The continent has registered increased urbanization where an increasingly young and educated population is driving higher consumption of online services. One of the largest overlooked investment opportunities of the past decade for the African continent is the Internet economy which has the potential for profound impact on development. The mobile Internet is transforming lives across the continent with the support of growing local connectivity and mobility and a dynamic, young urban population. With a potential to add up to US$180 billion to Africa’s gross domestic product (GDP) by 2025, depending on the usage intensity of digital technologies by businesses, the Internet economy is improving productivity and efficiencies across large swaths of the economy, including agriculture, education, financial services, healthcare, and supply chains.

Sub-Saharan African businesses are optimistic about 2021 (IT-online)

Purchasing Managers Index (PMI) reports released by IHS Markit in the first week of December shows that sub-Saharan African companies are optimistic about the improvement in business activity during 2021. PwC expects the Sub-Saharan African economy to return to growth in 2021 as the pandemic abates and global trade improves as lockdowns ease. The IMF expects the East Africa Community (EAC) economy to grow by 4,5% in 2021 compared to an expansion of only 1% this year – while the 2020 number was positive, it was significantly lower than an average of 6,1% per annum seen over the preceding four years. The IMF expects the Southern African Development Community (SADC) economy to expand by 3,3% in 2021 following a contraction of 5,5% in the preceding year. IHS Markit data shows that companies in Mozambique expect higher output next year linked to new investments and expectations of an end to the pandemic.

New African Stock Exchanges linkage project targets $1trn market capitalization (Businessamlive)

A new African Stock Exchanges linkage project being promoted by the African Development Bank (AfDB) with other stakeholders, which would integrate stock exchanges across Africa, is set to create an integrated capital market on the continent with capitalization in excess of $1 trillion. The incoming African Stock Exchanges capitalization would represent 90 percent of Africa’s total equity market. According to stock market experts, the new African Stock Exchange linkage will increase liquidity and enable seamless trading platforms across the continent’s 55 sovereign nations, 1.3 billion people and a combined GDP of $3.4 trillion.

Clean energy sector growing in South and East Africa (ESI-Africa.com)

A new report exploring recent developments in the clean energy sector in southern and eastern Africa shows market entry is challenging and requires targeted awareness-raising activities, increased financial inclusion and access to financing. EEP Africa used data collected from a call for 2020 proposals, their annual survey and active portfolio to develop its 2020 Market Report Productivity and Circularity in the Clean Energy Sector. The report looks at three rapidly developing areas of the clean energy market: the evolution of productive use of energy (PUE); role of clean energy in a circular economy; and impact of COVID-19 on early-stage companies.


2020 Year in Review: The impact of COVID-19 in 12 charts (World Bank Blogs)

This time last year, concepts such as “lockdowns,” “mask mandates” and “social distancing” were unknown to most of us. Today they are part of our everyday language as the COVID-19 pandemic continues to impact all aspects of our lives. Through the following 12 charts and graphics, we try to quantify and provide an overview of our colleagues’ research in the face of a truly unprecedented crisis.

WCO Council maps the road ahead to ensure the recovery, renewal and resilience of the Customs and trade community for a sustainable supply chain (World Customs Organization)

Heads of Delegation of some 150 WCO Member Customs administrations took part in the 137th Session of the WCO Council, the Organization’s supreme decision-making body, which was held virtually from 10 to 12 December 2020 under the chairmanship of Mr. Ahmed Al Khalifa, Vice-Chair for the North of Africa, Near and Middle East region and President of Customs Affairs in Bahrain. “Customs worldwide have played a critical role during the pandemic and we need to keep the momentum going and be ready for the recovery phase, especially by continuing to ensure the rapid movement of essential goods, including COVID-19 vaccines, and by increasing support to economic operators”, said the Acting Chairperson of the Council in his opening remarks.

European Union, AU sign new partnership to tackle epidemics (The Independent Uganda)

The European Centre for Disease Prevention and Control (ECDC) and the Africa Centres for Disease Control and Prevention (Africa CDC) has launched a new partnership to strengthen the capacity of Africa to prepare for and respond to public health threats. The four-year project dubbed ‘EU for health security in Africa will be implemented through harmonising surveillance and disease intelligence, and supporting the implementation of the public health workforce strategy of Africa CDC. The agreement will come into force on January 1st, 2021. Extending funding worth 9million euros for the activities and a million euros to cover staffing costs at the Africa CDC, he said is aimed at building capacity not only for handling COVID-19 but also to tackle future health threats on the continent.

No subsidized imports in post-Brexit trade deal, CS Maina affirms (KBC)

Industrialization, Trade, and Enterprise Development Cabinet Secretary Betty Maina has assured local manufacturers and producers of various goods that the post-Brexit trade deal Kenya signed with the United Kingdom will not open the floodgate for cheap and subsidized goods. On Monday, CS Maina said the post-Brexit Continuity Trade Agreement which was signed on 8th December 2020 between Kenya and the UK adheres to the fidelity of the EAC Customs Union Protocol and provides room for accession by the willing EAC Partner States as Kenya backs the deal to ensure a 5% increase in exports within the first year of implementation.

Access, funding stand in Africa’s path to getting Covid-19 vaccine (The East African)

As many countries around the world are making important decisions about who gets vaccinated against Covid-19, Africa is increasingly on a razor edge as access to the vaccine is not guaranteed. The challenge facing Africa is access: availability of the required vaccine doses and access to financing to make purchases. Specifically, Africa is scaling walls in the ongoing global race to access the vaccine as rich countries, representing just 13 percent of the world’s population, have already cornered more than half (51 percent) of the promised doses of leading Covid-19 vaccine candidates, according to Oxfam International.

2.7 billion people have had no social protection to cope with Covid-19 economic crisis (Oxfam International)

New Oxfam research shows that over a third of the world’s population has had no public money to cope with the effects of the pandemic. A new report “Shelter from the Storm”, done in partnership with Development Pathways, reviewed government programs used to inject additional money to help people, such as disability, unemployment, child, and elderly benefits, for 126 low and middle-income countries. It found none of them were adequate to meet everyone’s needs. Overall, the world has spent an additional $11.7 trillion this year to cope with the fallout from the coronavirus pandemic. Of this, $9.8 trillion (83%) was spent by 36 rich countries against just $42 billion (0.4%) in 59 low-income countries.

COVID-19 will likely widen yawning migrant pay gap − U.N. (Thompson Reuters Foundation)

Migrants earn up to 42% less than national workers in high-income countries, with the COVID-19 pandemic likely to exacerbate the pay gap and women worse affected than men, U.N. labour experts said on Monday. The pay discrepancy has widened markedly in many countries in the last five years, notably Cyprus, Italy, Portugal and Ireland, according to research by the International Labour Organization (ILO). The U.N. agency said much of the overall migrant pay gap could not be explained by differences in education, skills or experience, and was likely due to entrenched discrimination.

Thousands of Migrants from West and Central Africa at Risk as Critical Funding for Humanitarian Interventions Comes to an End (IOM)

The International Organization for Migration (IOM) is appealing for EUR 100 million to continue providing urgent protection and critical assistance to vulnerable migrants from West and Central Africa along the Central and Western Mediterranean routes, as funding under the EU Trust Fund (EUTF) comes to an end. “Through the EU-IOM Joint Initiative, we have been able to assist over 100,000 migrants who might otherwise have been left in conditions of great peril; in detention centres, stranded and left for dead in deserts, or living in extremely difficult environments conducive to trafficking and smuggling, with no safe alternatives to better their lives and those of their families,” says the IOM Director General.

Update on the Joint IMF-WB Multipronged Approach to Address Debt Vulnerabilities (IMF)

Amid rising debt risks in low-income developing countries and emerging markets, the IMF and the WB have been implementing a multipronged approach (MPA) to address debt vulnerabilities. Amplification of debt risks owing to COVID-19 has upped the urgency to implement the MPA and highlights the importance of debt sustainability and transparency for long-term financing for development. At the same time, it should be noted that countries have limited capacities which are further stretched by COVID-19 and that implementation of the MPA by itself may not be sufficient to address debt vulnerabilities and risks from global economic shocks.


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