tralac Daily News

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tralac Daily News

tralac Daily News
Photo credit: John Hogg | World Bank

Country focus

Economic growth to improve this year but will remain constrained (Engineering News)

The economic prospects for this year are better than 2020, but the recovery of the global economy will take some time, which will impact on South Africa’s prospects going forward, owing to the country’s dependence on global events, Alexander Forbes Group chief economist Isaah Mhlanga has said. Speaking during financial services provider Alexander Forbes Investments’ ‘Local and Global Economic Them

Minister Press Release: Government Welcomes Ford R16 Billion Investment Announcement (the dtic)

The new Ford investment in its Silverton plant, when completed, will pump R1,3 billion in wages and salaries annually into the Tshwane economy. This was said today by Minister of Trade, Industry and Competition, Ebrahim Patel, at the public announcement ceremony at the Ford plant. The announcement follows the designation of the area by the Minister as a Special Economic Zone in late 2019. Five key Government policies championed by the President, informed the decision of Ford, and enabled rapid decision-making, Minister Patel told a small gathering of business and Government leaders at the site. First, the Special Economic Zones framework; Second, the mobilisation of investment; Third, the masterplans driving our policy; Fourth, the opening of new markets for locally-produced products; Fifth, the District Development Model

From stimulus to debt: The case of South Africa (Brookings)

An estimated eye-watering $12 trillion of discretionary fiscal support has been provided globally during the pandemic. Such expenditure has come in the form of support to the unemployed, small businesses, and struggling sectors in an effort to save livelihoods and keep economies buoyant. Crucially, though, for many countries in sub-Saharan Africa, these fiscal stimuli packages have deepened their debt challenges. South Africa is one such example. Although the country’s pre-pandemic forecast for debt-to-GDP ratio for 2020 was already high at 65.6 percent, supporting the economy through the pandemic required the government to breach the spending ceiling and expand its borrowing – raising the forecasted debt-to-GDP ratio to 80.5 percent for 2020.

Ghana, UK Must Finalize Trade Agreement To Save Jobs – Fair Trade Africa (Peacefmonline.com)

Fairtrade Africa has urged the government of Ghana and the United Kingdom to finalise a trade agreement to save fruit exporting companies. Ghana and UK failed to finalise a trade agreement before the end of the BREXIT transition December 31, 2020. It said although it welcomed the joint announcement by the Ghanaian Ministry of Trade and the UK Department of Trade earlier this month that an agreement had been reached to allow tariff free access, the delay was impacting negatively on players in the industry. “We call on both the UK and Ghanaian governments to immediately sign an agreement to bring this into effect. Fairtrade Africa also requests that exporters be compensated for the tariffs already paid as it will be unfair for them to bear the brunt of the two governments delay in finalising an agreement,” it said in a statement.

COVID-19: Nigeria to receive first batch of vaccines (15 million) from COVAX in February- Minister (Nairametrics)

Nigeria is expected to receive the first batch of COVID-19 vaccines, which is 15 million, from AstraZeneca under the COVAX programme. This was disclosed by the Minister of Health, Dr Osagie Ehanire, at the Presidential Task Force on COVID-19 national briefing in Abuja on Monday. Though the minister did not specify the date or time, he disclosed that the government had been advised to expect the first batch of the vaccines from February. He said, “According to latest information I have, we have been advised to expect the first COVID-19 vaccines from Covax to arrive in Nigeria as from February. We shall continue to review plans to ensure smooth roll out in our country.”

Nigeria: NESG urges govert to promote non-oil sector to maximise AfCFTA gains (WorldStage)

The Nigeria Economic Summit Group (NESG ) has urged the Federal Government to take more interest in promoting the country’s non-oil exports if Nigeria is to benefit maximally from the African Continental Free Trade Area (AfCFTA) agreement. Chairman of the group, Mr Asue Igohdalo, made the call during a virtual launch of NESG report titled “NESG Macro-Economic outlook 2021.” Ighodalo said that Nigeria needed to create innovative economic ideas that could spur growth and prosperity. “Nigeria is at a crossroads and cannot afford the business-as-usual approach which will only lead to further job losses, pull millions of citizens into poverty and worsen an already fragile economy.”

Kenya gets Sh2bn Covid-19 war, green trade shot in the arm (Business Daily)

Kenya has received Sh2 billion from the Danish government to support the country’s green trade effort and the war on Covid-19 at border points. The funding, which will be channelled through TradeMark East Africa (TMEA), will boost Kenya’s efforts to transition to green trade and create sustainable jobs under the Denmark and Kenya Strategic Framework for 2021 to 2025. TMEA will partner with government institutions and the private sector in adopting sustainable and efficient transport and infrastructure for reduced barriers to trade, improve trading standards and sanitary and phytosanitary issues to enhance business competitiveness in Kenya. Denmark’s support to TMEA’s Safe Trade, which is being implemented in other 10 countries, will enable continuous efforts to provide essential services at the key entry and exit points while keeping front line border workers safe.

Tanzania-Uganda Road Project to kick-off soon (IPPmedia)

The Tanzania-Uganda roads will cover a total of 252km and will be implemented under the Tanzania-Uganda Road Project being coordinated by the EAC. The Masaka-Mutukula sectionwill cover 89km while the Mutukula-Kyaka section has a length of 30km. Mutukula-Kyakahighway will link to a 133km Tanzanian section from Bugene to Kumunazi via Kasulo in the western regions. Mr. Mlote further added that the Tanzania-Uganda Road Project is aimed to improve intra-EAC transport. “The purpose is to facilitate the development of the regional road transport market in the East African region,” he said while receiving final designs from the project consultants in Arusha.

Industry, trade minister tasks new EPZA chief to develop industrial park (IPPMedia)

Deputy Minister for Industry and Trade, Exaud Kigahe said in Dar es Salaam on Friday during Mnali’s inauguration and the retirement of his predecessor, Colonel (rtd) Joseph Simbakalia, that developing new industrial plots countrywide should be given priority as the government targets industrialization. The Deputy Minister Trade and Industry pointed out that EPZA has a crucial role to play in facilitating development towards industrialisation as per the government’s blue print. Kigahe explained that for the country to have sustainable development, EPZA has an important role to allocate more special economic zones with necessary facilities for investments.

Uhuru deploys Cabinet secretaries to speed up legacy projects (The Star)

President Uhuru Kenyatta has deployed his Cabinet secretaries to ensure his legacy projects are completed before he leaves office. Kenyatta, who has been on a working tour of Nyeri, is keen to have all the projects completed as a way of cementing the gains made during his reign. The head of state has been on a warpath with a section of politicians who have started early campaigns for next year’s elections.

Liberia Settles Debt with African Union to Regain Full Membership and Voting Right (Front Page Africa)

Liberia, a founding member of the African Union, Organization of African Unity at the time, was last year relegated from full member to just an observer – a decision which was triggered by the accumulation of unpaid dues that caused Africa’s oldest nation to lose its voting right at the continental body. The Africa Union in 2016 decided on the need for equitable and predictable funding source to finance the Union so as to reduce dependency while implementing development and integration programs on the Continent. On Wednesday, Liberia’s Foreign Minister disclosed that the country has fully fulfilled its financial obligation to the pan-African body. This disclosure comes ahead of the African Union’s 34th Ordinary Session of Heads of State which is scheduled to take place virtually from February 3-7.

Importers Link Essential Commodity Price Hike to Demurrage Charges (Foroyaa Newspaper)

Importers of essential commodities in The Gambia have informed the National Assembly Select on Trade that the high charge on demurrage is one of the major factors contributing to the hike in prices of the essential commodities. “There is also a high demand on essential commodities, especially in Africa and the production level is very low,” said the importers. They also told the committee that amid the COVID-19 pandemic, they have problems in importing and when it comes to shipping, most of the ports in the Far East of India and Pakistan, have to operate the way they were in pre-COVID-19 era. “Before the pandemic, the costs of shipment of a container of rice used to be around US$1600, but today it is US$3800 to US$ 4000. At the same time, factories and suppliers are not working consistently,” the importers said.

AfCFTA: Proudly Made in Zim products (Zimbabwe Independnt)

Undoubtedly, Zimbabwe’s most valuable exports are minerals and tobacco which rake in over $4 billion in export earnings every year. Given the difficulties Zimbabwe is having to control its import bill for consumer products, it must diversify the economy from mining and manufacturers to ensure competitiveness of locally manufactured products. The current export retention scheme where the government retains 40% of all the foreign currency earned by exporters (Using a soft pegged exchange rate), while taxing the same entities in foreign currency discourages value added export growth and encourages importation of finished merchandise for domestic consumption.

Time to embrace non-traditional exports (Zambia Daily Mail)

Zambia is traditionally a copper-exporting country with the commodity accounting for about 70 percent of the earnings. This narrative is about to change following Government’s commitment to promoting non-traditional exports (NTEs) coupled with the coming into effect of the African Continental Free Trade Area (AfCFTA) on January 1, 2021. This will allow small and medium-scale entrepreneurs (SMEs) and local companies to penetrate the market.

Namibia to minimize agricultural imports (CGTN Africa)

Namibia will minimize importing agriculture products and prioritize creating market access for locally produced goods to stimulate economic growth, Minister of Agriculture, Water and Land Reform Calle Schlettwein said Tuesday. Schlettwein said the move aims to empower Namibian farmers and allow them a fair chance to supply their goods to the local market.

Cameroon – Nigeria: Will there be a defined border soon? (The Africa Report)

In an effort to resolve the ongoing border dispute over the hydrocarbon-rich Bakassi peninsula between Cameroon and Nigeria, The Cameroon-Nigeria Mixed Commission will hold an important session in Abuja on 15 February, chaired by the UN Special Representative for West Africa, Mohamed Ibn Chambas. The process of establishing a border along the 2,100km stretch between the two countries is now almost complete. However, there is still one problem. The commission’s experts have come up against 13 reference points corresponding to 100km of the route.


News from Africa and Africa’s international trade relations

REVIEW: African Free Trade Area Ushers In Hope for Stitching Fragmented Continent Together (UrduPoint News)

The African Continental Free Trade Area (AFCFTA) ushered in a sigh of relief when the 54-nation market was finally launched on January 1, 2021. “It is incredibly important for a number of reasons. This is because African countries haven’t been trading amongst themselves,” political economist Mzukisi Qobo told Sputnik.

Qobo is adamant that the free trade area will help harmonize regulations. “It will measure the safety of goods and products to overcome barriers. We are going to see greater movements of people. Some service providers need to be present in other countries to see a greater delivery of goods and services,” he said. This is also an opportunity for African governments to engage the private sector.

All this, according to the non-profit Trade Law Centre for Southern Africa (tralac), is meant to boost the competitiveness of the fragmented African market. The continent is home to 16 landlocked states and 33 of the world’s 47 least developed countries. “By reducing tariff and non-tariff barriers, it should become easier to trade with other African countries and also to improve the competitiveness of Africa’s traders with the rest of the World. These improvements can also serve to attract more investment to African countries-a larger, the integrated market is much more attractive than a small market,” tralac executive director Trudi Hartzenberg told Sputnik.

For the AFCFTA to succeed, African countries, however, have a lot of work ahead. According to Hartzenberg, they need to expand and diversify their productive capacity; improve customs, border management, and governance in general; invest in infrastructure, including digital infrastructure to reduce the costs of key services such as transport and communication.

The grouping of Africa into regional economic blocs is believed to be posing a challenge for seamless trade. According to Hartzenberg, a good example is trade among countries in Southern Africa and West Africa. “South Africa and Nigeria currently trade without any preferential trade arrangement. The tariffs they levy on goods from each other’s markets are those that they apply to imports from global markets such as China. Under the AFCFTA these tariffs are expected to be lower for 90 percent of tariff lines, making these markets much more attractive and encouraging intra-Africa trade, which currently stands at about 16 percent of Africa’s total trade,” she explained. Trade between South Africa and Nigeria, the TRALAC chief went on, is also a reminder that major impediments to intra-Africa trade are non-tariff barriers, such as significant delays at border posts, paper documentation and transport costs.

Development prospects in Africa undermined by a severe economic downturn (Africa Renewal)

In 2020, the world economy shrank by 4.3 per cent, over two and half times more than during the global crisis of 2009, says the latest World Economic Situation and Prospects. Developing countries saw a less severe contraction at 2.5 per cent, with an expected rebound of 5.7 per cent in 2021, according to the estimates presented in the report. However, economic contraction among developing nations, falling exports and local consumption rates as well as high levels of public debt will significantly increase poverty levels, says the report.

African countries are experiencing an unprecedented economic downturn with major adverse impacts on development. Lower commodity prices, the collapse of tourism and lower remittances – exacerbated by much-needed domestic lockdowns and other measures to control the spread of the pandemic – have caused a severe and widespread deterioration of the economic situation. Limited fiscal space, challenging financing conditions and rising public debt have increased the risks of debt distress.

A visa-free Africa will give Africans more access to their continent and business opportunities (Independent Online)

A drive toward One-Stop Border Posts (OSBP) could pave the institutional and economic bridges African countries need to cross between each other. Turning them into smooth paths toward regional integration and economies of scale. This cannot be done in isolation. The Infrastructure Consortium for Africa’s OSBP sourcebook highlights the importance of developing the value chains which drive the utilisation of these borders, and lure investment opportunities – especially along transport corridors. This means connecting people with industry and industry with customers through appropriate transport infrastructure, networks and systems.

ECA’s 2021 Conference of Ministers to focus on sustainable industrialisation & diversification in the digital era (UNECA)

Preparations for the fifty-third session of the Conference of African Ministers of Finance, Planning and Economic Development of the Economic Commission for Africa (ECA) have reached advanced stages. The Conference of Ministers will be held virtually from 17-23 March, 2021, under the theme “Africa’s sustainable industrialisation and diversification in the digital era in the context of Covid-19”. ECA’s Regional Integration and Trade Division Director, Stephen Karingi, says with the African Continental Free Trade Area (AfCFTA) now up and running, the theme comes in handy, offering ministers and experts a platform to discuss the need to ensure that digitalization strategies are integrated into policy and planning frameworks for industrialization.

38th Ordinary Session of the Executive Council | African Union

The 38th Ordinary Session of the Executive Council will officially open on 3rd February 2021, in the presence of the leadership and officials of the AU Commission. The Executive Council will consider the draft agenda and the draft decisions and declarations of the Assembly with appropriate recommendations for consideration by the Heads of State Assembly, scheduled to take place from 6-7 February 2021.

Deeper Economic Ties Envisaged, as COMESA Accredits top EU, Canadian Diplomats (COMESA)

New Heads of Diplomatic Missions of Canada, Germany and France have been accredited as Special Representatives to COMESA. Ambassadors Pamela O’Donnell of Canada, Dr. Anne Wager-Mitchell of Germany and François Goldblatt of France presented their Letters of Credence to Secretary General Chileshe Kapwepwe in a ceremony held virtually on Tuesday 2nd February 2021. In her statement, the Canadian Ambassador expressed her country’s interest to work with COMESA to advance shared values and increase opportunities for international trade. Specifically, Amb. O’Donnell identified gender and trade as one of the priority area that her country is keen to collaborate with COMESA.

IFC lends Kioo $10m for modern equipment (The East African)

World Bank’s private sector lending arm has granted $10 million to Kioo Ltd to invest in energy efficient machinery to reduce its carbon footprint in Tanzania. The International Finance Corporation advanced the loan to the Tanzanian glass manufacturer to weather Covid-19 related challenges and invest in the latest modern energy-efficient machinery. IFC said the loan will provide Kioo with working capital as the region’s beverage industry faces falling demand due to measures put in place to contain the spread of Covid-19, like closure of bars and restaurants.

Mobile cash transactions hit record Sh5.2trn on phone payment reliefs (Business Daily)

Kenyans moved Sh5.21 trillion through their phones last year, an equivalent of half of the country’s estimated GDP, spurred by relief measures on mobile phone payments to help to curb the spread of the coronavirus. Fresh data by the Central Bank of Kenya (CBK) shows the total transactions rose by 20 percent from Sh4.34 trillion the previous year. “A significant increase of mobile money usage has been noted over the period the measures have been in place, demonstrating that they were timely and effective,” the CBK said at its Monetary Policy Committee meeting in December.

Biden should use this roadmap for America to re-engage with Africa (Nation)

In recent decades, the United States-Africa relationship has disappointed both sides. Republican and Democratic presidents alike have treated the continent with benign neglect, if not outright contempt. And America has duly fallen behind China, India and France in terms of trade with Africa. The arrival of President Joe Biden provides an opportunity to rekindle the relationship. Typically, articulating an Africa strategy is not a top priority for new US presidents.

Africa – a dynamic region with great resilience, high aspirations, abundant resources, unbounded creativity, and plenty of ideas – should not rely on any foreign power for its political and economic future. The fuse of prosperity and peace must be lit from within. But since trade is the main engine of growth and socioeconomic development for African economies (all small and open) and the US is the dominant economic player, Africans are looking up to Biden to chart a new course. The US can reap major political and economic benefits by acting symbolically, strategically and operationally. The Biden administration can set the tone for a new partnership with several costless overtures.

Will China help or hurt the AfCFTA? (The Africa Report)

African countries want to trade more with their partners on the continent – through the African Continental Free Trade Area (AfCFTA) agreement that launched operations on 1 January – but will that hurt big trading partners like China? In its public statements, Beijing is wholly supportive of the AfCFTA, seeing it as a ‘win-win’ solution and arguing that free trade and multilateralism are key foundations to the global system. In November 2020, China’s foreign minister Wang Yi said the government “will provide cash assistance and capacity-building training to its secretariat”. The focus on intra-African links is likely to involve China in two main ways: trade and the building of infrastructure to facilitate trade.

Measuring the Informal Economy (IMF)

This paper proposes a framework for measuring the informal economy that is consistent with internationally agreed concepts and methodology for measuring GDP. Based on the proposed framework, the informal economy “comprises production of informal sector units, production of goods for own final use, production of domestic workers, and production generated by informal employment in formal enterprises.” This proposed framework will facilitate preparation of estimates of the informal economy as a component of GDP.

Energy Transformation in Southern Africa boosted by new IRENA agreement with SACREEE (ZAWYA)

The International Renewable Energy Agency (IRENA) and the Southern African Development Community’s (SADC) Centre for Renewable Energy and Energy Efficiency (SACREEE) signed a Memorandum of Understanding (MoU), to work together on accelerating the deployment renewable energy solutions, including decentralised technologies, in Southern African countries. “The COVID-19 pandemic has re-emphasised the importance of a reliable, affordable, clean energy,” said IRENA Director-General Francesco La Camera. “It has served as a stark reminder that the new energy age must be inclusive, just and low-carbon if we are to achieve sustainable development in Southern Africa and around the world. Africa can seize the moment for meaningful change, and dramatically improve socioeconomic outcomes by moving decisively towards the energy transformation. This agreement will bolster regional progress.”

Gas can play a key role in Africa’s energy transition (EURACTIV)

Africa’s transition to cleaner energy has been accelerating over the last decade. With strong demand expected to continue rising, driven by population growth, increasing urbanisation, industrialisation and trade, Africa’s new energy projects are a vital part of the global battle against climate change. However, the impact of COVID-19 on the global economy has brought Africa’s switch from fossil fuels to renewables into sharp focus. A study by the University of Oxford published this month showed that Africa is highly unlikely to meet its ambitious targets for the use of renewables, which are now only expected to account for less than 10% of Africa’s energy generation by 2030.

OPEC’s Planned Output Increase Is Offset by Africa Disruptions (BloombergQuint)

OPEC boosted crude production as planned last month, but the increase was tempered by disruptions at long-troubled member nations. The Organization of Petroleum Exporting Countries raised output by 190,000 barrels a day in January, according to a Bloomberg survey. That fits with an agreement between the group and its allies to revive some of the supplies halted during the pandemic. Yet the monthly change is barely two-thirds of the scheduled amount, as increases by OPEC’s Persian Gulf exporters were offset by disruptions in Nigeria and Libya.


Global Economy

Enhance resilience to recover inclusively, says new report (United Nations)

The Great Disruption caused by the COVID-19 pandemic has turned the global economy upside down, destroying millions of jobs and livelihoods. The global economic decline of 4.3 per cent in 2020 was the worst since the Great Depression and three times as bad as the contraction suffered during the Great Recession in 2009, found UN DESA’s World Economic Situation and Prospects 2021 report.

The road to recovery will be long and painful. The forecasted 4.7 per cent growth in 2021 will barely be enough to offset last year’s economic losses. While macroeconomically resilient – and usually rich – countries can expect to rebuild and rebound fast, more vulnerable – predominantly developing – countries will suffer the deep and widespread scarring effects of the crisis against the backdrop of limited fiscal space and unsustainable debt burden.

COVID-19 exposed the digital divide. Here’s how we can close it (Qrius)

In 2020, the world embraced digital transformation at an expedited pace, reimagining technology’s critical role in how we work, learn and live. At the same time, the COVID-19 pandemic illuminated a long-standing issue: billions of people remain without the universal human right of internet access. Many rural and low-income communities around the world, including those in large urban areas, lack reliable, affordable access. More importantly, wireless technology is no longer just important for consumers and entertainment; it is rapidly becoming critical to how we connect everything in the digital world. According to an International Telecommunication Union report, in the developed world the internet penetration rate is 87% but just 47% in developing countries and 19% in the least developed countries.

In a globalised world, proximity is no longer a requirement for trade (Telegraph)

The UK left the European Union one year ago and it is measure of our newly independent outlook that we are applying to join a free trade area with 11 Asian and Pacific nations many thousands of miles away. In a globalised world, geographical proximity is not a requirement for trade nowadays any more than it was during the days of Empire. For all its claim to be the world’s biggest single market, the EU bloc has shrunk as a percentage of global trade and will continue to decline as Asian economies grow. Forging good trading relations with the world’s fastest-growing nations is a far-sighted approach and a welcome departure from the short-termism often seen in government.

What the World Learned Setting Development Goals (IISD)

Even before the COVID-19 pandemic, governments were making uneven progress on the SDGs. The world was off track to end poverty by 2030, food insecurity was on the rise, inequality was increasing, and the environment was deteriorating. But COVID-19 has reversed years of progress on poverty, hunger, gender equality, healthcare, and education. While the virus has impacted everyone, it is harming the world’s poorest and vulnerable the most. It has exposed and exacerbated existing inequalities and injustices.

At first glance, the COVID-19 pandemic poses an insurmountable obstacle to achieving the 2030 Agenda. In reality, the only way out of the crisis is through its application. The SDGs and the 2030 Agenda are well suited to act as a roadmap to coordinate global responses to a crisis with the scale, depth, and complexity of this unprecedented pandemic. The continued pursuit of these goals will keep governments focused on what is needed for recovery: inclusion, equity, growth, resiliency, and sustainability.

Promoting trade while protecting marine species (FAO)

Trade in fish and other marine species, like corals, is critical for the lives and livelihoods of many communities, and demand has increased in recent decades. But global distribution is uneven, and overfishing and illegal trade are putting species at risk. The Convention on International Trade in Endangered Species of Wild Fauna and Flora, known as CITES, was conceived to survey and control the trade of plant and animal species facing extinction. FAO, together with the United Nations Environment Programme’s World Conservation Monitoring Centre, has released CITES and the Sea to reveal just how critical a role trade can play in the survival of a species.