tralac Daily News
What economic trends can we expect from 2021? (Moneyweb.co.za)
Following the volatile year for the global and domestic economies in 2020, we expect 2021 to see an improvement, though uneven across economies. South Africa’s economic recovery depends on several factors, some controllable and others uncontrollable, with the most important one being the logistics of Covid-19 vaccines. Which factors will drive the economic recovery this year and beyond?
The government's rationale for imposing bans is twofold – to discourage large gatherings and to ease the burden on hospitals from alcohol-related accidents. The most recent shuttering of liquor stores was accompanied by a 9 pm curfew, and supporters of the policy were quick to highlight the unusual lack of admissions to emergency rooms over the new year. "During the early onset of the second wave everything was still open, so we had surgeries and trauma," said Marc Mendelson, head of infectious diseases at Groote Schuur Hospital in Cape Town.
Industry bodies including the Liquor Traders' Formation have warned of the impact on smaller sellers, particularly in poor communities, while highlighting a surge in illegal trade. There's also been a hit to the National Treasury from a slump in tax revenue. Yet Distell Group Holdings, South Africa's biggest wine and spirits producer, reported Wednesday that domestic revenue held steady during the six months through December, despite losing 41 trading days. The maker of mass-market wines such as Nederburg and Two Oceans got a boost from
Professional services firm PwC says the world needs to cut carbon intensity five times faster to meet the Paris Agreement commitments. A decarbonisation rate of 11.7% a year is now required to keep warming within 1.5 °C above pre-industrial levels, which is five times greater than the 2.4% rate that was achieved going into 2020. The PwC 'Net Zero Economy Index' shows that, based on current trends in energy consumption and carbon dioxide (CO2) emissions generation, the century’s global carbon budget would be used up by the end of this decade.
Despite Covid-19 hazard, auto industry hopeful of 2021 sales recovery (Engineering News)
This year should see the South African automotive industry claw back some of the losses experienced in 2020, despite the second wave of Covid-19 raging across the globe. Market commentators believe the 2021 South African new-car market should improve on last year, and that the used-car market will be able to retain its buoyancy this year. Also, new-vehicle exports should witness some growth, while the potential tide of job losses at retail level has been stemmed.
Digital mobile lenders lock defaulters out of platforms (Business Daily)
Unregulated digital mobile lenders have limited lending to a select customer to curb loses after the Central Bank of Kenya banned them from forwarding the names of loan defaulters to credit reference bureaus (CRBs).Digital Lenders Association of Kenya (DLAK) chairman Kevin Mutiso said the lenders initially stopped offering any loans in March and April but later resumed, targeting only the borrowers who had a good repayment history. “We stopped lending in March through April and May but we had to make decisions so we wrote off all bad loans. We are currently only lending to the best customers, those who understand that they have to pay,” he said. “Most borrowers initially were borrowing with no intention to pay back.”
SMEs to benefit from Sh110b Africa free trade area facility (The Standard)
Small businesses in Kenya are set to benefit from a Sh110 billion trade facility to boost their market expansion under the African Continental Free Trade Area (AfCFTA). This is ahead of a planned roll out of a payment facility to ease currency convertibility across the continent. AfCFTA Secretary-General Wamkele Mene said they were working with commercial banks across the continent to pool funds which would be guaranteed by governments. “This trade facility will help SMEs overcome the challenge of access to new markets which is not because of lack expertise but capital,” he said. Mr Mene said they are working with Afremixbank to develop a payment facility which is currently being piloted in six African countries.
New taxes & tax increases: An explainer (Mmegi Online)
Botswana Minister of Finance & Economic Development, Dr Thapelo Matsheka announced a number of tax changes whilst presenting the national budget on Monday, February 1, 2021 These tax changes come against the backdrop of constrained government mineral revenues as well as a dip in SACU and domestic tax collections which were occasioned by COVID-19. Below are the tax changes the Minister proposed to Parliament.
AfCFTA: NESG advises FG to strengthen domestic value chains (Nairametrics)
The Nigerian Economic Summit Group (NESG) has stated that for the FG to maximize the Africa Continental Free Trade Area (AfCFTA) agreement, it needs to direct its efforts into strengthening domestic value chains and also develop an efficient land border system for exports. The NESG Chief Mr. Laoye Jaiyeola stated that the rules of origin trade measures would be a major factor in reducing risks needed to make the agreement feasible, citing some nations might not be transparent with it. He added that transport infrastructure is necessary for a diversified trade economy over commodity export-dependent nations
RwandAir suspends flights to three African destinations (The New Times)
RwandAir, the national carrier has with immediate effect suspended its flights to three southern Africa routes owing to the emerging global concerns of Covid variants prevalence in the area. According to a statement released on Monday, February 8, suspended routes include Johannesburg, Cape Town, Lusaka and Harare. “Scheduled flights will resume as soon as there is more clarity on the situation”, the airline said in a statement posted on Twitter.
Reports indicate that South Africa, was among the countries which detected new variants of Covid-19, a few weeks ago. Other countries include Brazil, Britain among others. However, with the variants spreading across the Southern Africa region, experts say that this will arguably make the fight against Covid-19 more demanding.
Uganda: Business Activity Declines for the First Time in Seven Months (East African Business Week)
Business activity declined for the first time during the past seven months, the headline Stanbic Purchasing Managers’ Index (PMI) dipped below the 50.0, posting a reading of 49.8 from 51.2 in December 2020. Business conditions deteriorated for the Ugandan private sector during January due to a reduction in new orders which caused a fall in employment as the country went through the General Elections period. The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%); Output (25%); Employment (20%); Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).
Morocco's trade deficit eases 23.1%, tourism receipts halve (The North Africa Post)
Morocco’s trade deficit shrunk 23.1% as the pandemic lowered both imports and exports with tourism being the worst hit sector.... North Africa Post's news desk is composed of journalists and editors, who are constantly working to provide new and accurate stories to NAP readers.
News from Africa and Africa’s international trade relations
Matshidiso Moeti, WHO Regional Director for Africa, highlighted that the deployment is a “critical first step” to ensure countries access to vaccines. “Africa has watched other regions start COVID-19 vaccination campaigns from the side-lines for too long. This planned roll-out is a critical first step to ensuring the continent gets equitable access to vaccines”, Dr. Moeti said. The roll-out of the AstraZeneca/Oxford AZD1222 vaccine is subject to the vaccine being listed for emergency use by WHO, which is currently reviewing the vaccine and the outcome is expected soon, according to the agency. Amid surging demand for COVID-19 vaccines, the final shipments will be based on production capacities of vaccine manufacturers and the readiness of countries, WHO added, noting that recipient countries are required to submit finalized national deployment and vaccination plans to receive vaccines from the COVAX facility.
Trading within the African Continental Free Trade Area (AfCFTA) began on 1 January 2020, marking a significant milestone for intra-African trade. This is a historic turning point for Africa, where only approximately 16-18% of trade currently takes place between member states. Under AfCFTA, now the world's largest free trade area, and the auspices of the African Union (AU), the continent intends to increase this percentage exponentially.
Most of the trade undertaken by African nations is with the rest of the world, which is a reality that the AfCFTA Agreement wants to change. Africa's exports to the rest of the world are primarily raw materials, inclusive of extractive materials like oil and minerals, while its imports include manufactured goods, such as automobiles, aircrafts, electronics, pharmaceuticals, machinery and engineering products, among others. Therefore, the value of the goods imported by African countries far outweighs the exports they make to the rest of the world, affecting the balance of trade of African countries.
The AfCFTA -- Can Africa Save Itself? (Economic Confidential)
Africa is an incredibly rich continent. That richness, however, has not translated into wealth for Africans. Africa’s oil and gas and gold and diamonds and copper and cobalt have made Africa a target for stronger external powers for centuries. As a result, one in three Africans (some 422 million people) lives below the global poverty line (and that is a pre-COVID-19 statistic). Generations after the greatly exaggerated death of colonialism, over half of African nations’ exports are raw materials (the top five are oil, gold, diamonds, natural gas, and coal). While African farmers grow and export cash crops like coffee, cocoa beans, and tobacco to make ends meet, African net food imports are expected to triple by 2025, and undernourishment is projected to increase 33 percent over the same time period. The more things change, the more they stay the same.
Africa’s most precious resource, however, is not its arable land, its mineral commodities, or its precious metals. Africa’s most valuable resource is its people
In the coming decades, as the rest of the world ages and searches for new, growing export markets, Africa looks poised to be the only real game in town. The challenge facing African nations will be turning its human capital and resource wealth into a blessing rather than a curse – into leveraging its strengths to increase prosperity and dignity rather than being taken advantage of for yet another generation. Enter the African Continental Free Trade Agreement (AfCFTA), which came into effect on Jan. 1, 2021. The AfCFTA, signed by 54 out of 55 African nations (get with the program, Eritrea!) and currently ratified by 35, is arguably the most ambitious free trade agreement ever agreed to in world history. According to the World Bank, the AfCFTA will increase real income gains by 7 percent, will lift 100 million people out of extreme and moderate poverty, and increase continental production by over $200 billion.
African states will be able to trade in their local currencies for intra-Africa trade under the African Continental Free Trade Area agreement (AfCFTA), an official said on Thursday. Wamkele Mene, secretary-general of the AfCFTA Secretariat told journalists in Nairobi that the trading bloc is working with the African Export and Import Bank (Afreximbank) ) to establish a payment and settlement platform to eliminate the need for currency convertibility. "When the platform is fully operational, African companies will be able to transact with their counterparties in other Africa countries in their local currencies," Mene said.
AfCFTA Workshop Opens At Commerce Ministry (Liberian Daily Observer)
The Ministry of Commerce and Industry (MoCI), is expected to conduct a two-day stakeholders’ Workshop on the African Continental Free Trade Area (AfCFTA) in Monrovia from February 9-10, 2021. The African Continental Free Trade Area (AfCFTA) was established in January 2012, in Addis Abba, Ethiopia, and entered into force on January 1, 2021, with a focus on creating a single African market for goods and services.
The overall objective of the two-day workshop is to create awareness and build capacity of participants on the implementation of the AfCFTA Agreement, solicit feedback from Liberian service providers on trade restrictions faced in other African countries, as well as seek high level political buy-in to facilitate the ratification of the Agreement.
Updates from the 34th AU Summit
The COVID-19 pandemic remains a severe health emergency that has caused great suffering and hardship across the African continent and globally. The African Union however is committed to ensure all its member states benefit are part of, and benefit from the continental efforts to prevent and contain the pandemic especially with the rollout of the vaccination programme. The Assembly of Heads of State and Government during the opening of its 34th Ordinary Session held virtually on 6 February 2021, committed to strengthen the collective response to the crisis, marshalling resources for the benefit of all, and striving to ensure that no country is left behind.
Although relatively less affected than other parts of the world, Africa has not been spared by the deadly virus. The incoming Chairperson, H.E. Felix Tshisekedi, President of the Democratic Republic of Congo applauded the ingenuity and resilience shown by African countries in the fight against the pandemic. “Let us organize together, with our international partners, for a great offensive against these various scourges. It is imperative that our organization can strengthen the African Centre for Disease Control and Prevention (Africa CDC) in order to respond effectively to emergencies and complex health challenges, as a specialized technical institution of the African Union”, he stated.
H.E. President Tshisekedi observed that collaboratively with the Regional Economic Communities, the Union will strengthen peace and security; pursue the operationalization of the African Continental Free Trade Area; promote a renaissance of African culture, arts and heritage; combat climate change; accelerate integrative projects, including the construction of the Inga Dam; consolidate the African Union's initiatives in the fight against Covid-19 and in the prevention of other diseases. He further added that drawing the lessons of the pandemic, in addition to strengthening health systems, the time has come to invest more in education and scientific research. He observed that it is of highly strategic interest that each Member State earmark a large part of its income for the development of its human capital, which is the main wealth, the only one that can be effectively mobilized to solve its specific problems and face global challenges.
Chadian Moussa Faki retains top AU post (The East African)
Chadian Moussa Faki Mahamat has been re-elected chairperson of the African Union Commission, getting an endorsement from nearly all voting members of the continental bloc. The vote, decided on Saturday evening, saw Mr Faki elected unopposed, something that had always been expected after the AU said he was the only contender. He got 51 votes out of 55 with three abstentions and one other member being ineligible to vote. Faki’s victory is the highest in the African Union’s history and he got 15 more votes that he did last time, even though this vote only went through one round. He will be deputised by Rwandan banker, Dr Monique Nsanzabagwana, who was until Saturday the deputy governor of the Rwandan central bank. Her election went through rounds that were mostly an East African affair. She defeated Uganda’s Prof Pamela Mbabazi and Djibouti’s Hasna Bakarak Daoud.
New AU Chair has his hands full (The Southern Times)
DRC’s President Felix Tshisekedi will lead the African Union for a year after he takes over from South Africa’s President Cyril Ramaphosa at the virtual AU Summit scheduled for the weekend of February 6-7. And he will have a lot on his plate; juggling critical matters at home and on the continent. According to Wanyama Masinde, Professor of Regional Integration and Director of the Centre for Regional Integration in Nairobi, Kenya, President Tshisekedi is taking over at the AU even before settling down at home and stabilising his own country. “Therefore his hands were already full. We only hope that he finds time to lead the AU,” Prof Masinde said.
The Assembly of Heads of State and Government of the African Union has re-elected Moussa Faki Mahamat from the Republic of Chad, as the African Union Commission Chairperson for another four year term from 2021-2024. The election took place on 6 February 2021 during the ongoing 34th Ordinary Session of the Assembly which is being held virtually due to the containment measures instituted as a result of the ongoing Covid-19 pandemic. Mr. Faki sought a second term mandate for the position of AUC Chairperson following the end of his first term tenure (2017-2020). The Chairperson of the AU Commission is elected by the Assembly for a four-year term, renewable once. The Chairperson of the AU Commission is the Chief Executive Officer, legal representative of the AU and the Commission’s Chief Accounting Officer Faki will be deputised by Dr. Monique Nsanzabaganwa from Rwanda. Dr. Nsanzabaganwa secured the majority of votes in a highly contested position which saw two other female candidates vying for the post. Dr. Nsanzabaganwa becomes the first female to occupy the position of the Deputy Chairperson.
The Heads of State and Government of the African Union (AU) have elected H.E. Felix- Antoine Tshisekedi Tshilombo, President of the Democratic Republic of Congo (DRC), as the new Chairperson of the African Union for the year 2021. The event took place today, Saturday 6 February 2021 during the ongoing Thirty-Fourth (34th) Ordinary Session of the Assembly of the Union, holding virtually under the theme: “Arts, Culture and Heritage: Levers for Building the Africa We Want”.
Given the prevailing context of the COVID19 pandemic, the handing over ceremony between the incoming and outgoing Chairs of the African Union was organized in a hybrid mode, both at the Conference Center of the African Union in Addis Ababa, Ethiopia, where the newly elected Chair of the Union, President Tshisekedi was taking part physically, in the solemn handing over ceremony at the podium of the AU Mandela Hall, in the presence of H.E. Moussa Faki Mahamat, Chairperson of the African Union Commission (AUC), while the outgoing Chair Ramaphosa, was taking part virtually all the way from South Africa.
In his acceptance speech, President Tshisekedi said it is a unique privilege for the Democratic Republic of the Congo be given this opportunity as Chair of the African Union at a symbolic and highly significant moment when “we are celebrating the sixty years of the disappearance of a worthy son of the Congo and Africa, Mr. Patrice Émery Lumumba, who strongly believed in the great destiny of Africa. He did not hesitate to organize, in August 1960 in Kinshasa, then Leopoldville, the last Congress in the history of the great movement of Pan-Africanism. On June 30, 1960, shortly before his tragic death, he declared [I quote]: "Africa will write its own history and it will be in the north and south of the Sahara, a history of glory and dignity".
This pandemic has been a stark reminder of both our vulnerability and our interconnectedness as a human race. As a continent, we identified several priorities for the year.
We agreed to focus on the promotion of peace and security as part of the effort to Silence the Guns in Africa, to support economic development and integration through the operationalisation of the African Continental Free Trade Area, to advance the economic empowerment of women, and to support good governance and democracy. Yet, within a matter of weeks, the coronavirus pandemic forced us to urgently reprioritise both our programmes of action and the deployment of our resources.
Our most immediate and pressing concern was to manage the impact of the pandemic on our people. We worked with urgency to develop the Africa Joint Continental Strategy for COVID-19 and have effectively implemented it through the various structures of the AU. We have been ably led by the AU Bureau, which has been at the forefront of coordinating responses by member states.
In responding to the pandemic, we have been at the forefront of innovation. We established the ground-breaking Africa Medical Supplies Platform to assist AU Member States to access affordable medical supplies and equipment. Our response to COVID-19 has been driven, coordinated and capacitated by our own scientists and medical experts, mainly located within the Africa Centres for Disease Control and Prevention. And now it is our own African Vaccine Acquisition Task Team that is leading our efforts in the next frontier of the pandemic, to acquire vaccines for the people of Africa.
Kagame calls AU to prioritize domestic health financing (The New Times)
President Paul Kagame has called on African Union member states to prioritize domestic health financing especially in light of the Covid-19 pandemic to improve health outcomes and resilience. Kagame was speaking at the 34th Ordinary Session of the African Union Assembly which was held virtually, where he presented a progress report on the Institutional Reform of the African Union as well as an update on domestic health financing. Kagame said that without strong national health systems, the continent will remain vulnerable to pandemics.
African Union must reform to stay relevant - Nigeria's Buhari (Thomson Reuters Foundation)
The African Union must conduct a comprehensive reform if it is to stay relevant, Nigerian President Muhammadu Buhari said at the close of the bloc's two-day summit on Sunday. Nigeria is Africa's most populous nation and the largest economy on the continent, making it an influential member of the 55-nation bloc that was formed to promote international cooperation and harmonise member states' policies. The bloc decided in 2016 it needed to work on changes to make it more nimble, focused and accountable, putting Rwanda's President Paul Kagame in charge of the process. "Global realities demand that the AU be overhauled, if it must remain relevant in intergovernmental processes," Buhari said in a statement at the conclusion of the virtual summit.
In this report, we take stock of the past four years of the AU Commission and make recommendations for the Union in charting the future. As we do so, we are cognisant that we built on the work of the Commission that preceded us. We have made progress, but there is still work to be done in realising our Continent’s aspirations and strengthening our Union. We focussed on implementation of key priorities laid out in Africa’s 50-year blueprint - Agenda 2063. We are making progress, albeit uneven, in beginning to realise its aspirations. In the last four years, the African Continental Free Trade Area was signed, and entered into force in the shortest time ever witnessed for negotiations of a trade agreement of this size. Coupled with the launch of the Open Skies Initiative and the Free Movement Protocol, the potential to accelerate integration is great and should be capitalised.
Africa Needs Focus on Infrastructure, Supply Chain, Skills (Fibre2fashion.com)
The textile and apparel industry in Africa has grown rapidly in the past couple of years, and is estimated to grow at a compounded annual growth rate of around 5 per cent over the next five years. Even faster growth is possible if the countries pay attention to grey areas like infrastructure, strategic supply chain and skill management. Fibre2Fashion takes a look at some individual nations in the continent.
All is set for the Economic Commission for Africa’s (ECA) Fourth Business Forum, a unique gathering of African Heads of State, private sector executives and young ICT leaders and innovators which provides an invaluable opportunity to be part of a dialogue on business and development in Africa. At its fourth session, which takes place on 8 February 2021, the Africa Business Forum will focus on accelerating the role of the private sector through innovative financing to build forward towards achieving the Sustainable Development Goals
When the International Monetary Fund (IMF) said that the pandemic-ravaged global economy shrunk by 4.4% in 2020, the news probably surprised no one. The world has not experienced an economic decline so dramatic since the Great Depression, and very few of us have escaped COVID-19's financial tumult. Over the past 12 months, only China's economy grew. Everywhere else, stock markets cratered, businesses shuttered, and unemployment rates climbed to new highs.
As vaccines have started their roll-out, however, signs of recovery, however tentative, are emerging. While this sounds a hopeful note, what the future looks like remains difficult to predict. Uncertainties abound, and how they play out will determine who's right: the optimists, who believe that
More vaccines for SADC countries (The Southern Times)
SADC countries are harmonising efforts to co-ordinate vaccination of the region’s population against COVID-19, with private sector players also coming on board to augment the efforts of the bloc and of individual countries. Last week, SADC Chair President Felipe Nyusi of Mozambique called on the region to establish a vaccine manufacturing facility, a position that the bloc’s Executive Secretary, Dr Stergomena Tax, has publicly backed. This week mobile telecommunications operator MTN donated US$25 million to procure seven million doses of COVID-19 vaccines. This is in addition to what the regional bloc, the African union and individual countries are sourcing. AU Special Envoy on COVID-19, mobile communications mogul Mr Strive Masiyiwa has said one billion doss of vaccines are expected by December 2021 as the continent targets to vaccinate 60 percent – or 750 million - of its 1, 2 billion population.
Did Africa turn a corner in 2020 or did it just dodge a bullet? (Brookings Institution)
Africa had surprised everybody with its resilience during the coronavirus crisis, says Vera Songwe of the U.N.’s Economic Commission for Africa. African economies had shown the world that they were no longer helpless in the face of big shocks: They could collectively raise nearly $50 billion in resources to combat the crisis and freely tap private credit markets instead of relying on foreign governments and development agencies. This could not have happened without structural progress. The second feature that defines the new Africa is divergence: Half the countries on the continent were middle-income economies, not a collection of low-income least developed economies. Heterogeneity has always characterized Africa; it now defines the region’s economy. The third encouraging development was integration. This year, hopes are even higher because of the African Continental Free Trade Area (AfCFTA) that came into effect on January 1.
Big boost for SADC energy transformation (The Southern Times)
The International Renewable Energy Agency (IRENA) and the Southern African Development Community’s (SADC) Centre for Renewable Energy and Energy Efficiency (SACREEE) have signed an MoU to accelerate deployment renewable energy solutions. The two organisations will also co-operate on policy development, capacity building programmes and regional events aimed at attracting investments to the region. Southern Africa has seen remarkable improvement in electricity access over the past decade. This is largely due to a strong commitment from SADC member states to take advantage of the region’s vast renewable energy potential to improve energy security and meet rising energy demand. As a result, the total share of renewables in power generation rose from 23 percent in 2015 to almost 39 percent in 2018. However, despite significant progress, electricity access remains a challenge.
Biden Signals New Tone on US-Africa Relations (Voice of America)
President Joe Biden delivered a message to African leaders meeting virtually this weekend at the African Union Summit 2021, hosted from Addis Ababa. “The United States stands ready now to be your partner in solidarity, support and mutual respect,” Biden said in a video address, his first speech to an international forum as U.S. president. In his remarks, Biden outlined what he called a shared vision of a better future with growing trade and investment that advances peace and security. “A future committed to investing in our democratic institutions and promoting the human rights of all people, women and girls, LGBTQ individuals, people with disabilities, and people of every ethnic background, religion and heritage,” Biden said. Chairperson of the African Union Commission Moussa Faki Mahamat welcomed the message and said the African Union looks forward to “resetting the strategic AU-USA partnership.”
Multilateral Cooperation for Global Recovery (Project Syndicate)
by Emmanuel Macron, Angela Merkel, Macky Sall, António Guterres, Charles Michel, Ursula von der Leyen
We should not be afraid of a post-pandemic world that will not be the same as the status quo ante. We should embrace it and use all appropriate fora and available opportunities to make it a better world by advancing the cause of international cooperation. Comments from Javier Solana, Andrés Velasco, Mark Leonard, Kemal Derviş, et al.
Our world has experienced diverging trends, leading to increased prosperity globally, while inequalities remain or increase. Democracies have expanded at the same time that nationalism and protectionism have seen a resurgence. Over the past decades, two major crises have disrupted our societies and weakened our common policy frameworks, casting doubt on our capacity to overcome shocks, address their root causes, and secure a better future for generations to come. They have also reminded us of how interdependent we are. The most serious crises call for the most ambitious decisions to shape the future. We believe that this one can be an opportunity to rebuild consensus for an international order based on multilateralism and the rule of law through efficient cooperation, solidarity, and coordination. In this spirit, we are determined to work together, with and within the United Nations, regional organizations, international fora such as the G7 and G20, and ad hoc coalitions to tackle the global challenges we face now and in the future.
The pandemic calls for a strong coordinated international response that rapidly expands access to tests, treatments, and vaccines, recognizing extensive immunization as a global public good that must be available and affordable for all. In this regard, we fully support the unique global platform Access to COVID-19 Tools (ACT) Accelerator, launched by the World Health Organization and G20 partners in April.
The head of the IMF on Friday urged advanced economies to provide more resources to low-income countries, warning of an emerging "Great Divergence" in global growth that could risk stability and trigger social unrest for years to come. International Monetary Fund Managing Director Kristalina Georgieva told reporters that 50 percent of developing countries were at risk of falling further behind, which raised concerns about stability and social unrest. To avert bigger problems, she said rich countries and international institutions should chip in more. She also urged heavily indebted countries to seek debt restructuring sooner rather than later, and to boost conditions for growth.
As we gather virtually—almost a year on from the start of the pandemic—I would like to share with you how we see the global economy and our outlook for it. I will also take the opportunity to talk about where we should be headed—that is, our policy priorities for the period ahead. And—in keeping with the young, optimistic energy that surrounds me virtually with you all today—I will end with what the IMF believes is a once-in-a-generation opportunity that lies ahead of us.
Our immediate priority, must be to bring the health crisis under control. As we look toward recovery, we must consider the potential of lasting scars imposed by the pandemic—such scars could emanate from interrupted schooling, dislocated workers, idled skills, investments on hold, and new technology on standby. Given the gravity of this crisis, our second priority must be to maintain economic lifelines and policy support in countries where the virus is surging. This will help protect households and prevent bankruptcies of otherwise viable firms, enabling a faster rebound once constraints are lifted.
Advanced economies with more fiscal space are, of course, expected to recover faster; but, around half of all emerging markets and developing economies—who were previously converging with advanced economies in per capita income—are now expected to diverge. Which is why, our third priority must be to reverse this dangerous divergence between rich and poor countries. The IMF is calling for a synchronized investment in green and digital infrastructure, as the pandemic starts to come under control.
UNCTAD launches tool to transform economies amid global crisis (Kenya Broadcasting Corporation)
UNCTAD has launched a new tool to help developing countries improve their development policies, reduce poverty and build economic resilience to negative shocks such as the coronavirus pandemic, which has devastated economies across the world. The Productive Capacities Index (PCI) is an online portal with publications, manuals, resources and tools that allow policymakers to measure their countries’ performance in achieving their national development goals, as well as their ability to meet the UN’s Sustainable Development Goals (SDGs).
“As countries fight the coronavirus crisis, their need to build economy-wide productive capacities for inclusive and sustainable growth is greater than ever,” said UNCTAD Secretary-General Mukhisa Kituyi while launching the tool.
In 2019, countries traded 550 million tons of used materials – such as scrap plastics, metals, electronics, paper and second-hand clothes – worth $315 billion. Since the vision of a global circular economy hinges on turning waste into resources, China’s decision highlights the urgent need to better understand and monitor this trade. By reducing primary production, secondary materials (recyclable waste) offer immense economic and environmental benefits beyond cutting water consumption and CO2 emissions.
A network analysis of trade data after China’s ban provides important insight into the complex relationships in the trade of plastic waste.
1. Scrap flows towards weaker regulations.
2. Regional characteristics matter.
3. Low tariffs hinder environmental policy.
4. Illicit trade grows in the shadows of waste.
Foreign direct investment (FDI) flows to developing economies have shown relative resilience to the COVID-19 crisis, falling by just 12% in 2020 compared with the staggering 69% collapse recorded by richer economies. Overall, developing countries attracted a record 72% of global FDI last year, according to an UNCTAD Investment Trends Monitor published on 24 January. But the steep decline in greenfield announcements and international project finance in Africa, Asia and Latin America and the Caribbean is a cause for major concern. “These investment types are crucial for productive capacity and infrastructure development and thus for sustainable recovery prospects,” says James Zhan, UNCTAD’s director of investment and enterprise development.
The onset of the COVID-19 pandemic last year led to a devastating loss of jobs and income across the global south, threatening hundreds of millions of people with hunger and lost savings and raising an array of risks for children, according to new research co-authored at the University of California, Berkeley. The research, published today (Feb. 5, 2021) in the journal Science Advances, found “staggering” income losses after the pandemic emerged last year, with a median 70% of households across nine countries in Africa, Asia and Latin America reporting financial losses. By April last year, roughly 50% or more of those surveyed in several countries were forced to eat smaller meals or skip meals altogether, a number that reached 87% for rural households in the West African country of Sierra Leone.
Members of the European Parliament have backed a joint proposal by India and South Africa for waiver on intellectual property rights for COVID-19 vaccine patents. In a letter addressed to the European Union leadership dated Wednesday, 14 members of the European Parliament (MEPs) have called for a moratorium on the suspension of Covid-19 vaccine patents.
The MEPs' said, "South Africa and India sent a joint proposal to the World Trade Organization requesting an exemption from patents and other intellectual property rights concerning drugs, vaccines, diagnostics, personal protective equipment, and other medical technologies throughout the pandemic and this proposal is still pending." They added: "We ask the European Union to evaluate to support the adoption of a moratorium that allows the suspension of patents and the sharing of technology, data, know-how, allowing generics manufacturers to contribute to increasing global availability, including through support for India and South Africa's proposal at the WTO."
As countries around the world have started vaccinating their residents against COVID-19, the unequal distribution of vaccines between rich and poor countries has become obvious and alarming. Since October, the World Trade Organisation has been debating a proposal initiated by India and South Africa to waive obligations under the Trade-Related Aspects of Intellectual Property Rights or TRIPS agreement to make COVID-19 technologies, including vaccines, quickly accessible to across the world. During the TRIPS council meeting on 4 February, developed countries continued to oppose movement on the proposal.
Doubt cast on benefit to UK of joining trade accord (Chinadaily)
The United Kingdom wants to develop unfettered trade links around the world to offset upheavals from Brexit, but its move to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, presents limited benefits, analysts said. He Yun, an associate professor at the School of Public Administration at Hunan University in Changsha, said the UK government needs to prove that it is capable of negotiating trade deals after the country's departure from the European Union, and the CPTPP constitutes low-hanging fruit. "The CPTPP's benefits for the UK economy will be limited," she said of the country's sought-after participation in a free-trade zone centered on the Asia-Pacific region. "First, distance matters in trade. Air and sea freight carrying goods will be too expensive for the CPTPP to substantially lower the costs of the UK to trade with the rest of the bloc.
"Second, what the UK needs most is to expand the international markets for its services, which is suffering as a result of losing its passporting right to the EU market. But the CPTPP is thin on services."
World's Best Trade Finance Providers 2021 (Global Finance)
Goods nevertheless continued to move across borders, however, thanks in large part to fast action by authorities. In any crisis, there’s an immediate demand for liquidity; and at the start of the pandemic, governments and central banks stepped in with liquidity for the markets. As one issue dissipated, however, another started. Some companies had to expand their supply chains and find new sources. Among their biggest challenges were understanding tax implications and export-import regulations—and establishing their reputations in new arenas. “Trade is essentially all about trust, and many of the banking propositions are around those instances where the trust isn’t there,” says Ebru Pakcan, global head of trade on the Treasury and Trade Solutions team at Citi. “How does the bank, as the intermediary, help a company build that trust?” Technology, in some cases, furnished solutions. Banks and other providers embraced digitization strategies and introduced efficiencies into their processes that ultimately lowered costs, helped corporates manage their balance sheets and attracted new investors. Since trade finance is highly regulated and paper-based, processes can be repetitive and manually intensive.
The range of solutions, improvisations and transformations that the best trade finance banks adopted last year are reflected in the selections made by the editors of Global Finance, with input from industry analysts, corporate executives and technology experts, across 102 countries and eight regions.
As South Africa is the only African member of the BRICS community, questions have been raised about why procurement of vaccines from member states such as China and Russia were not mentioned in the president’s speech recently.
“We have secured 12 million doses in total from the global Covax facility, which has indicated it will release approximately 2 million doses by March. We have secured 9 million vaccine doses from Johnson & Johnson, commencing with delivery in the second quarter. Johnson & Johnson has contracted Aspen, one of our pharmaceutical companies, to manufacture these vaccines in South Africa,” said the president. Ramaphosa said, in addition, Pfizer had committed 20 million vaccine doses commencing with deliveries in the second quarter and this must be lauded. However, the issue is the loud silence about leveraging on close ties with Russia and China (BRICS allies) in order to widen the supply source for vaccines and maybe reduce the cost of procurement. While the president stated the government was in advanced negotiations with manufacturers to secure additional supplies, there was no mention of the BRICS advantage enjoyed by the bloc's only African member.
US backs Africa's candidate for top WTO job (The New Times)
Africa’s candidate for the World Trade Organisation’s top job, Ngozi Okonjo-Iweala, is set to become the first woman to lead the global body after the United States backed her bid Friday, February 5. “The Biden-Harris Administration is pleased to express its strong support for the candidacy of Dr. Ngozi Okonjo-Iweala as the next Director General of the WTO,” reads a statement by the United States Trade Representative. “Dr. Okonjo-Iweala brings a wealth of knowledge in economics and international diplomacy from her 25 years with the World Bank and two terms as Nigerian Finance Minister,” the statement added.
Having survived the murky waters of politics in Nigeria, where her mother was kidnapped to send her a message, and rising to number two at the World Bank, Ngozi Okonjo-Iweala should have no trouble dealing with international trade negotiators in her new job at the World Trade Organisation (WTO). The 66-year-old will be the first woman and the first African to occupy the position.