tralac Daily News
South Africa’s President Cyril Ramaphosa has called on the World Trade Organization (WTO) to waive its restrictions and enable countries that have the capacity to manufacture vaccines to do so. “It is important for us as Africans that as we deal with this pandemic, we are not left behind, with previous pandemics, Africa was often left behind in some cases we were left many years behind, even 10 years. This time round, we are going to be up there with the more developed economies, when it comes to the rollout of the vaccine, it is for this reason that we are calling for an end of vaccine nationalism,” Ramaphosa said.
Galvanising infrastructure investment is the only – and best – way for the SA government to kick-start economic growth and provide citizens with the means to improve their own lives and boost their incomes. But despite years of talk about enabling infrastructure investment in the country, we have gone backwards. Infrastructure investment has fallen precipitously, from 20.3% of GDP in 2015 to 17.9% in 2019. The fall has been particularly evident in public sector spending. In the 2019/20 financial year, public sector spending was 27% or R70-billion below the budget of the previous year. It gets worse when it comes to state-owned enterprises (SOEs) and municipalities, which generally spend half of what is provided. This reflects the legendary capacity constraints in public institutions and the unnecessary complexity of the regulations for public sector spending (on-budget expenditure), as well as public-private partnerships (PPPs). Thus, achieving the target set in the National Development Plan of investing 30% of GDP by 2030, or even the 23% targeted by the Minister of the Department of Public Works and Infrastructure, Patricia de Lille, by 2024, seems like a pipe dream.
South Africa continues to be G20 coal outlier, report shows (Engineering News)
With 86% of the country’s electricity produced from coal, South Africa continued to have the highest reliance on the energy mineral among all G20 countries in 2020, with the global average standing at 34%. The ‘Global Electricity Review 2021’, published on March 29, indicates that the G20 country with the second highest coal dependency is India, which generates 71% of its electricity from coal.
Partnership brings shared prosperity, opportunities (US Embassy in South Africa)
As we mark the anniversary of the first Covid-19 case in South Africa and the subsequent lockdown measures, March 2021 is an important time to reflect on the challenges we’ve confronted together during the past 12 months. The American people are proud to have contributed to the Covid-19 response in the Western Cape and City of Cape Town.
Assistance to the health sector must not, however, be our only response to Covid-19. As the top foreign direct investor in the Western Cape and one of the province’s leading trading partners, the US must play a key role in the economic recovery. That is why, in February 2021, I was delighted to join Finance and Economic Opportunities Minister David Maynier to launch a new US-Western Cape trade and investment promotion partnership. This collaboration supports President Joe Biden’s priority of partnering with dynamic and growing African economies, including sub-national ones like the Western Cape.
The story of Beitbridge is an exponential growth that does not correspond to demand for service. It is mainly an expansion in terms of population numbers, but highly unmatched by the availability of public amenities. Over the years, the border town has tremendously developed in terms of population and infrastructure growth, especially in the last decade. However, very little has happened in areas around the upgrading of social amenities, including health institutions.
Manufacturers have called on the Government to harmonize laws, policies and regulations at the National and County levels, to drive the competitiveness of local industry. This was during the launch of the Regulatory Audit Report 2020, highlighting regulatory challenges facing the business community across the country. Speaking during the launch, KAM Chair, Mucai Kunyiha explained that while regulations seek to create a level-playing field for businesses, regulatory overreach hinders the competitiveness of local industry. “At the national level, manufacturers are required to adhere to duplicating requirements, from different regulatory bodies, in addition to meeting numerous tax obligations. In the counties, we have to pay various fees, levies and charges. This drives up the cost of doing business in the country, thus reducing our competitiveness locally, regionally and even globally,” highlighted Mr. Kunyiha.
Tourism blow as agency reverses flights exemption (Business Daily)
The aviation regulator made a U-turn Monday by cancelling the permission that it had granted some local airlines to fly foreign tourists in and out of Nairobi and four surrounding counties in a move that is now set to hit the tourism sector. The Kenya Civil Aviation Authority (KCAA) had earlier said the exemption was applicable to all airlines offering holiday travels. However, in a quick reversal Monday evening, the regulator said international tourists will not be given exemption as communicated earlier.
The Namibian poultry industry's growth and development are being thwarted by high feed prices and imports from international poultry giants. This was revealed last week by the chairman of the Poultry Producers Association (PPA), René Werner, in the Namibian Agricultural Union's weekly briefs. Werner said despite the number of producers increasing, the sector's growth is being hampered by the cost of feed in the country. He pointed out that the volume of imports into the country from major international companies is creating stiff competition for the budding local industry. Local poultry trade statistics from the Namibia Statistics Agency (NSA) for the past two years indicate the country has imported poultry and poultry products worth N$2,0 billion from around the world.
Rwanda: New incentives for local manufacturers explained (The New Times)
In December last year, Cabinet approved the ‘Manufacture and Build to Recover Programme’, which the government says is aimed at fostering economic recovery following a recession resulting from the Covid-19 and measures to curb it. It will extend tax breaks and tax credits to businesses with an aim to reduce cost of investment for new manufacturers as well as those seeking to expand existing operations. The programme is expected to lead to over $1 billion worth of investments as well as create over 27,000 jobs across the country which is expected to put the country on the path to recovery.
The New Times’ Collins Mwai spoke to Rwanda Development Board Deputy Chief Executive Zephanie Niyonkuru on the programme scope, investor eligibility among other aspects.
The National Development Strategy (NDS1), the country’s new five-year development roadmap, will play a key role in positioning Zimbabwe for increased gains within the regional economic integration framework, Finance and Economic Development Minister Professor Mthuli Ncube has said. This comes as the Government is seriously focusing its policy on the regional, continental and international integration initiatives, as these are key in promoting economic development.
We’ve agreed that Nigerians are better, stronger together – Buhari (Premium Times Nigeria)
The President of Nigeria, Muhammadu Buhari, has urged Nigerians to keep faith in the promise of a great Nigeria. Mr Buhari made this call on Monday while speaking virtually at the Bola Tinubu 12th colloquium. The 12th colloquium is tagged: “Our Common Bond, Our Common Wealth: The Imperative of National Cohesion for Growth and Prosperity. The president said the colloquium will be a resource for wisdom in Nigeria and to the development of Africa at large. Speaking of the theme of the colloquium, the president said it is a more relevant and impactful discussion than ever before. “It seems that we have all agreed on one point that notwithstanding our diversity, ethnic, religion and group, Nigerians are better together and even stronger together.
African regional and continental news
The AfCFTA Secretariat and the UN Development Programme (UNDP) today have signed a strategic partnership to promote trade as a stimulus for Africa’s socioeconomic recovery from the COVID-19 crisis, and as a driver of sustainable development particularly for women and youth in Africa, in line with the SDGs and Agenda 2063 common vison for the continent.
Private Sector Vital for the AFCFTA (East African Business Week)
Exploring strategies to deepen private sector participation in the implementation of the African Continental Free Trade Area (AfCFTA) was the highlight at the panel session during the 2021 WTO Aid-for-Trade Stocktaking meeting. The African Development Bank, the United Nations Industrial Development Organization (UNIDO) and International Trade Centre (ITC) organized the session held on Wednesday 24 March. “The success of the AfCFTA hinges on the ability of African firms to understand and capitalize on the trade-related opportunities offered by the AfCFTA,” said Pamela Coke-Hamilton, International Trade Centre (ITC) Executive Director during the recent 2021 WTO Aid-for-Trade Stocktaking meeting.
The Aid-for-Trade initiative – promotes trade in development and supports building productive capacities with focus to boost the private sector’s role in AfCFTA: empowering businesses with skills and know-how; fostering multi-stakeholder partnerships to attract investment for greater value addition and enhancing market connections using e-commerce and digital platforms.
President Nana Addo Dankwa Akufo-Addo, says a very important plank of the new strategic partnership between Africa, Spain and Europe would be the strong support for the African Continental Free Trade Area (AfCFTA), which began trading on 1st January. Speaking at the “Focus Africa 2023” Conference held in Madrid, in Spain, on Monday, 29th March 2021, President Akufo-Addo indicated that the AfCFTA will link all the fifty-four (54) markets of Africa, covering 1.2 billion people, into a single market.
The President continued, “Imagine the investment and business opportunities offered by the infrastructure required to link our markets more effectively. And imagine the business opportunities that this huge market would offer for manufacturing and services firms from Spain and Europe that could establish production facilities in Africa to serve the African markets.”
Captains of industry, bankers, policy makers, analysts and business people across the country will converge on the Labadi Beach Hotel tomorrow (Tuesday) for a special breakfast meeting to chart a path and devise strategies on how Ghanaian businesses can fully leverage the Africa Continental Free Trade Area (AfCFTA) which took off on January 1, this year. Christened the Graphic Business/Stanbic Bank breakfast meeting, the event, the first of four for the year, is also expected to offer the platform to speakers and participants to share ideas and develop a more comprehensive road map that will help policymakers and potential beneficiaries to take advantage of the nearly $3.4 trillion free trade area. The theme for the event is: ‘Leveraging AfCFTA. The critical success factors,’ and the Minister of Trade and Industry, Mr Alan Kyerematen, is the keynote speaker.
The Council of Ministers of the Southern African Development Community (SADC) has urged Member States that have not yet signed and ratified the African Continental Free Trade Area (AfCFTA) and the Common Market for Eastern and Southern Africa-East African Community-SADC (COMESA-EAC-SADC) Tripartite Free Trade Area (TFTA) to do so to allow for the implementation of the agreements. The SADC Council meeting, which convened virtually on 12th March 2021 and was chaired by Honourable Verónica Nataniel Macamo Dlhovo, Minister of Foreign Affairs and Cooperation of Mozambique in her capacity as the Chairperson of the SADC Council of Ministers, noted progress on the signature of the COMESA-EAC-SADC TFTA. The signing and ratification of the TFTA Agreement is critical as it will pave way for the successful implementation of the AfCFTA. The AfCFTA seeks to increase employment opportunities and incomes, helping to expand opportunities for all African countries. It is expected to lift around 68 million people out of poverty and make African countries more competitive.
The Council noted that 22 COMESA-EAC-SADC Member/Partner States have signed the TFTA Agreement while 10 Member/Partner States have ratified the agreement. Of the 10, Member/Partner States, five are SADC Member States (Botswana, Eswatini, Namibia, South Africa and Zambia). Article 39(3) of the TFTA Agreement provides for the agreement to enter into force upon ratification by 14 Member/Partner States.
Logistics sector looks beyond COVID-19 (The Southern Times)
Stakeholders in Southern Africa’s transport and logistics sector are strategising how best to rebound from the COVID-19 pandemic, whose restrictions on movement have resulted in declining commerce, meaning less revenues. With vaccines being rolled out, those in the sector are hopeful that movement of people and goods will start improving soon. Walvis Bay Corridor Group (WBCG) chief executive officer Mr Mbapahu Hippy Tjivikua this week told The Southern Times Business that it remained crucial to strike a balance between health and business imperatives.
He acknowledged teething problems in implementing SADC-wide regulations in response to COVID-19, but these had been confronted and the sector was now looking at growth. “Our role is to sensitize and advocate with the relevant authorities to ensure that the measures that are being implemented contain COVID-19 and do not impede trade. We are consulting with government and neighbouring countries as well as the SADC secretariat with regards to the implementation of appropriate measures that will curb the spread of COVID-19,” he said.
“With the imposition of border closures and strict migration measures, there have been major disruptions in Africa’s global supply chains. The Corridor Group is further working hand in hand with the various border officials and agencies as well as the industry in order to alleviate the congestion at the borders, while ensuring that Covid-19 regulations are adhered to,” he said.
He went on: “The congestion at the various borders are experienced across the continent in varying degrees. COVID-19 has brought to light the importance of harmonised and collaborative approaches between countries, to ensure that trade continues. The AfCFTA could benefit from this situation as neigbouring countries are learning how to engage one another with regards to cross border trade.”
In pursuit of its efforts to implement the 2022 version of the Harmonized System in a timely manner, the East African Community (EAC) held a regional meeting of tariff experts from 15 to 19 March 2021 in Moshi, Tanzania. It was jointly organized by the EAC Secretariat and the WCO, within the framework of the EU-WCO Programme for the Harmonized System in Africa (HS-Africa Programme), funded by the European Union. The objective of the meeting was to transpose the EAC Common External Tariff (CET) to the 2022 version of the HS. Participants reiterated the importance of a well-coordinated approach to the implementation of HS amendments for EAC Partner States, to fully respect their commitments of Contracting Parties to the HS Convention and of signatories of the EAC Treaty.
The meeting was an important step in the process of the preparation of the 2022 version of the EAC CET. The meeting concluded by recommending to EAC policy organs to adopt the EAC CET 2022, with the entry into force on 1 January 2022.
Covid-19 status App tracking 72,000 EAC truck drivers (Daily Monitor)
The Covid-19 status of at least 72,900 truck drivers across the East Africa region is being monitored through a mobile application (App), according to TradeMark East Africa. The App, which was launched in September 2020 by the EAC Secretariat in partnership with TradeMark East Africa and the European Union, has been key in the fight against Covid-19, especially among cross border traders.
“Since we launched the App in September, 2020, more than 72,900 drivers have downloaded it. This represents more than 90 per cent of cross border trade drivers in the entire EAC,” Mr Odhiambo said, adding that whereas the current App was built in English, there are on-going efforts to localise it in languages spoken widely in EAC such as French and Swahili, among others. Whereas Covid-19 has been a major problem for all sectors of the economy, truck drivers have been more affected due to their cross border movements.
During the lockdown, the Ministry of Health in Uganda would on average record at least 100 Coronavirus suspected cases. Therefore, the Regional Electronic Cargo and Drivers’ Tracking App, which automatically picks test results for all cross border truck drivers indicating which is negative and positive, will go a long way in fighting Covid-19 and promoting trade, especially at a time when disruptions have not subsided.
The COVID-19 crisis has generated sudden and significant changes in the way that people work, produce, consume, trade and live. There has been the widespread turn to working from home (especially for typical white-collar activities), and the deepening reliance on e-commerce for groceries and other daily goods, which has affected notoriously traditional retail. However, with the exception of the temporary impact of the pandemic on travel and other leisure activities, activities like the use of e-commerce and working from home are not new to the world and to the people in East Africa. The technologies that have facilitated these changes have been available and were in use before the crisis. Working from home had been increasing in creative industries and other services. E-commerce companies such as Amazon, eBay and Jumia were giant corporations even before the pandemic. The use of electronic means of payment has been spearhead in many regions, notably in East Africa.
More than a year into the global pandemic, the coronavirus disease 2019 (COVID-19) pandemic has shown that health is central to everything we do on the planet. The profound impact of the virus and of the measures which have been necessary to contain it have worsened economic inequalities and social insecurities, and deepened challenges in our already under-pressure health systems on the continent. Lockdowns, although highly effective in the short term, cannot be a sustainable solution in the longer term given that more than 80 per cent of employment is estimated to be informal, and 85 per cent of the population live on less than USD 5.50 per day. The Africa Against COVID-19: Saving Lives, Economies and Livelihoods campaign is part of the African Union Commission’s answer to the challenge of fighting and containing the disease, while at the same time protecting African economies and livelihoods. Launched in August 2020 and driven by the Africa Centres for Disease Control and Prevention (Africa CDC), the campaign aims to drive a “whole of society” approach to fighting COVID-19 on the continent, combining the knowledge, expertise and capacities of our public and private sector, continental and global partners, especially in the realms of innovation and technology.
African leaders and finance ministers have called on global leaders and financial institutions to support the continent’s recovery measures from the economic impacts of the COVID-19 pandemic. They made the urgent call during the Conference of African Finance Ministers (COM), which was hosted by the United Nations (UN) Economic Commission for Africa (UNECA) on Tuesday, in the Ethiopian capital, Addis Ababa. Ethiopian Prime Minister, Abiy Ahmed, told the ministerial gathering that Africa demonstrated that it is not only capable of facing the crisis in the magnitude of the COVID-19 pandemic, but also ready to formulate and implement solutions. Ahmed, however, stressed that African countries must focus on digital transformation, climate-smart economy and the institutional framework for implementation and accountability as the continent responds and races to recover from the pandemic.
The Covid-19 pandemic had a devastating impact on many African economies, particularly those dependent on oil exports, tourism and resources. However, the continent’s GDP is expected to grow 3.4% in 2021 – after shrinking 2.1% in 2020 as a result of the pandemic – supported by a rebound in commodity prices and the resumption of tourism as pandemic-related restrictions are eased, according to the African Development Bank’s recently released African Economic Outlook 2021 report. The report points out that the pandemic’s economic impact varied across countries.
In a historic COVID-19 vaccine procurement Agreement signed on 28 March 2021, all African Union Member States, through the African Vaccine Acquisition Trust (AVAT) set up in November 2020 under the African Union chairmanship of H.E President Cyril Ramaphosa, President of South Africa, will have access to 220 million doses of the Johnson & Johnson single-shot COVID-19 vaccine, with the potential to order an additional 180 million doses. Most of the supplies will be produced at the giant pharmaceutical manufacturing plant in South Africa operated by Aspen Pharma. The vaccines will be made available to African countries through the African Medical Supplies Platform (AMSP), over a period of 18 months.
The African Union (AU) on Saturday said the COVID-19 accentuates African women’s pre-existing challenges and vulnerabilities, especially during armed conflict and post-conflict situations. The statement was made by the Peace and Security Council of the 55-member pan-African bloc, which followed the council’s recent meeting under the theme “Women, Peace, Culture and Gender Inclusivity in Africa.” The council “acknowledges the debilitating impact of the novel coronavirus (COVID-19) pandemic on women’s livelihoods and economic autonomy, thereby accentuating their pre-existing challenges and vulnerabilities, especially during armed conflict and post-conflict situations,” the statement read. According to the AU, the impact of COVID-19 pandemic on African women’s pre-existing challenges and vulnerabilities is evidenced by human rights violations and abuses, including sexual and gender-based violence.
The African Sovereign Wealth and Pension Fund Leaders Forum announced and presented its Pan African Green Infrastructure Investment Bank (AGIIB) initiative, during The fifty-third session of the Conference of African Ministers of Finance, Planning and Economic Development, hosted by the UN ECA. The AGIIB initiative recognises that the African green finance market, is highly fragmented representing a need to create a world class international pan African investment platform to mobilise this financing market and institutional capital at scale. The Forum’s AGIIB initiatives’ mission, is to create a specialist, independent and commercially run, pan African Green infrastructure Investment Bank, that is both green and profitable, with a pure green focus.
The AGIIB initially seeks to raise $3bn-$5bn from African institutional investors and governments and mobilize approximately $20bn from G7 and G20 investment partners.
ICC has welcomed plans to create a pan African Green infrastructure Investment Bank. The announcement was made at last weekend’s African Sovereign Wealth and Pension Fund Leaders Forum as part of the 2021 Conference of African Ministers of Finance, Planning and Economic Development, hosted by the United Nations United Nations Economic Commission for Africa.
Recognising the highly fragmented nature of the African green finance market, the initiative aims to create a world-class, international pan African investment platform to mobilise the financing market and institutional capital at scale. ICC Secretary General John W.H. Denton AO joined African ministers of Finance and leading institutional investors from Africa and around the world at a conference side event on Sunday to discuss how best to support green investments in Africa, the implementation of the African Continental Free Trade Area and stronger economic recovery and resilience.
“The reality is that investors and investments in emerging economies, including in Africa, must also be central to the development of policy settings that will drive the green transition,” he said. “This recovery must emphasise sustainability and resilience with policy settings, public-private partnerships and incentives that allow all countries to share in the benefits from a green transition.”
Biden Should Support Green Development in Africa (Foreign Policy)
U.S. President Joe Biden wants the United States to take back up the mantle of global climate leadership. But that won’t be fully possible until his administration prioritizes critical partners: African nations. Africa’s urban centers are swelling, threatening more emissions, and half of the global population growth over the next two decades is expected to occur in the continent. It must be a global priority to strike a balance between this ongoing development and its climate impact. And with Washington’s help, the sustainability strides made in Africa over the next decade can serve as models for countries worldwide.
The Biden administration has an incredible opportunity to both cement its status as a leader on climate change and promote expansive green development across Africa. The United States can support its African partners by mobilizing U.S. development capital for local funds and prioritizing investments that help African economies become more resilient against climate change. In doing so, Washington must be careful not to charge into the continent on its own but to take a multilateral approach and engage with African governments, especially the larger economies of Nigeria, South Africa, Kenya, and Ivory Coast, to combat one of the greatest challenges facing the continent today. Each of these countries is a key anchor for the sub-regions of West, East, and southern Africa: Nigeria, for instance, will drive Africa’s population growth over the next several decades, and South Africa has the continent’s largest carbon emission footprint and a long history of fossil fuel dependency.
All countries must strike a balance between economic growth and increased emissions as they make commitments to fight climate change and reduce emissions in global agreements such as the Paris climate accord.
Africa has the lowest per capita carbon emissions globally, and the average American, for instance, emits 23 times more carbon than the average Nigerian. Even so, sub-Saharan African GDP is projected to grow by an average of 4 percent a year over the next four years, which will inevitably create more emissions. Ethically, Western policymakers cannot ask these countries to slow economic growth. However, the global community can work together to ensure Africa grows its economy with low-carbon infrastructure.
Global economy news
Debt sustainability assessments and trade negotiations have something in common. They sound arcane and technical. But they are fundamentally about people: about people’s living standards, opportunities and aspirations. 20 years ago, we thought that the Highly Indebted Poor Countries and Multilateral Debt Relief initiatives would solve the debt problem. And they did, for a good two decades. But multiple crises, from the financial, economic and food crises of 2008-2009, to localized impacts of climate change, epidemics and now COVID-19, have left many poor countries and even emerging markets in debt distress, with little fiscal space to cope or to finance the SDGs post-COVID. So that is why we are here.
Trade and debt sustainability are closely linked. By closing off export opportunities and lowering commodity prices, COVID-19 has worsened debt dynamics for many developing countries. Action on trade can help alleviate debt pressures.
A report by the World Trade Organization (WTO) examines how African countries can leverage the multilateral trading system (MTS) to promote economic transformation and drive a robust recovery from the COVID-19-induced downturn. Launched on 23 March 2021 at the virtual Aid for Trade Stocking Event, the publication titled, ‘Strengthening Africa’s Capacity to Trade,’ highlights the WTO’s involvement in Sub-Saharan Africa, which has been especially hard-hit by reductions in trade and economic activity as a result of the COVID-19 pandemic. Noting that open global trade has had positive effects for African industrialization and development, the report reviews WTO support for trade facilitation initiatives, the Aid for Trade initiative, the Trade Development Facility, and other policy mechanisms that enable increased trade capacity on the continent. The report summarizes global trade impacts caused by COVID-19, outlining specific impacts on and challenges for African countries, which, the report notes, have a higher prevalence of informal employment and reliance on services such as tourism and travel. Citing research from the World Bank, the authors note that COVID-19 may drive up to 40 million people into extreme poverty across the continent, and that at least five years of development gains may have been erased. While African trade in goods and services has gradually risen from 2005 to 2019, its global share has remained consistent at just 3% of global imports and exports.
Why Private Cellular Networks are Critical to Trade (IT News Africa)
Increases in global development and international populations have put bigger demands on trade and in turn, ports and shipping. To manage the boom, ports are improving operations and efficiency with automation, powered by 5G-ready private cellular networks.
In the past, ports operated independently from their peers and exhibited little international collaboration. With a globally standardised container, ports were able to form global container alliances, creating more scalable and automated processes. As smart, connected facilities document additional gains and efficiencies, port operators are increasingly interested in deploying new solutions. However, the high density of devices in a mature smart port presents new challenges and connectivity requirements to manage.
Ericsson’s report, “Connected Ports – A guide to making ports smarter with private cellular technology,” details the challenges that ports face. It examined how private cellular networks – typically 4G and 5G – will play a critical role in overcoming these by delivering high-speed connectivity, low latency, and strong performance in environments with high device density. Further, the report features a deep-dive analysis of five high-value use cases that illustrate how 5G-ready networks address specific pain points and offer a path to the future.
Delegations from the group of World Trade Organization (WTO) members negotiating new disciplines on domestic regulation in services provided an update on their efforts in early March, including their intention of finalizing the talks by the WTO’s Twelfth Ministerial Conference (MC12). These negotiations currently involve 63 of the WTO’s 164 Members. It is a spin-off of the multilateral negotiations under the WTO’s Working Party on Domestic Regulation, which involve the full membership and date back to the earliest days of the Organization.
During the virtual meeting of the services domestic regulation JSI held in March 2021, the WTO members involved examined how the disciplines under negotiation relate to those under recent regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP).
Some trade experts, such as Aileen Kwa, have previously warned that new WTO commitments on domestic regulation in services could interact with members’ commitments under international investment agreements, even if these commitments are made at the WTO and not in an investment treaty. Other questions that emerged during the Working Party negotiations included whether these new disciplines could constrain countries’ policy space at the domestic level.
On 25 March, the Trade for Peace Network was launched at a meeting attended by ambassadors from WTO members and observers, heads of international organisations and experts involved in the WTO Trade for Peace initiative. The network will allow policymakers and experts to exchange ideas and identify concrete areas of collaboration, with the aim of leading to effective action in fragile and conflict-affected (FCA) states.
The COVID-19 pandemic is significantly affecting the capacity of banks in emerging markets to supply trade finance and their customers’ access to it, particularly in the poorest countries and fragile states, according to a new survey by the International Finance Corporation, a member of the World Bank Group. IFC’s 2020 Annual Issuing Bank Survey offers insights on the impact of COVID-19 on 163 banks participating in IFC’s Global Trade Finance Program (GTFP) in 63 countries.
Issa Faye, Director, Sector Economics and Development Impact, IFC said, “In the absence of public data on emerging market trade finance during the pandemic, this survey data is critical to understanding and addressing the challenges to closing the trade finance gap and rebuilding global trade after the crisis.”
A working paper published by the International Monetary Fund (IMF) finds that although international trade is strongly associated with improvements in inclusive growth, rising inequality in many countries can be attributed to concurrent increases in trade competition. Based on a survey of “conflicting literature” on the relationship between trade and inclusive growth, the working paper concludes that “more can be done to foster more inclusive trade.” Noting that some studies show aggregate benefits from trade whereas others portray adverse impacts, the authors identify policies that can improve inclusivity from trade. The authors examine the relationship between international trade and inclusive growth, and describe international trade trends and the shifting country and industry composition of trade. Pointing to aggregate net benefits of trade, the paper cites empirical evidence showing that trade openness is positively correlated with per capita income, poverty reduction, economic growth, and employment, and that trade liberalization leads to lower prices and greater variety of consumer goods. From a gender perspective, the authors note improved economic outcomes and increased bargaining power for women.
In our first High Level Meeting – in May of last year – we urged governments not to forget the financing needs of small businesses who have been deeply affected by the economic impacts of COVID-19. More than two-thirds of a general allocation of SDRs will flow to G20 economies, but it is vulnerable countries – DSSI-eligible countries and small island developing states – that most need additional support.
First, the global economic outlook is improving—thanks to incredible efforts on vaccines, and unprecedented actions by governments and the international community. But prospects for recovery are diverging dangerously. Emerging and developing countries are at risk of languishing with weaker growth. Relative to pre-crisis projections and excluding China, this group is projected by 2022 to have cumulative per capita income losses as high as 20 percent versus 11 percent in advanced economies. Which brings me to my second point: We need a comprehensive approach to support vulnerable countries and people. It must include domestic measures to improve revenue collection, spending efficiency, and the business environment, as well as substantial international support, including grants and concessional lending. We will do our part through concessional lending.
IMF, World Bank Must Urgently Help Finance Developing Countries (Inter Press Service)
COVID-19 has set back the uneven progress of recent decades, directly causing more than two million deaths. The slowdown, due to the pandemic and policy responses, has pushed hundreds of millions more into poverty, hunger and worse, also deepening many inequalities.
COVID-19 has further set back progress towards the Sustainable Development Goals (SDGs). As progress was largely ‘not on track’ even before the pandemic, developing countries will need much support to mitigate the new setbacks, let alone get back on track.
Meanwhile, emerging market economies spent only 5%, and low-income countries (LICs) a paltry 1.3% by mid-2020. In 2020, increased spending, despite reduced revenue, raised fiscal deficits of emerging market and middle-income countries (MICs) to 10.3%, and of LICs to 5.7%.
In 2019, the International Monetary Fund (IMF) assessed half the LICs as being at high risk of, or already in debt distress – more than double the 2013 share. Debt in LICs rose to 65% of GDP in 2019 from 47% in 2010. Thus, LICs began the pandemic with more debt relative to government revenue, larger deficits and higher borrowing costs than high-income countries.
Developing economies have increasingly had to borrow on commercial terms in transnational financial markets as international public finance flows and access to concessional resources have declined.
Suez Canal: Stuck container ship set free and on the move (The Irish Times)
A huge container ship blocking Egypt’s Suez Canal for nearly a week has been set free and is on the move, a salvage firm has said.
The obstruction has created a massive traffic jam in the vital passage, holding up $9 billion each day in global trade and straining supply chains already burdened by the coronavirus pandemic. It remained unclear when traffic through the canal would return to normal. At least 367 vessels, carrying everything from crude oil to cattle, have piled up on either end of the canal, waiting to pass.
Data firm Refinitiv estimated it could take more than 10 days to clear the backlog of ships. Meanwhile, dozens of vessels have opted for the alternate route around the Cape of Good Hope at Africa’s southern tip, a 3,100-mile (4,989km) detour that adds some two weeks to journeys and costs ships hundreds of thousands of dollars in fuel and other costs.
Ship operators did not offer a timeline for the reopening of the crucial canal, which carries more than 10 per cent of global trade, including 7 per cent of the world’s oil. Over 19,000 ships passed through last year, according to canal authorities.
Major developing countries and their leaders, who spearheaded the establishment and rise of the Non-Aligned Movement (NAM) and then of G77, maintained close interest in activities of the two groupings. They also believed in the importance of collective action of the Global South at the UN, and provided high level political drive and direction. This kind of involvement of leaders has not been common recently.
Following the launch of the New International Economic Order (NIEO) in the General Assembly, and of other joint NAM - G77 initiatives when the two groupings worked closely together, the B Group launched a drive to weaken and gradually end UNCTAD secretariat’s support for developing countries’ group actions arguing that this favouritism was contrary to the “neutral” posture international civil servants were required to assume in the North-South tug-of-war.
In the beginning, the G77 agenda was focussed on trade and development within purview of UNCTAD. This helped the Group evolve its positions on key items of interest to developing countries, i.e. commodities, manufactures, invisibles, development finance, transfer of technology, restrictive business practices, as well as to organize its work, to involve developing countries governments in Group action, and to mobilize expertise and human resources required.