tralac Daily News
Government has welcomed the International Monetary Fund’s (IMF) revised upward growth outlook of South Africa from 2.8% to 3.1% for 2021. In a statement issued on Wednesday, the Ministry in the Presidency: Planning, Monitoring and Evaluation, said the upgrade affirmed the robustness of the country’s economy and positive economic interventions despite tough conditions. The projected 3.1% growth follows a period where economic activity decreased by 7.0% in 2020 compared with 2019 due to the Coronavirus Disease (COVID-19) pandemic.
The IMF growth projection revision is attributed to the additional fiscal support in large economies and the global roll-out of COVID-19 vaccines.
Africa should be able to have capacity to manufacture and distribute its own biotechnology to develop vaccines as COVID-19 continues to sweep the globe. Speaking during the webinar on World Health Day on Wednesday, Health Minister, Dr Zweli Mkhize, said depending on other continents should be the thing of the past. “We should take it as an urgent assignment to make sure that come other pandemics in the future, Africa is capable of manufacturing its own requirements, whether it’s protective gear, pharmaceutical products, diagnostic vaccines and equipment,” he stressed.
“It’s quite a challenge to rely on other various countries when the entire continent has no access to the manufacturing capacity for vaccines,” he said. “I think this is a lesson that we must learn now and never be put in a situation where our response is very much dependent on other countries serving their own domestic interests first, while the continent benefits last in the queue.”
A new study released yesterday showed that South Africa grew its exports of pulp and cereals by more than double during the first half of 2020 at the height of the Covid-19 pandemic. The global study, Trade in Transition, showed that South Africa’s exports of pulp – the raw material for toilet paper – and cereal increased by 163 percent and 113 percent year-on-year, respectively, in the first half of 2020. These export increases by South African companies were part of nearly 32 percent of firms that expanded international sales in the first half of 2020, according to multinational logistics firm DP World.
China’s growing thirst helps South Africa’s wines cope with Covid downturn (The Africa Report)
The question we’ve been tackling at Wines of South Africa, is how can South African wine producers use this opportunity to gain a firmer foothold in the Chinese wine market?
The ban on alcohol sales during South Africa’s nationwide lockdown, along with the government shutting its borders to trade, coupled with the loss of wine tourists, resulted in a domestic surplus of around 400 million bottles of wine. Such circumstances had the potential to devastate the industry which is crucial to the South African economy. In 2019, the wine industry contributed 1.1% of GDP ($3.69bn) as well as providing 269,096 jobs (accounting for 1.6% of national employment) and $1.28bn in household incomes. Wine tourism also contributed $1.81m and 36,406 employment opportunities.
In 2019, South Africa only captured 0.9% of the Chinese wine market share, a tiny amount compared to the top three countries: Australia (35.4%), France & Monaco (28.7%), and Chile (14.2%). Comparatively, China is South Africa’s 4th top destination for wine exports accounting for 4% of its total wine exports.
Dubai’s trade with South Africa grew 17% to AED15.71 billion ($4.27 billion) from AED13 billion in 2019, delegates heard at an investment and trade seminar organized by South Africa’s Department of Commerce. Following the vision of Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai and the Dubai external trade plan, Dubai will raise the value of its foreign trade from AED1.4 trillion to AED2 trillion in the next five years. In the virtual seminar, which saw active participation from international firms, Rashid Darwish, head of Customs Procedures Section at Tariff and Origin Department released figures that showed growth in mutual trade between Dubai and South Africa. Darwish said: “There is noticeable growth in trade between Dubai and South Africa despite the big challenge posed by the spread of the covid-19 pandemic. More growth is expected in the future thanks to the wise planning and highly advanced facilities and services Dubai provides to the foreign trade sector. Dubai always turns challenges into opportunities and there are promising prospects ahead by exploring the foreign markets.
Bruce Whitfield interviews Gerrit van Rooyen (economist at NKC African Economics) about the situation and the effect on South African companies with interests in Mozambique’s gas fields. It’s very concerning. The Mozambican government is expected to earn about $50 billion over the lifetime of these projects. Gerrit van Rooyen, Economist - NKC African Economics Total has now decided to completely withdraw their staff from its Afungi LNG Park that is being built to process the gas and to act as a base for these projects. Gerrit van Rooyen, Economist - NKC African Economics From a South African standpoint it’s concerning that several of our banks have loaned quite large amounts of money for these projects. We also have subcontractors involved there that are now also losing out on this business. Gerrit van Rooyen, Economist - NKC African Economics
IMF pushes for fuel tax rise in $2b loan deal (The East African)
Kenya’s Treasury is under pressure from the International Monetary Fund (IMF) to double the value added tax (VAT) on all petroleum products in an effort to cut budget deficit and tame public borrowing. The multilateral financier reckons that Kenya should impose a 16 percent VAT on fuels from the current eight percent when crude oil prices fall, signalling the fund is open for a delayed implementation to guard against growing public anger and pressure over soaring petroleum costs in the country. Petrol is currently retailing at a level last seen in November 2011 while diesel is selling at the highest level since December 2018. The IMF’s push for the fuel tax was revealed in an advisory to the government after the fund’s board approved a new loan for Kenya valued at $2.34 billion to help the country continue responding to the Covid-19 pandemic and address its debt vulnerabilities.
IMF warns protesting Kenyans face job cuts, taxes without loan (The East African)
The International Monetary Fund (IMF) warned Kenyans protesting its loans to the government that they face job cuts, tax increases and expensive loans without its assistance. The IMF has released a statement following public outcry over the government’s growing appetite for debt after it approved a $2.34 billion loan to Kenya, saying its bailout has saved the country from a debt crisis in the mid of the Covid-19 pandemic. The IMF said the loan would help Kenya tackle Covid-19 in the short run and balance its books in the long run by replacing expensive bank loans with concessional financing from bilateral countries and multilateral institutions. “The arrangements with the IMF — together with additional financing from development partners and capital markets and G-20 support under the Debt Service Suspension Initiative (DSSI) — will help meet Kenya’s significant medium-term financing needs including to support their Covid-19 response. The alternative to this financing is much sharper fiscal consolidation or much more expensive borrowing on commercial terms,” the IMF said in a frequently asked questions on Kenya.
Kenya mulls cutting Sh10m capital cap for foreign firms (Business Daily)
Kenya is considering lowering the blanket $100,000 (Sh10.89 million) minimum foreign investment requirement for international firms seeking to venture into less-capital services sector such as ICT to spur growth in foreign direct investment (FDI) flows. The Kenya Investment Authority (KenInvest) says it is seeking an international consultant to help draw conditional incentives for foreign investors. “There are many people who were thinking $100,000 is high and others were saying when people were innovating something like M-Pesa, they wouldn’t have needed that minimum capital. There are some types of businesses where you require human resource or knowledge more than capital,” KenInvest managing director Moses Ikiara said. “The thinking is to allow innovative investments that are not capital-intensive not to be locked out.”
Financing pressures to push up debt to 48.8% by June (Daily Monitor)
The African Development Bank (AfDB) has said an increase in financing needs will drive Uganda’s public debt to 48.8 per cent by June 2021. The debt, AfDB said in its country African Economic Outlook, is expected to surge further to above 50 per cent by June 2023. AfDB is one of Uganda’s largest multilateral lenders, coming only below the World Bank. Currently, it has a commitment of about $1.8b to both government and the private sector. Much of this is held in the transport sector, which accounts for at least 63 per cent of the bank’s portfolio.
In its outlook, AfDB said the slowdown in the economy in 2020, had increased government’s financing needs, which is 2021 projected to reach 11.4 per cent of Gross Domestic Product but was still within sustainable levels even as it exposes the country to adverse shocks.
Kenya, UK eye peace after travel ban fight (The East African)
Kenya and the United Kingdom are set for reconciliatory talks after a spat over Covid-19 risk levels triggered a tit-for-tat travel blockade from each of them. The two countries Wednesday announced that a joint committee would be formed to review the travel restrictions which threatened bilateral trade, economic and security relations. “They discussed the strength of our relationship – on trade, regional security, and health – and agreed to establish a Joint Committee to work together on addressing Covid-19 travel restrictions,” Kenya’s Foreign ministry said in statement.
Uganda’s hopes of resuming sugar exports to Kenya fade (Daily Monitor)
Hope of Uganda resuming sugar exports to Kenya continues to fade as Kenya announces an increase in production, amid a blockade on Uganda’s sugar. Kenya’s Ministry of Agriculture has reported a steady “increase in sugar production due to enhanced investments by government and private players” noting that in 2020 alone, industry capacity grew to 603,788 tonnes compared to 440,935 tonnes in 2019, setting off a 37 per cent improvement in local production. Uganda had been hoping to resume sugar exports to one of its biggest trade partners due to a large production deficit but indications suggest otherwise, with Kenya failing to conduct a verification exercise that had been expected in December last year.
The COVID‐19 pandemic has become a global health and economic challenge since its outbreak in December 2019. As of November 2020, more than 52 million people were diagnosed positive with the virus worldwide, with over 1.3 million causalities (WHO, 2020). The first COVID‐19 case in Africa was reported on February 14, 2020 in Egypt, and since then over 1.4 million people were infected on the continent.
Being the second‐most populous country in Africa with a rapidly expanding economy before the pandemic, and leading sub‐Saharan Africa in the number of confirmed COVID‐19 cases, Ethiopia is considered as a case country in this study. Like many other African countries, the virus was imported to Ethiopia in early March and since then the country has taken several preventive measures to contain its spread. Whereas these measures have been critical in containing the viral transmission and the potential for widespread economic and human losses in Ethiopia, cases are increasing lately since the first observed case on March 13, 2020.
The pandemic is posing an unprecedented shock to the world economy because of the response measures countries adopt, including a partial or full shutdown of economic activities, simultaneously affecting both domestic and global value chains. Combined with the global effects, national measures have unavoidable considerable impacts on incomes, livelihoods, and the wider economy (Martin et al., 2020; Thurlow et al., 2020). Although the domestic response measures in place in Ethiopia are by far not as strict as in some countries in Africa, jointly with the external channels, these could cause massive disruptions in various sectors and the economy in general. Recognizing the negative impacts on GDP, IMF (2020) and AfDB (2020a) revised growth projections for Ethiopia from 6.2% and 6.1% to 3.2% and 3.7% in 2019/2020 and 2020/2021, respectively, despite significant policy support.
Understanding the nature of the impact channels and affected sectors is the first step to designing appropriate policy responses and relief measures that target the most vulnerable, aid in economic recovery efforts, and return the economy to its pre‐COVID growth trajectory. This paper utilizes a social accounting matrix (SAM) based multiplier model and provides an assessment of the economic and welfare effects of COVID‐19 related response measures in Ethiopia.
AfDB helps Egypt improve railway system safety with €145m loan (The North Africa Post)
The African Development Bank, AfDB, will extend Egypt a credit line of €145 million to help the country improve the railway system safety and to increase the network capacity. “The planned upgrades are expected to benefit low-income Egyptians, about 40 percent of the population, who rely on trains as an affordable mode of transport,” the bank said in a statement.
African Development Bank working on economic recovery support plan for Seychelles (Seychelles News Agency)
The African Development Bank (AfDB) is working on a financial facility to support Seychelles in its COVID-19 recovery programme, said a top official of the bank. The executive director of AfDB, Cheptoo Amos Kipronoh, made this statement after a courtesy call on President Wavel Ramkalawan at State House on Wednesday. “The facility will try and help Seychelles fully in the recuperation of its economy. I am seeing that the recovery process is going very well and the country has been able to vaccinate 60 percent of its population,” said Amos Kipronoh.
ALTHOUGH Zimbabwe is famed for quality livestock production, the sector has in recent years faced numerous challenges, which have weakened output capacity and frustrated value chain gains. A combination of climate change induced shocks, the rise in animal pests and diseases, inadequate financing and limited research knowledge, have constrained both communal and commercial livestock farmers with adverse impact on the entire economy and jobs. In 2020, for instance, farmers in Zimbabwe had lost over 300 000 cattle valued at around $4,394 billion due to a combination of the dry spell that decimated pastures and drinking water, and various diseases such as anthrax, January Disease (Theileriosis) and tick-borne diseases, due to lack of dipping chemicals, according to official reports.
Finance and Economic Development Minister, Professor Mthuli Ncube, stated in his 2021 national budget statement that due to resilience capacity building gaps, especially among communal farmers, who form a large base of livestock owners, the country has lost substantial livestock attributable to drought and floods, which reduced pastures as well as the continued outbreak of pests and disease attacks including the fall army worm, tuta absoluta and foot and mouth disease in cattle.
African regional and continental news
AfCFTA: 100 days since start of free trading, prospects seem bright (Africa Renewal)
“Increased intra-African trade is what will drive economic development post-COVID-19,” Mr. Mene told Africa Renewal in an earlier interview. The AfCFTA establishes a single market for made in Africa goods and services, eliminates tariffs by 90 per cent and tackles non-tariff barriers such as customs delays. “We are not going to get another opportunity to integrate; this is our last opportunity,” he said at a press briefing in January. “There is not a single African country that can work alone to trade its way out of poverty,” he opined at an event in New York just last month.
Making the trading system work for Africa (Lexology)
Competing for media attention at the beginning of 2021 was the fact that nearly the entire African continent created a free-trade zone: the African Continental Free Trade Area (AfCFTA). While much work remains to be done before the AfCFTA becomes fully operational and relevant, it does not lack for ambition. The plan is for virtually all African nations to open their markets to each other to establish a single market covering both trade and investment with a combined GDP of US$3.4 trillion. Economic integration is not a new idea in Africa. There are many sub-regional and other economic and trade agreements in Africa, several of which have been around for a long time. In fact, their longevity and relative lack of success in creating economic prosperity can explain some of the indifference and cynicism shown towards the AfCFTA. But is past necessarily prologue? This newest integration effort occurs at a time when the world’s trading system is undergoing significant change on many levels. The multilateral system established after World War II through the GATT and then the WTO is under strain. Economic nationalism is springing up in many countries that openly question the value of multilateralism, seemingly intent on fashioning a trading system based on strict reciprocity instead of non-discrimination. Overall, there is a growing impatience with the existing economic and trade architecture, which some argue has not delivered on its goals of raising living standards, particularly in developing countries. Against this backdrop, the AfCFTA may have arrived at the right time, as long as this is the beginning of a process, not the end.
Economic nationalism should not scupper the AFCFTA (The Herald)
The new African Continental Free Trade Area (AFCFTA) is a potential game changer for many economies in the region, but there is need for governments to fight the urge to protect the broader economic vision from threats of narrow national interests. Recently, Zambian fuel transporters have been pushing for authorities in that country to limit Zimbabwean fuel transporters from working with fuel companies and dealers in that country. Zambian fuel transporters are not happy as they feel their government is not prioritising them in the transportation of imported fuel, and in recent days parked their vehicles to demand for the fulfilment of that country’s 50 percent volume allocation policy.
Xinhua reports that tanker drivers have since resumed operations after the intervention by Zambian President Edgar Lungu who directed for the full implementation of the 50 percent fuel volume allocation. Zimbabwean drivers are happy with the development. “It is only through regional integration that we can enhance our standards of living as Africans.
The much-anticipated African Free Trade Agreement (AfCFTA), through which trading commenced on 1 January this year, could bolster the continent’s income by US$450 billion (more than N$6 trillion) and lift 30 million people out of extreme poverty by 2035, if accompanied by significant
Getting Central African states switch from the design to implementation of economic diversification strategies, is the major result area on which the work done by the Subregional Office for Central Africa (SRO-CA) of the UN Economic Commission for Africa (ECA) in the sub-region will be measured against in 2021. To this effect, SRO-CA completed a geographic information system (GIS) spatial planning and investment decision tool during the first three months of 2021. In addition, a trade decision support model (DSM) for Cameroon (to be expanded to the who subregion) was equally completed and the process to design and use a Made in Central Africa marketing label launched.
Northern Corridor routes have recorded improved transit time during the last quarter of 2020 following reduced border crossing times because of various initiatives put in place to enhance seamless cargo flow and regional trade. According to the Northern Corridor Dashboard Quarterly Performance Report for the period between October and December 2020, transit time from Mombasa to Kampala reduced from 167 to 131 hours.
“The positive trend was attributed to the opening up of borders by the Northern Corridor Member States and implementing the Regional Electronic Cargo and Driver Tracking System (RECDTS),” Northern Corridor Transit Transport Coordination Authority said in a post published on its website.
Minister of Trade and Industry Nevine Gamea said that Egypt supports the launch of the second phase of the Aid for Trade Initiative for Arab States (AfTIAS) program, which aims to contain the negative impacts of coronavirus on trade movement in Arab states. Gamea made the remarks during her participation in a virtual symposium about the role of AfTIAS program’s second phase in reviving trade movement in Arab countries after the coronavirus pandemic ends. The event was organized by the International Islamic Trade Finance Corporation (ITFC).
Africa’s path through and beyond the Covid-19 crisis will be determined to a large extent by the actions that all social partners take in the next few weeks. The virus confronts the continent with an imperative to begin looking ahead and repurposing, reimagining and reopening African societies, business, developmental institutions and government.
The effects of the pandemic have proven to be devastating to both the production and demand sides of the economy. The decline in GDP growth has been largely due to the marked slowdown in economic activity coupled with widespread disruptions in international, regional and domestic supply chains. Saving lives and preserving livelihoods was always going to be a monumental task.
Africa is not poor, just poorly managed. Though Africa is rich in resources, the continent and its people have been exploited for decades. Yes, several countries of Africa are among the poorest in the world and a large section of the population lives below the poverty line. While Africa carries about 20% of the global burden of disease, its scientific output represents less than 1% of the world’s share as measured by the field-weighted citation impact. Africa represents the youngest (the median age of an African individual is 19.7 years versus 38.4 years for the median individual in the US) and fastest-growing population in the world.
The implementation of the African Continental Free Trade Area (AfCFTA) agreement will boost intra-Africa trade. Africa is the world’s second-largest and second most populous continent — after Asia in both cases — and the most centrally located continent in the world with both the prime meridian (0 degrees longitude) and the equator (0 degrees latitude) cutting across it, therefore receiving direct sunlight throughout the year.
In a historic and united show of solidarity for a continent that contributes only 5% to global emissions, more than 30 heads of state and global leaders committed to prioritize actions that help African countries adapt to the impacts of climate change and “build forward better.”
Africa now faces the dual onslaught of climate change – currently estimated at between $7 billion and $15 billion each year – and Covid-19, which has claimed 114,000 lives. The African Development Bank expects that the impact of climate change on the continent could rise to $50 billion each year by 2040, with a further 3% decline each year in GDP by 2050.
Speaking Tuesday, during a virtual Leaders’ Dialogue convened by the African Development Bank, the Global Center on Adaptation and the Africa Adaptation Initiative, more than 30 heads of state and global leaders rallied behind the bold new Africa Adaptation Acceleration Program. The program’s objective is to mobilize $25 billion to accelerate climate change adaptation actions across Africa.
After a dark 2020, a new year has brought new hope. In Africa, where up to 40 million more people were driven into extreme poverty and the continent experienced its first recession in 25 years, a brighter future beckons as the economy is forecast to return to growth this year. Africa now has an opportunity to reset its economic compass. To build back not just better, but greener. Particularly as the next crisis—climate change—is already upon us. Africa’s food systems must be made more resilient to future shocks such as floods, droughts, and disease. Urgent and sustainable increases in food production are needed to reduce reliance on food imports and reduce poverty, and this is where digital services come into play.
In West Africa, can organic shea become a solution? (Trade 4 Dev News)
Trade in shea nuts and shea butter, which provides a host of skin benefits and is also used in chocolates, is now a multimillion-dollar industry. And most shea, whether raw or processed as butter, comes from West Africa, specifically Burkina Faso, Benin, Ghana and Mali.
Burkina Faso is the world’s largest exporter of shea nuts, with an estimated global market share of around 50%. It is also in the least developed country (LDC) category, as are Benin and Mali, indicating the low per capita income and vulnerabilities to shocks. Could a move to exports of organic shea be one way to create more income security?
The pandemic has created the opportunity for a “great reset” of Africa’s economies. As Foresight Africa 2021 highlights, Africa needs bold action for an economic revival from the COVID-induced estimated 3 to 5.4 percent contraction in GDP and the devastating increase in the number of extreme poor by about 40 million.
Climate change continues its calamitous trend; the destruction facing Africa has not stopped during the pandemic. The 2020 floods in East Africa affected well over a million people, and the Nile River hit its highest levels in half a century. The worst locust outbreak in 25 years, caused by unusual weather conditions, left about one million people food insecure in the Horn of Africa. In the long term, Africa could see its GDP decrease by up to 30 percent by 2050 due to climate change.
African countries with challenging fiscal positions and high debt levels can ill afford the costs of climate shocks. For example, the recent Cyclone Idai of March 2019 affected more than 1.5 million people in Mozambique. According to the World Bank, the poverty rate in the affected areas rose to 79 percent, up from 64 percent, and real GDP growth decreased from an estimated 4.7 percent to 2.4 percent. Moreover, a catastrophe risk modeling study estimated that the country faces average annual losses of about $440 million due to floods alone. Mozambique is not alone in Africa. Achieving the Sustainable Development Goals will be slower and more expensive if African societies do not mainstream adaptation and resilience in all economic activities. Given the rapid pace of urbanization on the continent and the specific climate risks of urban areas, the need to combat these effects is more urgent than ever.
Liberia to Host ECOWAS Decolonized Meeting to Focus Women Empowerment (Front Page Africa)
Liberia is expected to host a 5-day decolonized ECOWAS Meeting. The expected meeting will take place in Monrovia from the 13-17 of April 2021 with specific focus on ECOWAS women. The theme of the expected meeting is “Empowerment of Women in the ECOWAS Region” and will be held at the Ministerial Complex in Congo Town.
In 2017, Liberia hosted another ECOWAS meeting where issues of community interest particularly the running of institutions and organs of the Economic Community of West African States (ECOWAS), alongside economic development of the West African sub-region dominated the 21st meeting of the Administration and Finance Committee (AFC) of the regional organization.
Among items for information, the ministers listened to presentations on various issues such as the organization of the 8th ECOWAS Trade Fair in Niamey, Niger, status of implementation of the ECOWAS Common External Tariff (CET), ECOWAS Biometric Identity Card, and Monrovia Declaration on
Africa Oil & Power (AOP) and the African Energy Chamber are excited to announce the launch of the first-ever U.S. Africa Energy Forum (USAEF). This event aims to create deeper cooperation between the U.S. and Africa on energy policy, to reach alignment on long term sustainability goals, to stimulate greater American investment in the African oil, gas and power sectors, and to engage and reposition the U.S. as the primary partner of choice for African energy developments. Under the theme “New Horizons for U.S. Africa Energy Investment” the forum will explore diverse foreign investment and export opportunities across the continent, including natural gas as a vital fuel for the energy transition; energy storage and battery minerals; Africa’s place in global energy supply chains; the benefits of the African Continental Free Trade Area; evolving energy technologies and how they relate to the future role of petroleum resources; and on-and off-grid power developments.
A range of multilateral development banks (MDBs) have been active in Africa for several decades. This article considers recent developments concerning the European MDBs, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) in sub-Saharan Africa.
Towards the Second Russia-Africa Summit (Modern Diplomacy)
Sudan is known to be embroiled in a boundary dispute with Ethiopia. This border disagreement was sudden and experienced no former political conflicts. Following the border dispute, it is clear that Sudan’s position on the Renaissance Dam is changing. Sudan’s interest has repeatedly been described as a third-party mission. Despite the Sudanese opposition, the Ethiopian government has repeatedly stated Sudan is engaged in another mission .
The Sudanese government on the one hand is wearisome to show the boundary is unrelated to the Renaissance Dam mediations. While on the one hand, trying to inform the dialogues on the border and the Renaissance Dam is genuinely from Sudan’s political interests but not from foreign forces. Nevertheless, the critical question is how balanced these efforts are.
Ethiopia’s idea of the GERD was to resolve Africa’s problems with Africans, which Sudan remain a proponent of. However, It was purely after the border dispute that Sudan’s views became clear. Sudan had mentioned that the AU negotiations were unreliable, as traditional fashion which is no longer feasible. Efforts to make the issue more global have continued since then and another aspect of this is to show Ethiopia as stubborn in the international relations arena.
Both Sudan and Ethiopia’s efforts to address Africa’s problems in the continent were because they perceived the role of the West as inseparable from pressure. This was noted by the United States effort. It is comprehensible; therefore, that Sudan’s desire is for the international
Africa Ready For Right-Sized Fleets (Aviation Week)
It may not yet be considered a mature aviation market, but Africa is expected to be a huge area for growth in aircraft acquisition during the 2020s. One of the features of that growth is likely to be the ability of carriers to move straight to a right-sized fleet.
Daniel Galhardo, director of strategy, Embraer Commercial Aviation, acknowledges that although in terms of new aircraft sale numbers, regional jets did not breakthrough in Africa, the company does have examples of substantial fleets being successfully operated by carriers, such as Airlink and Kenya Airways. “The pre-owned market is very relevant in Africa, probably more than anywhere else in the world, and when we consider that, we see significant penetration for the segment,” he remarks.
While considerable growth continues to be expected, the Covid pandemic will clearly affect the figures in the OEMs’ forecasts for these types in Africa, although it may merely be a time shift. “The main consequence of the pandemic has been a fall in demand that has strongly affected all aspects of air transport in Africa,” Houari confirms. “We anticipate that 2019 traffic levels could return by 2023 at best, or 2025 in the worst timeframe.
“This short-term economic crisis does not mean the end of long-term economic growth,” he stresses. “The fundamental drivers of economic growth in Africa have not changed. The resultant air traffic growth will be driven by demography, with a population expected to exceed 2 billion within 20 years, as well as by urbanisation and middle class development. Inbound tourism and intra-Africa tourism will continue to contribute to national economies and drive air traffic growth. We are confident that the A220 will play a significant role in meeting the needs of air transport in Africa.”
Global economy news
The study was commissioned by DP World and conducted by the EIU at the outbreak of Covid-19 in Q1 2020, and updated in Q4 2020. Despite the disruption to supply chains, it found that optimism about future growth is widespread and assuming the pandemic does not worsen, and protectionist polices remain restrained, 77% of companies expect international sales to expand.
Capturing the perspectives of business leaders across six regions (North America, South America, Europe, Middle East, Africa, and Asia Pacific), the study found 83% of companies are reconfiguring their supply chains, including a diversification of the countries they intend to trade with. In Europe, for example, companies expected international sales from N. America to increase from 14% in 2019 to 21% in 2020. Conversely, in the Middle East international sales from N. America have decreased whilst revenue from Africa is expected to increase by 50%. In Asia-Pacific, 76% of companies are earning most of their international revenue from within the region. The next important continent for them in terms of international revenue is North America, which lagged behind at 13%.
A global study of private sector perspectives highlights how international trade flows have remained robust despite the pandemic. On average, companies allocated 32% of revenue from the first half of 2020 to help them switch suppliers or logistics providers and change production or purchasing locations.
Sultan Ahmed Bin Sulayem, CEO and Chairman of DP World, said: “International trade has shown remarkable resilience during the pandemic and will play a critical role in facilitating the global recovery. The business community is more optimistic for the future than many expected, and the supply chain challenges exposed by the pandemic have acted as a positive agent for change. We expect the result will be global flows of trade that are more efficient and more robust.”
Developing countries stand to benefit from up to $10 billion in savings after the G20 group of wealthy nations announced on Wednesday (7 April) that it would extend its debt service suspension initiative (DSSI) which launched last May until the end of this year. Forty-five countries signed up for the DSSI last year, resulting in the deferral of $5.7 billion in debt payments. Extending the initiative until the end of 2021, which the G20 said would be the “final extension” of the scheme, could potentially save an additional $9.9 billion.
The G20 ministers also gave their endorsement for the International Monetary Fund (IMF) to propose a new Special Drawing Rights (SDR) worth $650 billion to help economies hit by the pandemic.
African nations expect to receive $33.6 billion from a new issuance of Special Drawing Rights, according to Vera Songwe, executive secretary of the United Nations Economic Commission for Africa. On Wednesday, G-20 finance ministers and central bank governors reaffirmedcalls for the International Monetary Fund to make a proposal for a new allocation of $650 billion in SDRs — an international reserve asset — that will provide countries around the world with liquidity. The last SDR allocation was issued in 2009 following the global financial crisis. The African Union has advocated for a global issuance of SDRs over the past year in hopes that countries can use these funds for the purchase of COVID-19 vaccines, and other parts of national pandemic recoveries.
G20 debt relief for poor nations means COVID healthcare investment (Thomson Reuters Foundation)
When COVID-19 first hit, it was spoken about as a ‘great equaliser’ – but as its full impact is becoming clearer, it is clear this could not be further from the truth, particularly when it comes to how nations are able to build back. Countries across the world, rich and poor, have all taken an economic hit over the last year. But the pandemic made existing inequalities worse, pushing as many as 150 million more people into extreme poverty according to the World Bank. On one side, rich countries have been able to mobilise huge sums, an average of nearly 10% of their GDP, and an unprecedentedly large total of $20.6 trillion to respond to the pandemic and stimulate their economies. Take the USA’s announcement last month of $1.9 trillion in relief measures as an example. The world’s poorest countries, at the other end of the spectrum, have fewer options available to help weakened economies bounce back. Although many have had their debt repayments suspended for the moment, repayment still looms meaning that there is less room to invest in healthcare systems which were fragile even before the onset of COVID-19, and many are hesitant to re-impose restrictions and public health measures which could undermine the modest recovery of their economies, despite new waves of the disease.
Half of all imported goods from low-income countries are clothes (Statistics Netherlands | CBS)
The United Nations compiles a list of Least Developed Countries (LDCs) which is reviewed every three years. The criteria are gross domestic product (GDP), economic vulnerability and several indicators on education and health. 13.6 percent of the entire world population live in one of these 46 countries, most of them located in Africa (33 countries, 700 million inhabitants) and Asia (9 countries, 340 million inhabitants); another 15 million live in low-income countries in Oceania (3) and America (1).
In 2020, Dutch imports from the LDCs were worth 2.9 billion euros, representing a decline of 4 percent on 2019. This amount comprised 1.9 billion in goods from Asia (65 percent) and 1.0 billion from Africa (34 percent). Asia predominantly supplies clothing while Africa supplies raw materials. Last year, the share held by LDCs in total Dutch goods imports was 0.7 percent. This is roughly equivalent to imports from Austria, our 30th largest import partner.
Of all goods imported by the Netherlands from the LDCs, clothing is by far the most important category. In 2020, Dutch import flows of clothing from the LDCs were worth 1,453 million euros. Almost three-quarters of that amount came directly from Bangladesh. The remainder of clothing imports is mostly sourced from Cambodia and Myanmar. In 2020, footwear imports – almost exclusively from Bangladesh and Cambodia – were worth virtually the same amount as in the previous year, i.e. 180 million euros. Crude oil imports are almost entirely sourced from Angola. With a share of almost three-quarters, Ethiopia is by far the largest supplier of cut flowers. Aluminium imports are almost exclusively sourced from Mozambique.
Futures Report Outlines Top Trends Impacting Global Economy, Society and Technology (World Economic Forum)
The new technologies of the Fourth Industrial Revolution, such as artificial intelligence (AI), the cloud and robotics, are changing the way we live, learn and do business at a rate unprecedented in human history. This seismic shift is playing out in a world characterized by unreliable political landscapes and increasing environmental instability.
“The rapid pace of technological change, alongside the global crisis caused by COVID-19, means that leaders today need new tools to understand challenges and develop strategies in the face of an increasingly uncertain future. This report provides three new analytical tools for business leaders to think about the future in a dynamic environment,” said Ruth Hickin, Strategy and Impact Lead, Centre for the Fourth Industrial Revolution, World Economic Forum.
The International Air Transport Association (IATA) released February 2021 data for global air cargo markets showing that air cargo demand continued to outperform pre-COVID levels with demand up 9% over February 2019. February demand also showed strong month-on-month growth over January 2021 levels. Volumes have now returned to 2018 levels seen prior to the US-China trade war.
African airlines’ cargo demand in February increased a massive 44.2% compared to the same month in 2019 the strongest of all regions. Robust expansion on the Asia-Africa trade lanes contributed to the strong growth. February international capacity grew by 9.8% compared to February 2019.
“Air cargo demand is not just recovering from the COVID-19 crisis, it is growing. With demand at 9% above pre-crisis levels (Feb 2019), one of the main challenges for air cargo is finding sufficient capacity. This makes cargo yields a bright spot in an otherwise bleak industry situation. It also highlights the need for clarity on government plans for a safe industry restart. Understanding how passenger demand could recover will indicate how much belly capacity will be available for air cargo. Being able to efficiently plan that into air cargo operations will be a key element for overall recovery,” said Willie Walsh, IATA’s Director General.