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National trade and trade-related news
Five retail categories that will lead the sector’s recovery in 2021 (IOL)
StatsSA’s latest figures show retail trade falling 3.5 percent year-on-year from 2019 to 2020, continuing a 10-month downward spiral. However, South African retailers are starting to show signs of adapting to the needs of the changing market. Dov Girnun, chief executive of Merchant Capital, said that although the sector has yet to recover from a combination of the country’s Covid-19 measures and reduced consumer spending power, the company’s collection data suggests the early signs of recovery in several key categories. “We’re starting to see South Africa’s retail sector adapting to the reality of new customer preferences, lifestyle changes, the impacts of Covid-19 and technological developments. We believe the retail sector is on the mend, and will see greater recovery throughout 2021,” Girnun said.Figures from Merchant Capital show five categories that could drive the retail sector’s recovery this year
South African citrus: Capacity, infrastructure may be “tested to the limits” (FreshFruitPortal.com)
While hopes are high for the South African citrus season in terms of production volume, the industry looks set to be challenged by a lack of refrigerated containers and sky-high shipping costs. The country expecting citrus exports in 2021 to set another consecutive record - now revised even further upwards by the Variety Focus Groups to 162 million cartons in total - driven in large part by late mandarins.
However, Citrus Growers Association of Southern Africa (CGA) CEO Justin Chadwick cautioned that there "could well be a challenge" in meeting the citrus industry's expected demand of 95,000 reefer containers this season. This figure rises to 120,000 when deciduous and subtropical fruit volume is included.
Special Economic Zones continue to perform well (SAnews)
South Africa’s Special Economic Zones (SEZs) continue to thrive despite the challenges brought on by COVID-19, says Deputy Minister of Trade, Industry and Competition, Nomalungelo Gina. In a statement on Tuesday, Gina said the SEZ programme continues to attract investors. “This has seen the value of operational investments increasing from R17.7 billion by the end of the third quarter of the 2019-2020 financial year to R19.5 billion by the end of the third quarter of 2020-2021 financial year. “This is a positive increase of R1.8 billion. During the same period, the number of investments have increased from 129 to 143,” said the Deputy Minister.
As part of the economic recovery and reconstruction plan, South Africa is using the SEZs to reignite manufacturing-led industrialisation in an accelerated manner.
KRA targets Sh81bn on removal of tax reliefs for wealthy (Business Daily)
Wealthy individuals and firms have lost more than Sh80 billion in annual tax breaks after the Treasury withdrew a raft of incentives in April last year to partly make up for losses as a result of short-lived Covid-19 reliefs. The Treasury estimates the Kenya Revenue Authority (KRA) will collect Sh81.29 billion in the first 12 months following withdrawal of some income and value added tax (VAT) breaks in early days of Covid-19 pandemic shocks. Treasury secretary Ukur Yatani used the Tax Laws (Amendment) Act, which handed businesses and households tax reductions between April and December last year, to remove some of VAT exemptions and rebates on corporate income tax. The Treasury and the taxman have in recent years been looking to claw back some of the preferential rates of tax, investment deductions, tax reliefs, zero-rating for VAT purposes, remissions of taxes and exceptions.
Kenya in new search for oil off Lamu coast (Business Daily)
Kenya has launched a fresh search for oil and gas in its Indian Ocean territory by tapping an American firm to conduct seismic surveys to detail petroleum prospects within Lamu County. “We are pleased Kenya’s Ministry of Energy and Petroleum selected ION to increase the understanding and promote the hydrocarbon potential of these offshore resources to attract future investment,” said ION senior vice president Joe Gagliardi in a statement confirming the deal.”The programme will leverage our extensive data library and knowledge offshore Kenya and East Africa.”
Kenya, Pakistan to review trade agreements (The Standard)
The governments of Kenya and Pakistan are in high-level discussion to review the bilateral trade agreement of 1983 to harmonise business levels between the two states. The talks are geared towards harmonising tariffs and diversifying products traded between the two countries as they aim to hit one billion dollars annually.
According to Dr Julius Bittok, Kenya’s ambassador to Pakistan, the two states are set to review their bilateral trade agreement to increase and sustain trade and investment as well as diversify products traded. “The countries have enjoyed good trade in tea and rice. We seek to diversify into new products aimed at boosting volumes and exchange rate earnings between our countries,” Dr Bittok told The Standard.
Uganda, Kenya Officials Meet in Kampala to Resolve Ban on Ugandan Sugar Exports (Chimp Reports)
A Kenyan delegation led by Amb. Johnson Weru, the Principal Secretary of State-Department for Trade and Enterprise Development is meeting Ugandan officials from Ministries of Foreign Affairs and Trade led by Ms Grace Adong, the Acting Permanent Secretary of the Ministry of Trade, Industry and Cooperatives to discuss the Kenya – Uganda sugar export crisis. The closed door meeting is underway at the Ministry of Foreign Affairs in Kampala. In July 2020, Kenya banned sugar imports, opting to solve challenges facing the country’s sugar industry. The East African country had announced a ban on all sugar imports and subsequently revoked all sugar import permits, some of which were held by Ugandan manufacturers and exporters. However, in January 2021, Kenya lifted the ban and allowed to import 90,000 tonnes of sugar from Uganda after, Uganda through the Uganda Manufacturers Association (UMA), clarified to Kenya that it had enough sugar both for domestic and export markets and denied importing sugar from outside the Common Market for Eastern and Southern Africa (COMESA) region.
Rwanda banks on seed multipliers to increase cassava production (The New Times)
It requires ‘quick multiplication of cassava clean seeds’ as part of efforts to scale up new disease-resistant cassava varieties on about 200,000 hectares that are used for cassava growing in Rwanda, researchers have said. “The average of cassava production is 15 tonnes per hectare due to using traditional seeds that have diseases yet model farmers using the cassava clean seed are harvesting over 35 tonnes per hectare,” he explained. Figures show that some farmers are still even harvesting below the potential yield.
Build The Nation: South Sudan Prioritizes Infrastructure Development (Africa Oil & Power)
While several African countries saw significant delays to infrastructure projects due the COVID-19 pandemic, South Sudan has been committed to dramatically raising its living standards, spurring industrialization and generating economic benefits through large-scale infrastructural investments. Built against a backdrop of reformed political stability, the new administration is focused on improving infrastructure to stimulate growth and investment across energy and non-energy sectors. Accordingly, the country is prioritizing significant improvement of roads, the revitalization of power generation infrastructure and the development of improved water and sanitation infrastructure, supported by a new Infrastructural Development Plan and the establishment of foreign partnerships.
By prioritizing new and improved road networks, South Sudan is growing both trade and transportation opportunities within the country. By focusing on linkages with the wider region, South Sudan is opening up trade and transportation opportunities, encouraging economic growth in the process. “Logistics is one of our biggest problems that we are trying to solve. Last year, we started work on national roads that will connect South Sudan to both Ethiopia and Sudan. This will assist with the movement of goods and materials, especially to the oil fields, which are very close to the borders of both countries,” H.E. Awow Daniel Chuang, Undersecretary, Ministry of Petroleum, told Pump Africa.
Egyptian Customs Authority’s digital platform mandatory by July 2021 (CGTN Africa)
Egyptian ministry of Finance has announced a new decision regarding the Customs Authority’s new digital platform, which goes live later this year, stating that shipping companies will be required to send information about their cargo electronically to the platform.
Companies shipping to Egypt must follow the new rules as the second stage of the pre-registration (Advance Cargo Information) system begins and joining the system becomes mandatory in July 2021. The decision includes stipulations for importing companies to electronically send shipping and cargo data and documents, such as packing lists and commercial invoices, to the new Advance Cargo Information (ACI) system. Importers are also required to review and confirm shipment files and documents with the shipment identification number (ACID), and approve them using an electronic signature.
The system, part of the National Single Window for Foreign Trade Facilitation (Nafeza), is meant to facilitate customs procedures and improve border security.
Algeria to reopen its border with Libya as part of its diversification plans – by becoming hub for sub-Saharan transit trade | (Libya Herald)
After Mauritania, Mali and Niger, Algeria is to reopen its land border with Libya and Tunisia soon, Algerian Echoroukonline.com reported yesterday. The northmost Libyan Algerian land border crossing is the Ghadames-Debdeb crossing. The revelation was made by Algerian Trade Minister Kamal Razik yesterday speaking on the side-lines of the opening day of the Inter-African Exchanges event organized by Condor Electronics at the International Convention Centre in Algiers. Razik was quoted as saying that the opening of border crossings with neighbouring countries is aimed at exporting and importing African products, and stressed that Africa is and will remain the historical and strategic depth of Algeria. He said Algeria is ready and will help African countries import their products, as well as from around the world through Algeria and deliver them by road to the Algerian border.
Nigerian banks earn N216 billion in E-banking income amidst threat from challenger banks (Nairametrics)
Nigerian banks raked in a sum of N216.52 billion from their e-business earnings in the year 2020 as tier-1 banks popularly known as FUGAZ (First Bank, UBA, Access Bank, GT Bank, and Zenith Bank) topped the list of highest earners. Income from digital channels is also classified as electronic business or banking income by the majority of commercial banks. Nairametrics gathered this research from the audited financial statements of 12 of the leading banks in the country. The same banks reported N217 billion in income from digital channels in 2019 dipping marginally by 0.24%.
The International Islamic Trade Finance Corporation (ITFC) a member of the Islamic Development Bank Group (IsDB) and the Republic of Cameroon have signed on April 12, 2021 two agreements in a virtual signing ceremony between H.E. Alamine Ousmane Mey, Minister of Economy, Planning and Regional Development (IsDB Governor) and Eng. Hani Salem Sonbol, CEO, ITFC. The first signing is a three-year framework agreement amounting to US$ 750 Million under which ITFC will provide to Cameroon a financing envelop of US $ 250 Million annually over a period of three years to facilitate the imports of key commodities in the strategic sectors of energy, mining, in addition to the health sector with medical supplies including healthcare equipment. It will also sustain its already strong support to the priority sector of agricultural with the exports of agricultural commodities such as cotton, soy amongst others.
A resilient sector amid the crisis is one of the conclusions of a major study conducted by the International Trade Centre’s (ITC) Global Textiles and Clothing Programme (GTEX) and Middle East and North Africa Textiles Programme (MENATEX) on the impact of the COVID-19 pandemic on the Tunisian textile-clothing sector. The report also shed light on the post-pandemic opportunities and the sector’s recovery plan.
In collaboration with the Ministry of Industry and Small and Medium-Sized Enterprises, la Fédération Tunisienne du Textile et de l’Habillement (FTTH) and the Technical Center for Textiles, the study is based on a survey conducted by national and international experts in 248 companies, spread over nine regions and seven production chains, between April and September 2020.
African regional and continental news
AfCFTA: Africa must shun detractors (GhanaWeb)
Mr Silver Ojakol, the Chief of Staff of the African Continental Free Trade Area (AfCFTA) Secretariat, has asked African countries to shun detractors and doubters of the successful implementation of the Area. There is geopolitics and those that cast doubts about the implementation of AfCFTA, “We, however, know at least from the studies of the United Nations Economic Commission for Africa and the World Bank that if successfully implemented, the AfCFTA will add $450 billion onto Africa’s trade portfolio by 2035 and lift 30 million people from extreme poverty and another 68 million from moderate poverty. “We also know that this should catalyse infrastructure development in the continent,” he said.
AfCFTA promises to unlock the potential for African women to move to macro businesses (The East African)
For decades, African women have been trapped in poverty cycles due to several underlying factors including unequal access to education, factors of production, and trade facilities; inequitable labour saving technologies; underpaid or unpaid labour; harmful cultural practices; and limited legal protection from gender inequality practices entrenched in society. To break the cycle of poverty and inequalities, the African Union continues to advocate for the development and implementation of policies and legal; frameworks that will create a wider array of opportunities for women, and which will lead to their economic empowerment at the national and regional levels, and ensuring that the development envisaged for Africa is inclusive and sustainable. With the launch of trading under the African Continental Free Trade Area (AfCFTA) in January 2021, the expectations are high as relates to the expanded business prospects for women-led businesses, which will unlock the potential for African women to grow their businesses from micro to macro enterprises.
Furthermore, the AfCFTA Protocols on Trade in Goods, Trade in Services, Investment, Intellectual Property Rights and Competition Policy, provide clear guidelines to ensure emerging enterprises and infant industries are protected thus adding impetus to the Agenda 2063 goals of gender equality, women empowerment and youth development.
Women remain integral part of AfCFTA agenda ― Co-chairman (Nigerian Tribune)
Co-champion of the National Action Committee on the African Continental Free Trade Area (AfCFTA) for Transportation, Mrs Funmi Folorunsho, has revealed that women remain an integral part of the agenda and activities to be implemented under the agreement. Folorunsho made this declaration during a courtesy visit on the Iyalode of Egbaland, Chief Mrs Alaba Lawson, in Abeokuta, the Ogun State capital, as part of efforts aimed at making women thrive as vital components of regional trade activities. She noted that AfCFTA activities will leverage on women and the youth because of the advantages they offer in the business.
SADC pushes for a one-stop cross border post to reduce congestion (News24)
The Southern African Development Community (SADC) Parliamentary Forum’s standing committee on trade, industry, finance and investment has called for the harmonisation of cross-border trade systems to reduce “trade costs and time spent at borders”. This echoed calls that were made by the governments of South Africa and Zimbabwe earlier in the year after thousands of people and vehicles were stuck at the Beitbridge border post for days following the Christmas and New Year holidays. At the time, the delays resulted in more than 100 people reportedly testing positive for Covid-19. The standing committee, chaired by Zimbabwe Member of Parliament, Anele Ndebele, met virtually on Sunday under the theme: “Enhancing regional economic integration through infrastructure development: A case of one-stop border post”. Discussions centered on ways in which regional economic integration, through infrastructure development - with a special focus on one-stop border posts, could be enhanced.
The African Development Bank, the African Union Commission, and the United Nations Economic Commission for Africa will host a webinar to discuss the implications of the latest Africa Regional Integration Index for the East African Community, the Common Market for Eastern and Southern Africa, and the Southern African Development Community. Policymakers, analysts, government leaders, the private sector and task managers can expect to gain insight into how to accelerate and deepen regional integration in Africa. The Africa Regional Integration Index is the most authoritative source of data on the progress and scope of Africa’s regional integration. The second edition was published in May 2020, and includes dedicated online data platforms and tools to help users, especially policymakers, better understand the methodology and statistics of the index.
African Experts Urge Local COVID-19 Vaccine Manufacturing (Voice of America)
Africa is lagging in vaccinating its people against the COVID-19 disease, and continental heads of state and international health officials say vaccine manufacturing must come to Africa in earnest to combat both the illness and future health emergencies. These experts, alongside African heads of state and international finance figures, are meeting virtually this week to hash out an ambitious plan to bring more manufacturing capability to the continent. South Africa only recently started to make the COVID-19 vaccine, but is the main producer on the continent.
“There remains a shocking imbalance in the global distribution of vaccines, as I have said many times,” he said. “More than 700 million vaccine doses have been administered globally, but over 87 percent have gone to high-income or upper-middle-income countries, while low-income countries have received just 0.2 percent. The pandemic has shown that global manufacturing capacity and supply chains are not sufficient to deliver vaccines and other essential health products quickly and equitably to where they are needed most. That’s why building up vaccine manufacturing capacity in Africa is so important.”
Related:
- Call for African medical supplies manufacturing facility (SAnews)
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Africa falling behind in Covid-19 vaccination race, must expand vaccine production, say leaders (Sowetan Live)
Covid-19 Africa: What is happening with vaccines? (BBC News)
Some African countries could face delays to their vaccine rollouts as they use up initial supplies, according to the World Health Organization (WHO) and the Africa Centres for Disease Control (CDC). Meanwhile, both organisations have recommended that the AstraZeneca vaccine should continue to be used despite concerns raised about its safety. How are African countries getting vaccines?
Globally, populations wait in earnest for the effective eradication of the coronavirus. The COVID-19 pandemic has brought unprecedented distress to the African continent through continual COVID-19 related sicknesses and loss of lives. In addition, the pandemic has negatively impacted several socio-economic sectors such as health, education, economy, agriculture, and trade. As such, the pandemic has altered the cultural and social dynamics of how people live. For instance, numerous countries have put measures in place, such as partial national lockdowns, and have recommended minimal socio-economic activities to sustain social distancing.
African countries have prioritized vaccine roll-out towards their citizenry in utilizing it to improve herd immunity against COVID-19 and subsequently reduce hospitalization and deaths from COVID-19 related sicknesses. Through various agreements and mechanisms, such as the COVID-19 Vaccines Global Access (COVAX), several African countries have acquired vaccine shots for their national campaigns, although inadequate. Vaccine manufacturing delays and the subsequent unavailability of adequate vaccines to meet demands is a global problem. To mitigate this, the available vaccines are being prioritized towards Africa’s populations’ riskier sectors, such as health workers and frontline workers.
As more vaccines are being procured to meet demands, lessons have been learnt from the initial vaccination roll-out targeted towards frontline and riskier sectors. These challenges will be exacerbated when scaling up the vaccination programme to cover their entire population, if not mitigated. Besides current vaccine supply shortages, some African countries are falling short on accelerated vaccination programmes within their countries. African governments are faced with the dilemma of systematically and effectively implementing distribution mechanisms of the vaccines to reach every community in their countries.
Vodacom Group partners with AUDA NEPAD for major vaccine roll-out | AUDA-NEPAD
Vodacom Group, part of Vodafone Group, will work with AUDA-NEPAD to build digital infrastructure to manage vaccinations across up to 55 countries, following successful deployments in South Africa - to manage Covid-19 vaccinations - and in Mozambique, Tanzania and Nigeria - to manage infant inoculations. The roll-out of mVacciNation, developed by Mezzanine, a member of the Vodacom Group, is the first project in a public-private partnership that has been formed between Vodacom Group and AUDA-NEPAD to boost Africa’s digital transformation and build resilience for the post-Covid world.
Dr Ibrahim Mayaki, CEO of AUDA-NEPAD, said: “The response to the Covid-19 crisis has significantly accelerated the adoption of frontier technologies. Africa’s booming digital sector offers great opportunities for public-private partnerships to help build resilience in the aftermath of the Covid-19 crisis and respond to critical continental priorities. As the development agency for the African Union, we act as a channel to connect innovators and governments to roll-out and localise these solutions.”
Covid response deflates project spending across eastern Africa (The East African)
Eastern African countries cut $68.3 billion spending on infrastructure projects last year, the largest decline in number of projects and value of projects in sub-Saharan Africa in a year. This is as a result of the economic fallout from the Covid-19 pandemic sweeping across the region, hitting public finances and pushing governments into massive indebtedness .The Africa Construction Trends Report (2020) by consultancy firm Deloitte released last week shows that the number of infrastructure projects in the region covering Burundi, Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Rwanda, Seychelles, Somalia, Tanzania and Uganda dropped by 35 per cent to 118 in 2020 from 182 in 2019 while the total value of the projects declined by 47 per cent to $77.7 billion from $146 billion in the same period.
COMESA COVID-19 Taskforce Team Discusses Pandemic with African Union CDC (COMESA)
The COMESA Secretariat COVID-19 Taskforce led by Assistant Secretary General for Programmes (ASGP) Amb. Dr Kipyego Cheluget on Tuesday 6 April met representatives from the Africa Union Centre for Disease Control (AU – CDC) to discuss the pandemic and how the Secretariat should plan and prepare to return to work physically. The Secretariat closed physical operations and migrated to online operations in March 2020 due to the continued escalation of COVID-19 cases in Zambia and the region.
Rwanda tops region, takes bulk of $142m IMF debt relief (The East African)
Countries in the region led by Rwanda and Tanzania are drawing benefits from over $142.7 million in debt relief from the International Monetary Fund (IMF).This comes even as the Bretton Woods institution last week approved a third tranche of grants for debt service relief, for 28 member countries, under the Catastrophe Containment and Relief Trust (CCRT). Rwanda leads the region in the countries that enjoy the highest debt relief at $71.23 million, followed by Tanzania at $26.43 million. Burundi is third at $25.42 million, while Ethiopia wraps up the list at $19.71 million, latest figures from IMF shows. Kenya, South Sudan, and Uganda are not part of the 28 countries that were picked to benefit from the debt relief programme.
“This tranche of grants for debt service relief will continue to help free up scarce financial resources for vital emergency health, social, and economic support to mitigate the impact of the Covid-19 pandemic,” IMF said, adding that subject to the availability of sufficient resources in the CCRT, debt service relief could be provided for the remaining period through from October 2021 to April next year, amounting to $964 million.
New report on Africa’s agriculture industry explores prospects for intra-regional trade growth (Myjoyonline)
A new focus report produced by the global research and advisory firm Oxford Business Group (OBG) shines a spotlight on Africa’s agriculture sector, examining the potential it holds to strengthen food security across the region and the tech-led solutions that are expected to be key in driving post-pandemic growth. Titled “Agriculture in Africa 2021”, the report charts the industry’s performance to date on both a regional and country-by-country basis.The report in partnership in partnership with OCP Group, the world’s largest phosphate mining and leading fertilizer company, gives crucial facts and figures on topics that include variations in land use and crop production, cross-border trade volumes, agriculture’s contribution to GDP and financing.
Financing climate change in Africa (Independent)
As Africa struggles to emerge from shocks caused and accelerated by climate change amidst the COVID-19 pandemic, world leaders have committed to prioritise actions that will help the continent emerge stronger, healthier and more resilient. Speaking April 06 during a virtual leaders’ dialogue convened by the African Development Bank (AfDB), the Global Centre on Adaptation and the Africa Adaptation Initiative, more than 30 African heads of state and other global leaders rallied behind a bold new Africa Climate Change adaptation programme. The leaders resolved that the continent’s development –be it in infrastructure, food security, urban development, and youth empowerment through education, jobs and entrepreneurship– can take a different path based on a deep understanding of climate risks. “Africa’s only choice is to adapt to climate change. We all must change how we plan, invest and grow in a warming world,” they said.
Leaders of the Southern African Development Community (SADC) are now considering, without foreign interference, tackling frequent insurgency devastating regional development, causing havoc to human habitation and threatening security in southern Africa. This collective decision came out after the Extraordinary Double Troika meeting on 8th April in Maputo, Mozambique.
Many international organizations and foreign countries have responded with humanitarian support and with financial aid aimed at alleviating situation, specifically in Mozambique and generally in southern Africa.
As a first step, SADC has called for cooperation in cross-border surveillance as essential to stem the flow of foreign fighters fomenting terrorism in Cabo Delgado, and further warning the spread of violence throughout southern Africa. Among other measures, SADC suggested that southern African police and judicial systems must consistently work to combat trafficking and money laundering that funds terrorism.
Global economy news
WTO chief seeks solutions to ‘glaring’ vaccine inequity, upbeat on IP waiver (Reuters)
The head of the World Trade Organization said on Monday a meeting this week to tackle “glaring” inequity in COVID-19 vaccine allocation will be attended by major manufacturers and look at solutions such as firing up idle or under-used manufacturing plants in Africa and Asia.
WTO Director-General Ngozi Okonjo-Iweala, a former Nigerian minister and World Bank executive who took up the position last month, has vowed to “forget business as usual” at the ailing 25-year-old global trade watchdog and said her top priority was to address the COVID-19 pandemic.The April 14 meeting will bring together vaccine makers from the United States, China and Russia, ministers from wealthy and developing countries, and banking officials to discuss vaccine export restrictions, scaling up manufacturing and a waiver of intellectual property rights for COVID-19 drugs and shots, she told Reuters.
Guterres calls for ‘paradigm shift’ to recover from COVID setbacks (UN News)
Secretary-General António Guterres painted a grim picture of the past year during which more than three million have died from the virus. Around 120 million have fallen into extreme poverty and the equivalent of 255 million full-time jobs have been lost.
He noted that as the speed of infections is increasing, ”the crisis is far from over”. “An enormous push at the highest political level” is needed, said Mr. Guterres, to reverse these dangerous trends, prevent successive waves of infection, avoid a lengthy global recession and get back on track to fulfil the 2030 Agenda for Sustainable Development and the 2015 Paris Agreement on climate change.
Advancing an equitable global response to recover from the pandemic is “putting multilateralism to the test”, the UN chief said, adding, “so far, we have failed”. To illustrate this, he pointed out that just 10 countries globally account for around 75 per cent of COVID vaccinations given, noting that some estimates put the global cost of unequal access and vaccine hoarding at more than $9 trillion. Mr. Guterres underscored the need for “unity and solidarity” to save lives and prevent catastrophic debt and dysfunction.
UN chief urges wealth tax of those who profited during COVID (ABC News)
Secretary-General Antonio Guterres declared Monday that the world’s failure to unite on tackling COVID-19 created wide inequalities, and he called for urgent action including a wealth tax to help finance the global recovery from the coronavirus. The U.N. chief said latest reports indicate that “there has been a $5 trillion surge in the wealth of the world’s richest in the past year” of the pandemic. He urged governments “to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities.”
Guterres told the U.N. Economic and Social Council’s Forum on Financing for Development that since the pandemic began “no element of our multilateral response has gone as it should.”
“Advancing an equitable global response and recovery from the pandemic is putting multilateralism to the test,” he said. “So far, it is a test we have failed.” “The vaccination effort is just one example,” Guterres said, stressing that just 10 countries account for around 75% of global vaccinations and many countries haven’t even started vaccinating their health care workers and most vulnerable citizens. “Some estimates put the global cost of unequal access and vaccine hoarding at more than $9 trillion,” he said.
Financing for Sustainable Development Report 2021 | United Nations
The 2021 Financing for Sustainable Development Report (FSDR) of the Inter-agency Task Force on Financing for Development warns that COVID-19 could lead to a lost decade for development. The report highlights the risk of a sharply diverging world in the near term where the gaps between rich and poor widen because some countries lack the necessary financial resources to combat the COVID-19 crisis and its socioeconomic impact. Short-term risks are compounded by growing systemic risks that threaten to further derail progress, such as climate change. The report recommends immediate actions to prevent this scenario and put forward solutions to mobilize investments in people and in infrastructure to rebuild better. It also lay outs reforms for the global financial and policy architecture to ensure that it is supportive of a sustainable and resilient recovery and aligned with the 2030 Agenda
New ODI report urges stakeholders to urgently rethink how Development Finance Institutions invest (ODI)
ODI’s report, Development Finance Institutions: need for bold action to invest better, finds that progress towards the vision set out in the AAAA has been slow, with major course correction required in order for the investment potential of DFIs and Multilateral Development Banks (MDBs) to be realised. ODI’s report urges shareholders of DFIs and MDBs to urgently rethink their objectives and investment approaches. To do so, the report puts forward the following recommendations: 1) A new focus on transformative investment and market creation – especially in lower-income countries (LICs) and lower-middle-income countries (LMICs)2) Mobilisation of institutional capital at scale, especially in upper-middle-income countries (UMICs).
For transformative investment this would include close coordination with governments, donors and the public sector operations of MDBs who should step up efforts to support upstream policy reform. It would also mean developing new investment opportunities. This would require an increased focus on pipeline development, demonstration and early-stage investments, and would also require a shift away from the use of senior debt towards an increased use of high-risk capital, for example, in the form of grants, equity, mezzanine financing including convertible finance and contingent grants, as well as guarantees.
COVID-19: What low-income countries need for a more equal recovery (World Economic Forum)
Many of the poorest countries in the world are facing the threat of a weak recovery, and setback in their development path. A new IMF paper suggests that low-income countries will need approximately $200 billion until 2025 to improve their pandemic response, and a further $250 billion to catch up with advanced economies.
Several factors hamper the economic recovery of low-income countries. First, they face uneven access to vaccines. Most of these countries rely almost entirely on the multilateral COVAX facility—a global initiative aimed at equitable access to vaccines led by a consortium of international organizations. COVAX is currently set to procure vaccines for just 20 percent of the population in low-income countries. Second, low-income countries have had limited policy space to respond to the crisis—in particular, they have lacked the means for extra spending (see chart).
From Financial Innovation to Inclusion – IMF F&D
For technology to benefit everyone, private sector innovation needs to be supported by public goods Digital technology is transforming the financial industry, changing the way payments, savings, borrowing, and investment services are provided and who provides them. Fintech and Big Tech companies now compete with banks and other incumbents across a range of markets. Meanwhile, digital currencies promise to transform the heart of finance: money itself. But just how much has technology advanced financial inclusion? For sure, in the past year alone, digital finance has helped households and businesses meet the challenges posed by the COVID-19 pandemic. It has also given governments new ways of reaching those who need support.
COVID-19 strategies must invest in human-centred recovery, ILO tells World Bank/IMF
COVID-19 crisis recovery policies must be human-centred and address pre-existing world of work challenges as well as the impact of the pandemic, the Director-General of the International Labour Organization (ILO), Guy Ryder, told the members of the Development Committee and the International Monetary and Financial Committee (IMFC), who convened during the 2021 Spring Meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF). Citing the sharp increase in poverty and inequalities seen since the pandemic began, he also warned delegates that without comprehensive and concerted policy efforts, “there is a very real risk that the COVID-19 crisis will leave a legacy of widening inequality and social injustice.” Coherent, multilateral action is essential to ensure that economic and social recovery is as human-centred as the impact of the pandemic itself, he said, pointing out that the ILO Centenary Declaration for the Future of Work, adopted unanimously by ILO Member States in 2019, offered an internationally-agreed roadmap to more inclusive and resilient societies.
Tackling the data gap in the fight against illicit financial flows | UNCTAD
UNCTAD is working with national statistical offices to better measure the scale of illegal movements of money across borders to inform firmer policy action.
As the world frantically searches for the funds needed to recover from the COVID-19 crisis and achieve the United Nations Sustainable Development Goals (SDGs), concerns remain that billions of dollars of illicit financial flows (IFFs) will slip through the cracks this year. A conceptual framework designed by UNCTAD and the UN Office for Drugs and Crime (UNODC) can help governments measure IFFs better and design more effective policy responses. “The pandemic has made it even more urgent to track illicit financial flows,” UNCTAD’s chief statistician, Steve MacFeely, said. “Without resources, countries will not be able to achieve SDGs, and progress that has been made may even be reversed.”
Only Multilateral Cooperation Can Stop Harmful Tax Competition (Inter Press Service)
US Treasury Secretary Janet Yellen has urged all governments to support a global minimum corporate tax rate of at least 21%. The US is working with other G20 nations to get other countries to end the “thirty-year race to the bottom on corporate tax rates”.
As countries raced to the bottom, offering increasingly generous tax incentives to attract investments by transnational corporations (TNCs), the average worldwide statutory corporate tax rate fell from 40% in 1980 to 24% in 2020. Thus, US$500–600bn, or around 10–15% of annual global corporate tax revenue, is lost yearly to TNCs shifting profits to tax havens, using base erosion and profit shifting (BEPS) book-keeping.
Developing country governments undertook reforms reducing often progressive direct income tax systems in favour of supposedly neutral, but actually regressive indirect taxation on consumption. Digitisation and changing business models are making it more difficult to determine the actual location of economic activities. Thus, digitisation enables BEPS, reducing revenue due to under-reported taxable income. Consequently, in 2017, developing countries lost US$10bn in revenue from e-commerce compared to HICs’ US$289 million loss. Least developed countries lost US$1.5bn while sub-Saharan African countries lost US$2.6bn.
Supported by the G20, the OECD has been working on BEPS since 2013. The OECD BEPS initiative seeks to check tax base erosion by setting a global minimum corporate income tax rate and taxing TNCs selling cross-border digital services. OECD and G20 countries now aim to reach consensus on both by mid-2021.
