tralac Daily News
Sugar Masterplan starting to uplift industry – DTIC (Engineering News)
The South African sugarcane industry has experienced a sharp decline in revenue and production in recent years, mainly as a result of cheap sugar imports that have flooded the local sugar market, as well as the Health Promotion Levy (HPL) or so-called sugar tax, that is threatening its future prospects. The Portfolio Committee on Trade and Industry held a meeting on May 11, during which stakeholders within the sugar industry engaged on key matters and developments with regard to the Sugar Masterplan – which was formally signed off by all stakeholders in a virtual ceremony held on November 16, 2020.
Trade and Industry Minister Ebrahim Patel says the outbreak of Covid-19 has allowed the country to ramp up the production of personal protective equipment (PPE) in the fight against the virus. He said this has also boosted trade between South Africa and the rest of the continent. “What Covid has done is remind us how important it is to localise, because in March last year the country had a shortage of medical grade masks and other products. When we did an initial check on what our capability is to produce those masks that front-line healthcare workers use, we concluded that at best we could do 6 million masks a month and yet this country’s need was greater than that,” said Patel.
Transformation of SEZs into truly special zones key to their success – CDE (Engineering News)
In a new report, the Centre for Development and Enterprise (CDE) is calling on government to change or adapt special economic zones (SEZs) into areas that are “actually and truly special”, offering a modified labour market regime to attract companies and investment. CDE executive director Ann Bernstein points out that, although there are 11 SEZs in South Africa, none offer tenants a business environment that is meaningfully different from that of the surrounding economy.
Small business development minister Khumbudzo Ntshavheni says the department is in talks with the Department of Trade, Industry and Competition to designate more products under the 100% local content category to support SMMEs in the local manufacturing sector. The minister said this when ministers in the economics sector replied to oral questions in the National Council of Provinces (NCOP) on Tuesday. Ntshavheni said South Africa runs an open economy, which means it competes internationally and products are allowed to be in the country. However, the Department of Trade, Industry and Competition designates certain products for 100% local content, which means that products that are produced in other countries in certain categories cannot be allowed into South Africa because the products that must be in the country are those products that are produced locally.
Construction of largest renewable energy investment in South Africa begins (Construction Review)
Construction of the 100MW Redstone project has begun following achievement of financial close. At US $826.3m total investment, the Redstone project is the largest renewable energy investment in South Africa to date. The project has secured financing from leading international and South African financial institutions. Through the successful mobilisation of international project finance, Redstone CSP has facilitated approximately US $499m in foreign direct investment to fund and support the strategic energy transition goals of the country.
Namibia yesterday launched a utilisation strategy for the two-decades-old African Growth and Opportunity Act (AGOA), with a specific objective to increase the country’s exports to the United States (US). This joint effort between the US Agency for International Development (USAID) and Namibia’s industrialisation and trade ministry is part of US efforts to expand mutually-beneficial trade with Namibia, enabling Namibia to export over 6 400 products tariff-free to the US market. The strategy recommends steps to address the policy, supply and market challenges faced by potential Namibian exporters. A body, composed of private and public sector representatives, will drive the implementation of this AGOA strategy. It is envisaged that increased utilisation of AGOA will result in more local job opportunities, while Namibian companies that utilise AGOA will be exposed to the US market, where they can create sustainable strategic alliances with US firms. Through the application of this strategy, minister of trade Lucia Iipumbu hopes Namibia will be able to maximise AGOA’s trade potential in trade, investments and skills transfer.
BEMA makes strides in market search (Botswana Daily News)
Botswana Exporters and Manufacturers Association (BEMA) continues to seek market access for local companies both regionally and globally. In an interview with BOPA, BEMA chief executive officer Ms Mmantlha Sankoloba said even though the organisation had encountered challenges, more successes than setbacks were realised in the quest to secure international markets on behalf of Botswana manufacturing entities. Ms Sankoloba said at the peak of the COVID-19 pandemic, the association made intensive efforts of prospecting for groundnuts markets and found South Africa to be a key market.
Following the trade tension between Uganda and Kenya, the two neighbouring countries entered a deal that to many, has issues. Do you have any qualms with the communiqué that the two countries endorsed last month, considering that you had raised a red flag before over Uganda’s exports to Kenya?
While all efforts to resolve market access challenges by our members are welcome and we note that the meeting outcomes indicated progress towards resolution of long-standing challenges, we are frustrated that trade that should be guided by a clear EAC framework (enshrined in the Common Market Protocol) is now hostage to bilateral negotiations. For sustainability of trade in the region, a regional dispute resolution mechanism that is enforceable and able to bring sanctions to bear on errant states is a more permanent solution and one that would cure the embarrassment of partner states having to seek permits and comply with quotas in order to supply their neighbors in total contravention of the ideals of the EAC Treaty.
Head of States from Kenya and Tanzania have agreed to further discussions to end cold trade ties which have defined bilateral ties between the pair in recent years. The agreement will see the pair’s respective Trade Ministers meet at a summit in a month’s time to discuss the easing of non-tariff barriers (NTBs) which have characterized trade between the two East African Community (EAC) partners. On Wednesday, President Kenyatta admitted to the impact of the adverse ties which have cut down the volume of trade between the countries in the last decade. The value of trade between Kenya and Tanzania has plateaued easing to Ksh.58 billion in 2020 from a higher Ksh.60.4 billion in 2012.
Kenya setting up emissions trading market, says Ukur Yatani (Business Daily)
Kenya aims to set up an emissions trading system that will allow companies and other bodies to buy emissions allowances, Treasury said on Tuesday, as the country strives to limit the release of greenhouse gases. Emissions trading is a pollution control mechanism where a central authority issues a limited number of permits for the release of specific greenhouse gases. Companies can then buy these permits and also trade them. Many countries are using a price on carbon to meet climate goals, in the form of a tax or under an emissions trading or cap-and-trade plan where companies or countries face a carbon limit. “The government is at an advanced stage in establishing the Kenya Emissions Trading System allowing companies and organisations to buy Emission Allowance and thereby enable Kenya to meet her commitments in limiting greenhouse emissions,” Treasury Secretary Ukur Yatani told an online conference of Kenyan and European officials.
Uganda: Where Does Money Borrowed By Govt Go? (Daily Monitor)
Uganda is unable to exclusively finance its ambitious infrastructure projects from domestic revenues due to a narrow tax base. Officials said the tax revenues are lower than 16 per cent of the Gross Domestic Product (GDP), the average for African countries. Part of the problem, according to experts, is the government’s failure to effectively tax and collect revenues from the informal sector that roughly accounts for half of Uganda’s economy. This newspaper’s investigation reveals that the government’s plan to finance up to 80 per cent of its budget from local revenue has failed because of its inability to generate sufficient domestic revenues. To plug the financial hole, the country has increased its borrowing from both external and domestic creditors, plunging the country to near debt distress.
Economic ties: Suluhu to urge more Tanzanians to invest in Kenya (The Star, Kenya)
President Samia Suluhu of Tanzania has pledged to cement historical friendship and brotherhood between Tanzania and Kenya.The president who is on her two-day official visit to Kenya said both countries need to set up sound policies to build strong economies and cooperation. Speaking during a State banquet hosted in her honour by President Uhuru Kenyatta and First Lady Margaret Kenyatta on Tuesday evening, Suluhu said her era of leadership will strive to strengthen historical ties that exist between the two countries especially in economic cooperation. “Investments from Kenya to Tanzania are largely good. We have about 513 Kenyan companies in Tanzania but from Tanzania to Kenya we have only 30 companies. Now when I go back I will urge more Tanzanian investors to come in and set shop in Kenya so that we can improve on our economies,” Suluhu said.
COVID-19 has more than wreaked havoc on all areas of society. Significantly, COVID-19 accentuates two types of dependencies into which African countries are locked. First, is the dependence on export of commodities such oil, minerals, and agricultural raw materials. Second, the pandemic led to the crash of oil and mineral prices; both events exacerbated Africa’s economic challenges and taxed the health system in the most severe of ways. Africa imports around 80% of its drugs and medical supplies from China and India. According to the African Development Bank (AfDB), potential losses in GDP are to the magnitude of $ 173 and $236 billion in 2021 and 2022 respectively. The second dangerous dependency is the reliance on food imports, especially grains imports, estimated at $45 billion in 2019.
FG hopeful of improved earnings from floating LNG (Guardian Nigeria)
The Federal Government has expressed optimism about improved earnings from its gas monetisation scheme, following the signing of the Pre-Front End Engineering Design (Pre-FEED) contract by the licensee to commence the development of 176 million cubic feet per day Liquefied Natural Gas (LNG) floating plant. The Department of Petroleum Resources (DPR) had issued Licence to Establish (LTE), the first floating Liquefied Natural Gas (LNG) production plant to UTM Offshore Limited, an indigenous oil and gas company, earlier this year.
Nigeria’s oil output drops by 30% in four years – Investigation (Vanguard News)
In an apparent reflection of the measures taken to achieve stability in the global market by the Organisation of Petroleum Exporting Countries, OPEC, pipeline vandalism and oil theft in the Niger-Delta, Nigeria’s oil production has fallen by 30 per cent in the last four years to 1.423 million barrels per day, mb/d in 2020 from 2.041 million barrels per day, mb/d in 2017. The figure excludes 2020 condensate production, according to the data obtained by Vanguard Energy from OPEC’s monthly market reports between 2017 and 2020. This steady or consistent drop in output constitutes a serious threat to the nation’s economy, especially as the world continues to adopt new forms of clean energy.
The Nigerian Content Development and Monitoring Board (NCDMB) is set to host the maiden edition of the African Local Content Roundtable in a bid to institutionalise peer review mechanism among African oil-producing countries on local content as a key development imperative for domestication and sustainable growth of Africa’s hydrocarbon resources. The organisers, in a statement issued on Tuesday, noted that over the years, critical stakeholders in the oil and gas sector in Africa have been fascinated by the remarkable impact and achievements of Nigeria in the implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act and the development of its hydrocarbon resources which is anchored on the philosophy of In-Country Value Addition.
The International Monetary Fund (IMF) executive board approved on Monday a financing plan to help mobilize resources needed for the fund to cover its share of debt relief to Sudan. The financing plan relies on a broad effort of IMF member countries, including cash grants and contributions derived from the fund’s internal resources, IMF Managing Director Kristalina Georgieva said in a statement. “This marks a critical step in helping Sudan advance the process of normalizing relations with the international community and make progress towards achieving debt relief under the Heavily-Indebted Poor Country (HIPC) Initiative,” she added.
African regional and continental news
AfCFTA involves country and regional economic community actions (Ghana Business News)
Trade under the AfCFTA means a liberalized single market for goods and services facilitated by the easy movement of people and capital. It also lays the foundation for a continent-wide customs union. Ultimately, this new single market is expected to contribute to sustainable and inclusive socioeconomic development, gender equality and, more broadly, enhanced competitiveness and industrial development. The United Nations Economic Commission for Africa (ECA) is playing a key role in providing support to the AfCFTA process. ECA is collaborating with the African Union Commission (AUC) and various partners to advocate for AU Member States’ AfCFTA ratification and implementation, sensitization around the AfCFTA and technical support to the negotiations. ECA’s technical support also extends to assistance in the preparation of national AfCFTA strategies. Forty-one countries, including 21 LDCs and four Regional Economic Communities (RECs) are at various stages in preparing these strategies, which identify strategic areas of national interest and relevant interventions to ensure that countries and regions fully participate and benefit from the agreement.
The Secretary-General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, has urged the 37 countries which have ratified the African Continental Free Trade Area Agreement to resort to the dispute settlement body that has been set up to address any challenge they might face. He has also asked them to endeavour to comply with rulings of the body, as this will significantly contribute to investor confidence. According to him, compliance with the rules will go a long way to boost investor confidence – as the world will be able to tell the character of a country when it comes to dispute settlement and the risk associated with investments into those countries. “More importantly, there is an investor sentiment that is at play here: countries which are seen to be complying with rules of the African trade law, those countries will have their investor sentiment enhanced. It is an important development; it sends a strong signal to importers, investors and service provider that Africa is ready to transact businesses in a rules-based system,” Mr. Mene told journalists at a press briefing on the agreement’s status.
The President of the Republic of Botswana, His Excellency Dr. Mokgweetsi Keabetswe Eric Keabetswe Masisi, has signed several Southern African Development Community (SADC) legal instruments which include the Protocol on Industry, agreements amending the Protocol on Extradition, and the Protocol on Mutual Legal Assistance in Criminal Matters. The Protocol on Industry seeks to promote development of a diversified, innovative and globally competitive regional and national industrial bases which will enable the Region to achieve sustainable and inclusive industrial development. Botswana becomes the 12th SADC Member State to have appended its signature on the Protocol.
Impact of COVID-19 on financing of free trade in Africa assessed (ESI-Africa.com)
African Export-Import Bank, the UN Economic Commission for Africa, the African Development Bank and Making Finance Work for Africa Partnership have released a special African Trade Finance Survey Report assessing the impact of the COVID-19 pandemic on trade finance in Africa. The report highlighted the role trade finance can play in overcoming social and economic impacts of the COVID-19 pandemic to accelerate the process of economic recovery through trade and investment growth.
Professor Benedict Orama, Afreximbank president, explained that tightening global financing conditions triggered massive capital outflows from Africa, exceeding $5billion the first quarter of 2020. “These massive capital outflows strained Africa banks, many of which recorded sharp drops in net foreign assets. This further exacerbated liquidity constraints and undermined the capacity of banks to finance African trade.”
Dr Vera Songwe, executive secretary at the UN Economic Commission for Africa (ECA) commended Afreximbank for the counter-cyclical measures it took to help countries deal with the economic and health impacts of the COVID-19 pandemic: “The bank has also played a major role in putting together a $2billion facility to help African member states purchase up to 400 million doses of the COVID-19 vaccine.”
A road and rail bridge linking Botswana and Zambia was inaugurated on Monday – marking the completion of a multi-million-dollar project aimed at easing congestion at border crossings throughout the southern African region. “This will lower the cost of doing business,” Zambia’s President Edgar Lungu said at the ribbon-cutting ceremony, anticipating “an increase in trade and competitiveness, job creation, tourism and other positive ripple effects”. Construction of the $259 million (213 million euro) project began in December 2014, co-funded by the African Development Bank (AfDB), the Japan International Cooperation Agency (JICA), regional governments and other grants. The bridge will facilitate intra-regional freight transport by allowing trucks to bypass the notorious Beitbridge border post between Zimbabwe and South Africa, which is perennially congested, with vehicles spending hours and sometimes days queueing to cross.
Africa, according to a report by the African Development Bank Group (AfDB), is one of the least industrialised regions of the world as its economy is mainly centered on the export of raw agricultural and mineral staples which are in most cases, processed into finished products by foreign industries. Economic experts averred that most African countries have continually traded their natural resources majorly in unprocessed forms which to a large extent has limited diversification towards high processed and value-added commodities in global export trade. They also warned that Africa’s failure to process its raw commodities into finished products for export could prove costly to economic development as it is probably the most ideal development model that can actually create sustainable jobs, relevant export revenues and rapid wealth generation to a large range of its populace.
It has been argued by analysts and stakeholders in the manufacturing sector that the continent’s industrialisation development has been hampered by wide range of problems including high cost of capital, erratic power supply, lack of relevant skills, high prices of raw materials, infrastructural decay, poor customs and logistics, government policies and interferences. These, according to them, have forced many indigenous industries from functioning effectively with many of them eventually closing down.
Africa must actualize the customer-king adage (Daily Monitor)
It is estimated that by 2040, Africa will have the largest workforce in the world. With a steadily growing population, the continent could have more than a quarter of global population by 2050. It has been previously reported that the rate of return on foreign investment in Africa is higher than in any other developing region. Also in recent times, Africa’s lion states which include Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Uganda, and South Africa have grown faster than the Asian tigers. Africa’s middle class has been reported as fastest growing in the world. About 34 percent of Africa’s population was reported to spend $ 2.20 a day, a 100 percent rise in less than 20 years, according to the African Development Bank. The McKinsey Global had projected that Africa’s boom in consumer spending was set to rise from $ 860 billion in 2008 to $ 1.4 trillion in 2020. This projection was hit five years ahead of time, in 2015. It is now projected that the figure will hit $2.1 trillion by 2025.
Following President Biden’s Interim National Security Strategic Guidance signaling for continued growth in partnerships with African economies, the African Energy Chamber (AEC) believes it is vital to engage U.S. companies and investors to counter the often-wrong preconceptions about investing in the continent, as Africa has some of the fastest-growing economies globally and possesses significant investment and development opportunities for U.S. firms. U.S. companies stand to play a significant role in the road to a lower-carbon future on the continent, and to continue leading some of the most important markets in the energy industry. “Africa, we believe offers a tremendous opportunity for US companies to invest and make returns that are far superior to market returns in many other investment destinations” said Jude Kearney, Chairman of the US-Africa Committee at the AEC. “We would therefore like to encourage more US companies to look beyond unjustified risk perceptions on Africa and actively pursue opportunities in Africa.”
African nations are attending this year’s Expo 2020 Dubai in force, hoping to project an image of a modern and ambitious continent and shed stereotypes of conflict and underdevelopment. The six-month mega-event was delayed by the Covid pandemic. With nearly all African states represented for the first time, Expo provides a stage to advertise a “continent that is ready to move forward” and “a secure place to do business,” Levi Uche Madueke from the 55-member African Union told AFP. “The time has come for us to actually reach out to the world, and for the world to understand us, and also see how they can collaborate with us,” said Madueke, the AU’s head of strategic partnerships.
The EU is reaffirming its solidarity with vulnerable people in countries in the Sahel and Central Africa through a humanitarian budget of €210 million in 2021. The funding will be allocated to humanitarian projects in the following eight countries: Burkina Faso (€24.3m), Cameroon (€17.5m), the Central African Republic (€21.5m), Chad (€35.5m) Mali (€31.9m), Mauritania (€10m), Niger (€32.3m) and Nigeria (€37m). Crisis Management Commissioner Janez Lenarčič said: “Worsening instability and armed conflicts, together with the COVID-19 pandemic and natural hazards, are having a devastating impact in the Sahel and countries in Central Africa. The EU remains committed to help reduce suffering among people in need in the region. While humanitarian aid is there to bring emergency relief, longer-lasting improvements can only be brought about through the political will of national governments and good governance.”
A project launched in Zimbabwe in December 2020 to mitigate the impact of COVID-19 on food and nutrition security using Climate Smart Technologies is making good progress with a thriving horticulture crop, a solar-powered borehole, and 100 efficient cook stoves having been installed. The project is being implemented by Grow a Tree Foundation (GTF), a partner of the Centre for Coordination of Agricultural Research and Development for Southern Africa (CCARDESA), with funding from the European Union (EU) through the Southern African Development Community (SADC), and technical support from Bembani Group. The project is expected to expand to other product lines such as beekeeping, fish ponds and chicken rearing. The community through the project was assisted with registering a private company that will be used as a commercial vehicle to market and sell the produce.
The ECA Office for North Africa held on Monday, May 10, 2021, a workshop for the launch of its study on the recognition of African migrants’ skills in the Kingdom of Morocco, currently conducted as part of its programme for Migration Statistics and Skills Recognition in Africa. The meeting presented the methodology of the study, which aims to facilitate, on the one hand, the assessment of national policies in the field of skill recognition, and, on the other hand, reflect on avenues to further improve them, to support Morocco’s National Immigration and Asylum Strategy, the implementation of both Agendas 2030 and 2063 as per the recommendations of the Global Compact for Safe, Orderly and Regular Migration (GCM). “This project will enable us to study Morocco’s policy regarding foreign diploma recognition, with a view to developing an African framework for the certification of diplomas,” said Khaled Hussein, Director a.i. of the ECA office in North Africa ahead of the meeting.
On support for global trade in Africa, today (Trade for Development News)
A new World Trade Organization (WTO) report, Strengthening Africa’s capacity to trade, addresses the disruptions to trade due to the pandemic and outlines the ways the international body is working to encourage trade flows on the continent. As LDCs, countries get additional international support with development assistance and with trade, and 33 of the 46 LDCs today are in Africa.
The WTO’s Africa report states, “Trade has allowed many developing countries to benefit from the opportunities created by emerging new markets by enabling them to integrate into the world market through global value chains. Moreover, the unbiased, predictable and non-discriminatory regime maintained by the multilateral trading system places all economies – developing and developed, small and large – on an equal footing.” But COVID-19 is hitting the most vulnerable the hardest, with the United Nations Conference on Trade and Development (UNCTAD) foreseeing LDCs to “experience their worst economic performance in 30 years.”
With Liz Truss setting out Britain’s post-Brexit future, Helen Grant Tory MP for Maidstone and The Weald and trade envoy to Nigeria claimed a trade deal with the country could be significant for UK plc. Referencing her desire to “bang the drum” for UK trade abroad, Ms Grant boasted of Nigeria’s emerging economy – the largest in Africa – and the impact it could have for British business in terms of financial services, agriculture and tech. “Traditionally oil and gas has been Nigeria’s most important sector and that will remain so for some time.” But Nigeria’s government realises that its economy must diversify for climate and sustainability, as well as economic reasons. “That’s why it’s also good business for the UK Government to support Nigeria’s efforts to reform in critical areas such as the power sector, improving the business environment or speeding up customs clearance.”
“The aim of this new draft text is to serve as the basis for work toward a clean text to present to a meeting of ministers on 15 July,” the chair told heads of delegations at a meeting of the Negotiating Group on Rules. “This leaves us just two months to finish. The shared sense of urgency is palpable, and we need to harness that sense to finally agree to the compromise landing zones that will represent the ambitious and balanced outcome that ministers in Buenos Aires mandated us to find, to make a substantial and tangible contribution to the health of our shared oceans.”
The COVID-19 pandemic will expand the divide between rich and poor around the world and reverse gains made towards the Sustainable Development Goals (SDGs), according to new analyses from the United Nations Development Programme (UNDP) and the Pardee Centre for International Futures at the University of Denver. The analysis shows that eight out of ten people that could become poor by the end of this decade as a result of the pandemic will live in the world’s poorest countries and that an additional 41 million more people will live in extreme poverty in low and medium human development countries by 2030. But the study also shows that strategic policy decisions made now could not only reverse the development losses caused by the pandemic, but bring countries closer to achieving the SDGs.
The narrow section of the Suez Canal that was accidentally blockaded when the Ever Given cargo ship became stuck will be expanded and deepened, according to plans announced by the Egyptian government. The plan was announced six weeks after the Ever Given ran aground on both banks of the canal, leading to a global trade crisis. About 10 per cent of world trade flows through the canal, and some 19,000 vessels passed through the canal last year, according to official figures.