tralac Daily News
Organised business is preparing to intensify engagements with government and labour over growing calls for higher levels of localisation and industrialisation, including in the country’s infrastructure roll-out, as well as in response to a “request” by Trade, Industry and Competition Minister Ebrahim Patel that an import-substitution target of 20% be set for non-petroleum imports.
Business Unity South Africa (Busa) CEO Cas Coovadia reports that import-substitution discussions have intensified partly as a result of the success of business in responding to the supply-chain challenges presented during the Covid-19 lockdown in 2020, when several enterprises stepped up their manufacture of personal protective equipment. However, the priority being given to localisation in government’s Economic Reconstruction and Recovery Plan has since prompted Busa and Business Leadership South Africa (BLSA) to commission research into the issue, as well as to create a structure, comprising over 30 CEOs mostly from manufacturing enterprises, to advance bilateral discussions with government on the matter.
Sense needs to prevail as government considers new policies to limit the impact of the third Covid-19 wave in South Africa, says Business Leadership South Africa (BLSA) chief executive Busi Mavuso. Citing the economic costs of South Africa’s last three ‘hard’ lockdowns, Mavuso said any additional restrictions being considered for South Africa’s third wave must focus on protecting both lives and livelihoods. “We now have clearer insight into the impact of certain policies on the economy as well as the impact on health outcomes. Businesses have invested to be able to operate safely – the priority must be to set out safe operating protocols and let business get on with adapting to them. “Bans, curfews and shutdowns are hugely damaging and have a questionable impact on public health. Let us get the balance right.”
South Africa’s weak growth could fuel socioeconomic tensions – Moody’s (Engineering News)
South Africa’s low economic growth and rising debt burden could see socioeconomic tension intensify and impede policy reforms, ratings firm Moody’s said in a research note on Tuesday. The note, an extract from the credit firm’s annual report published on Monday, said South Africa’s credit profile was balanced, with its low level of foreign currency debt and strong core of institutions counting in its favour.
Why Kenya could lose its top food export market (Business Daily)
In the months surrounding the birth of our own republic, from 1961 to 1963, a crucial organisation was also being born, to assure food safety across the globe. As a partnership between the Food and Agriculture Organisation (FAO) of the United Nations and the World Health Organisation (WHO), the Codex Alimentarius Commission produces the Codex Alimentarius, which is Latin for the ‘Book of Food’. It contains internationally recognised guidelines, standards, codes of practice and recommendations on food safety, with just two goals: to ensure the health of consumers and fair trade in food. Yet, today, both are under threat.
Investors threaten divestment over FG’s Free Trade Zones reform plans (Blueprint Newspapers Limited)
Leading investors in Nigerian Free Trade Zones have threatened to commence divestment from the zones following what they called an attempt by the federal ministry of Industries, Trade and Investment to transfer supervision of the Zones from Nigeria Export Processing Zones Authority (NEPZA) to the Oil and Gas Free Trade Zones (OGFZA).
Zimbabwe needs a “broader reform and stabilization agenda” to sustain an almost yearlong effort by authorities to support the local currency and lower inflation, the International Monetary Fund said.
Zimbabwe reintroduced its own currency in 2019 after a 10-year hiatus and has been battling bouts of high inflation and shortages of everything from foreign currency to food. The local unit, which was pegged at parity to the U.S. dollar two years ago, has plunged to 84.6 against the greenback, while annual inflation stands at 194%. The government has yet to provide a clear plan on how the country will expunge almost $10 billion of debt owed to multilateral lenders including the World Bank, Paris Club and African Development Bank that are crucial for it to access fresh credit lines. The solution lies in “sound policies and donor support needed to resolve the debt overhang problem,” according to the IMF.
Namibia on Monday lauded growing business and bilateral relations with the European Union (EU) and called for the consolidation of the relations in mutual areas including combating climate change, improving exports and technical cooperation.
“The EU market remains an important market for Namibian exports. In 2019, Namibia exported goods valued at over 1.1 billion euros (19 billion Namibian dollars). Export products ranged from agricultural products to fisheries as well as mining commodities,” Namibian Ministry of International Relations and Cooperation Executive Director Penda Naanda said. According to Naanda, the Economic Partnership Agreement (EPA) concluded between EU and SADC EPA states, of which Namibia is a member, allows for duty-free, quota-free market access from Namibia to the EU with the exception of arms and ammunition.
The Minister of Information, Kojo Oppong Nkrumah who is also in Charge of Ghana’s Trade Information has directed all heads of Communications, Public Relations Officers and Corporate Affairs Departments of state institutions to document the various efforts being made by their organizations towards harnessing the potentials of the Continental Free Trade Area and report to the Ministry on regular basis. He said government in partnership with the Private Sector Community, International partners and the AfCFTA Secretariat will be intensifying information dissemination programs at the national, regional and continental levels to enlighten business associations and service providers on opportunities under the AfCFTA.
Players in the nation’s transit trade have been sensitised on how to position themselves to benefit from AfCFTA. The Transit Shipper Committee (TSC) members of the Ghana Shippers Authority (GSA) in Grater Accra have been taken through the AfCFTA framework and enlightened on how mechanisms available can be used to enhance their operations. Head of Freight and Logistics Department – who also doubles as Chairman of the Committee – Fred Asiedu-Dartey in his welcome address expressed optimism about the potential of transit trade and its contribution to the economy of Ghana. He noted that the TSC had made substantial contributions in the promotion of Ghana’s transit corridor, and that the TSC is poised to do even more to continuously bring about practical solutions for the challenges faced by transit shippers using Ghana’s corridors.
The government is inviting investors to establish mobile phone assembly lines in Tanzania to tap into a huge market of those not served, with a goal to reach 80 percent of internet users by 2025. The country has so far 43.7 million mobile phone subscribers but only 23.1 million of them get internet, with up to 86 per cent locked out in rural areas compared to 44.6 per cent in urban areas. At the media workshop on Saturday, Mr Nungu said the Tanzania Communications Regulatory Authority (TCRA) was working closely with stakeholders to ensure a majority of Tanzanians afford smartphones to access internet. “The government wants an inclusive digital economy that will ensure all people from all walks of life including the marginalised have access to the internet,” he said.
Real impact of Covid-19 on Tanzania’s economy (The Citizen)
The impact of the Covid-19 pandemic may have been played down in the past. However, available data shows that it has had devastating outcomes on a number of economic aspects. According to the quarterly economic bulletin of the Bank of Tanzania (BoT), growth of credit to the private sector by commercial banks dropped to 2.3 percent in March 2021, largely due to the impact of the Covid-19 pandemic on demand and supply of various products. “The pandemic-related impact disrupted demand and supply channels of some of the economic activities, particularly those directly exposed to external sector shocks.”
According to a 2019 study by Tanzania Investment Centre (TIC) and East Africa Trade and Investment Hub, avocado has been transformed to be an important earner of forex for Tanzania and a source of edible oil. A long time ago when our farmers started planting coffee, tea, sugar and other cash crops, it was the analogue era. There was no internet. But today, as our farmers take up avocado farming, it is the digital era. How our farmers going to take advantage of the development of science and technology? Traditionally, our farmers make no money or make very little in the agriculture value chain. Mostly, it’s because as they work on their farms, it is always a game of chance. But there are modern farmers in Tanzania, especial the investors, if they plant beans, they know where to sell them and some had already secured a contract.
African regional and continental news
Considerations for rules of origin under the African Continental Free Trade Area (Journal of African Trade)
Rules of origin are used to determine a product’s eligibility for preferential tariffs under a free trade agreement and have major implications for the extent of trade under the agreement and the growth of regional value chains. Firms choose to comply with rules of origin when the benefits of trading under an agreement, determined primarily by the preference margin, are higher than the costs of complying with rules of origin, determined by the costs of sourcing products from within the free trade area and from the costs of certifying that products comply with rules of origin. In addition, as there is a fixed cost component of complying with rules of origin, compliance is more likely when trade volumes are large. Negotiations for rules of origin under the African Continental Free Trade Area (AfCFTA) are complicated by the diverse rules of origins used in Africa’s many regional economic communities. We analyze preference margins, the availability of intermediate inputs, trade volumes, and potential certification costs in Africa.
With all the challenges that the Covid-19 pandemic has presented to Africa, there are many exciting changes afoot, and few are potentially more impactful than the African Continental Free Trade Agreement (AfCFTA). While the Covid-19 pandemic has thrown a harsh spotlight on the vulnerabilities of global supply chains, the putting in place of the AfCFTA agreement couldn’t be more timely for Africa. AfCFTA is a catalyst for new ways of doing business, producing, working and trading within Africa and with the rest of the world. It highlights the significant and increasing commitment of the African Union to reducing poverty through trade.
The AfCFTA can play the role of unlocking innovation, growth and productivity across the continent, but significantly, for its SME segment, by translating spending power into economic development. Cutting red tape and simplifying customs procedures could bring significant income gains for SMEs. By improving their ability to quickly scale up using digital skills, SMEs have the chance to capitalise on the potential trade boom.
Africa has the opportunity to follow in the footsteps of Asia’s manufacturing giants over the next decade, using industrialisation as a strategy to uplift millions of people from poverty and create jobs for its burgeoning young population. In doing so, it could reinvent itself as the world’s next production powerhouse. That’s according to Vinny Perumal, CEO of KAS Africa, who says that the manufacturing sector holds the key to unlocking the economic potential of South Africa and the wider continent, with the continent’s young population emerging as an asset in a changing world.
“According to the International Labour Organisation (ILO), over one in five African young people were not in employment, education or training (NEET) in 2019,” she says. “Furthermore, half of the countries among the top 10 for the highest rates of youth unemployment are in Africa, with South Africa topping the list.
Ultimately, free trade can improve the economic standing of a country by improving the GDP and income per capita over time. For those reasons and more, the North American Free Trade Agreement (NAFTA), which eliminated most tariffs between Canada, Mexico, and the US, remains one of the most instructive trade agreements in the past two decades.
The trade deal also established health safety and industrial standards to facilitate the manufacturing and movement of goods; liberalized financial markets to increase investment opportunities; and expanded intellectual property rights. But for the potential benefits of AfCFTA to be realized, stakeholders – signatory countries, public and private development actors, and third-party governments and multinational corporations – should avoid the mistakes signatories made when they signed up to NAFTA in 1994.
Summit on the Financing of African Economies
French President Emmanuel Macron Tuesday hosts African leaders and chiefs of global financial institutions for a summit meeting that will seek to provide Africa with critical financing swept away by the Covid-19 pandemic. Africa has so far been less badly hit by the pandemic than other global regions – with a total of 130,000 dead across the continent. But the economic cost is only too apparent, with the International Monetary Fund warning in late 2020 that Africa faces a shortfall in the funds needed for future development – a financial gap – of $290 billion up to 2023. A moratorium on the service of public debt agreed in April last year by the G20 and the Paris Club, a group of creditor countries that tries to find sustainable solutions for debtor nations, was welcomed but will not be enough on its own. Many want a moratorium on the service of all external debt until the end of the pandemic.
Africa-France Relations: How Beneficial To Africa? (Global News Network)
The aim of the Summit, according to its convener, French President Emmanuel Macron, is to mobilize financial resources to revive the economy of African countries. Africa is not worse off, but there is the fear that given its weak and poorly-resourced health systems, the situation could worsen. It is also projected that Africa’s GDP could experience its first recession in 25 years in 2021.
Economic recovery and COVID-19 might sound persuasive and topical subjects, yet Africa-French relations, usually evoke controversies relating to colonial legacies and imperialism, conditional aid, and the Franc CFA currency, which remains a divisive issue. There is also a moot point over the criteria used for inviting attendees to the summit.
Macron and Africa: the good, the less good and the dangerous (The Africa Report)
France is at the forefront of a change in discourse on the continent. This is because of its insistence that Africa must be treated as a common geopolitical entity while taking into account its diversity. The French Development Agency (AFD) has thus ripped up the country’s common practise of dividing the continent into ‘Sub-Saharan Africa’ and North Africa. Paris’s handling of the conflicts in Libya and the recent succession dilemmas in Chad demonstrate a pragmatic and – therefore – refreshing understanding of intra-African dynamics.
But old habits die hard. Although the growth of French foreign direct investment (FDI) in Africa has been remarkable over the past five years (it increased tenfold in value between 2000 and 2017 according to the Treasury), this boom has benefited too few sectors of the future. Most of the FDI remains destined for fossil fuels (47% of the French FDI stock in Africa in 2017) and the traditional trade in raw materials.
Macron cancels debt to help ‘inspirational’ Sudan (Eyewitness News)
President Emmanuel Macron on Monday said France would cancel almost $5 billion in debt owed by Sudan, hailing the African nation as an “inspiration” in its transition after years of authoritarian rule. Macron hosted Sudan’s new leadership and other key African figures for a summit in Paris aimed at boosting Prime Minister Abdalla Hamdok’s drive for economic reform and investment. The French leader made clear the biggest priority for making progress would be to rid Sudan of its “burden” of debt, which amounts in total to some $60 billion, adding that he hoped other creditors would follow suit.
On Tuesday, a Paris summit on African economies will try to fill a financing shortfall of almost $300 billion caused by the COVID-19 pandemic. Both meetings, held in a temporary exhibition centre near the Eiffel Tower, present a chance for Macron to show himself as a statesman on Africa whose influence goes beyond the continent’s Francophone regions. The meetings mark a return to in-person top-level gatherings after the COVID-19 pandemic made video conferences the norm.
We the undersigned African Public Development Banks gathered today for the Spring meetings of the Finance in Common Summit, commit to supporting African heads of state and international organizations to finance the needed transitions and transformation of African economies. In the context of the Covid-19 crisis recovery, our efforts will center on achieving sustainable, resilient and equitable development.
African countries are facing a huge investment gap. At the same time, they must address their debt service payments, which weigh significantly on their ability to finance their development programs. African countries should be enabled to face this debt challenge in order to help preserve financial stability on the continent.
All regions of the world have developed their economies by relying strongly on their local resources. Strengthening African financial institutions is a prerequisite for the success of all international measures taken to provide financing to African economies. Reinforcing African public institutions will lead to the emergence and strengthening of a robust local private sector, and consequently mobilize national, regional and international investments.
It is crucial for the SADC to encourage all member states to develop, publish and promote national vaccine acquisition and roll-out plans and procurement strategies, detailing concrete measures to ensure non-discriminatory access to vaccines to all in the region. “Although progress is being made, many African countries have barely moved beyond the starting line. Limited stocks and supply bottlenecks are putting Covid-19 vaccines out of reach of many people in this region. Fair access to vaccines must be a reality if we are to collectively make a dent on this pandemic.” – Dr Matshidiso Moeti, the World Health Organization (WHO) regional director for Africa
New momentum for cooperation between the East African Community and the Federal Republic of Germany following the signing of two Government Agreements thus paving the way for the implementation of projects of a total volume of US$65 million in the areas of health, digital skills and water resources management.
With a view to the current Covid-19 pandemic, that also hit hard Eastern Africa, H.E. Regine Hess, Ambassador of the Federal Republic of Germany to the United Republic of Tanzanian and the EAC promised that Germany will commit additional funds of up to US$6.6 million for pandemic preparedness and response in 2021, to be implemented through existing EAC-German programmes on pandemic preparedness, economic integration and digital skills.
In order to strengthen digital skills and innovation in East Africa, the Secretariat and Germany further agreed on the implementation of the project “Digital Skills for an Innovative East African Industry” that builds on the results of the project “Centre of Excellence for ICT in East Africa”. The new phase (USD 6 million) strengthens digital skills of especially young women and men from all six EAC Partner States to strengthen their employability and innovation capacities.
Africa’s largest-ever vaccination drive is well under way. Forty-nine African countries are rolling out COVID-19 vaccines and over 22 million doses have been given on the continent. Valuable lessons are emerging, but major risks and challenges threaten Africa’s fragile gains.
“We’re in a very tough spot when it comes to supply,” says Dr Richard Mihigo, World Health Organization (WHO) Africa’s Immunization and Vaccines Development Programme Coordinator. “What is crucial for Africa is that we urgently use all the doses we have to protect our most vulnerable populations.”
In some African countries, a lack of funds is already causing delays in addition to a lack of vaccinators, sub-optimal training, weaker communications to boost the uptake of vaccines and an inability to capture crucial data or to print and distribute immunization cards. “Commitment and domestic resourcing is crucial,” says Dr Phionah Atuhebwe, WHO Africa’s New Vaccines Introduction Officer.
Are African banks ready to take on the trade-finance market? (The Africa Report)
When a European or Chinese turbine exporter wants to be sure that he will be paid by his African client – who also wants to know if the goods are on the boat – or when a Kenyan flower producer wants reassurance that they have been paid by the Amsterdam-based wholesaler who wants to be certain that the roses are on the plane, they turn to their banks. One bank for the importer, another to the exporter and a third ‘confirming’ bank issues and guarantees the letters of credit, document collection, etc.
Invest Africa, the leading business and investment platform for African markets, and Absa Group, one of Africa’s largest diversified financial services groups, are pleased to announce a strategic collaboration, aimed at supporting the development of business and investment on the continent, and the growth of Absa Group as a leading African retail, corporate and investment bank. The new alliance combines Absa Group’s position as experts in providing a gateway to opportunities in Africa, with Invest Africa’s well-established network, in order to promote trade and investment across the African continent.
Africa’s underinvested youth are in need of urgent attention and youth entrepreneurship investment banks must become the focus of global support, the African Development Bank head Dr. Akinwumi A. Adesina said Monday in a discussion on scaling up financing for the continent’s youth. With lack of access to finance a serious bottleneck, the proposed youth entrepreneurship investment banks would coordinate financial and non-financial actors and partners to more effectively support youth entrepreneurs.
Research suggests that Africa needs to create 18 to 30 million jobs annually through 2030, and Ladi Balogun, CEO of First City Monument Bank Group, reiterated the urgency of this challenge. He said time was of the essence in terms of mounting a response as well as accelerating decision-making processes for the extension of financing to entrepreneurs. He also advised working through local money managers to achieve scale. “We have a ticking time bomb on our hands,” Balogun said.
As a U.S. presidential candidate, Joe Biden declared that he would “lead efforts internationally to bring transparency to the global financial system, go after illicit tax havens, seize stolen assets, and make it more difficult for leaders who steal from their people to hide behind anonymous front companies.” Perhaps nowhere will his intervention be more welcome than in Africa.
Stemming illicit financial flows and returning stolen assets are therefore a top priority in countries across the continent eager to finance domestic development. It would be extremely beneficial for Africa if Biden were to make the fight against illicit financial flows a core component of U.S. Africa policy.
The United States would benefit from supporting Africa’s fight against illicit financial flows. The U.S. government will commit fewer financial resources and security personnel to tackling insecurity in Africa when the financiers of conflicts and terrorism on the continent are starved of access to illicit funds. The U.S. government will also spend less on foreign aid to a more economically independent Africa and will see reduced illegal immigration from the continent.
International aid to Africa needs an overhaul. Tips on what needs to change (The Conversation CA)
Many African countries still rely heavily on foreign aid. However, several studies have shown that foreign aid has failed to deliver sustainable economic growth and poverty reduction. The fact that foreign aid as currently practised has failed to achieve its poverty reduction targets in Africa is clear from the data. Over 75% of the world’s poor live in Africa today. In 1970 the figure was 10%. Some forecasts suggest it could rise to 90% by 2030. Africa is the only continent in the world where official aid inflow outstrips private capital inflow by a large margin. This is problematic since no country in the world has achieved substantial development based on reliance on aid. This points to the need for reform.
AU priorities on Gender Equality and Women’s Empowerment in Agenda 2063 (The East African)
Africa has noted that despite positive achievements registered recently in decision-making, women, as the largest proportion of our population; remain vulnerable, at-risk and impoverished due to the challenges caused by social, economic, cultural and political marginalisation, gender-based violence and discrimination against women, terrorism, conflict, and fundamentalism. Under Agenda 2063 and continental, regional and national Gender Architectures, it is envisaged that there will be gender equality in all spheres of life and engaged and empowered youth. Women are key contributors to global economies and play a critical role in the development of their societies. Without the equal and effective participation of women in all spheres of socio-political and economic life, the vision of Agenda 2063 might not be realised.
UNCTAD LDC Report: putting productive capacities first (Trade 4 Dev News)
Expanding and diversifying productive capacities will better position least developed countries (LDCs) to tap the financing and e-trade opportunities that will underpin their Covid-19 recovery. This was a recurrent theme in the United Nations Conference on Trade and Development (UNCTAD) Least Developed Countries Report 2020, which cautioned however that the international community must first rally with resources, policy space and better international support measures.
At a negotiating meeting of the structured discussions on investment facilitation for development on 11-12 May, participating members made good progress, with a view to achieving a concrete outcome at the 12th Ministerial Conference at the end of the year. Delegations addressed a number of provisions across several sections of the so-called Easter text, the consolidated document which serves as the basis for the negotiations.
Speaking at a meeting of the Working Group on Trade, Debt and Finance on 17 May, Director-General Ngozi Okonjo-Iweala encouraged WTO members to build on their discussions to develop a trade finance work programme in the run-up to the 12th Ministerial Conference (MC12). She emphasized the importance of trade finance for developing economies, particularly least-developed countries, and offered her support to the group’s efforts to catalyse trade finance support for those needing it the most.
Why the trading system needs even more multilateralism today (Observer Research Foundation)
Pandemic-induced economic challenges and trade uncertainties are not a threat but an opportunity to ‘multilateralise’ new and deeper trade integration in future WTO agreements. In many parts of the world, automation and technological advances have resulted in improved manufacturing output even as large parts of the workforce have been left without jobs. Without a safety net and programmes to equip workers with new skills, those who may have lost out on jobs to technological advancement and globalisation may grow discontent. Future advancements in digital technologies could also lead to a loss of white-collar jobs in advanced economies. It has been argued that the wide adoption of digital communication technologies during the COVID-19 pandemic could accelerate the trend towards more services sector jobs in competition with employees teleworking from abroad or software robots replacing particular office tasks. Crucial to addressing these challenges are domestic policies to enhance social protection, ease worker mobility, and ensure that the benefits of technological progress and globalisation are more widely shared.
Suez Canal starts dredging work to extend double lane (Engineering News)
The Suez Canal Authority (SCA) has started dredging work to extend a second lane that allows for two-way traffic in a southern section of the canal near to where a giant container ship got stuck for six days in March, it said on Saturday. The SCA announced this week that it was planning to extend a second canal lane that opened in 2015 by 10 km to make it 82-km-long, and would widen and deepen a single lane stretch at the southern end of the canal.
Key promoter of WTO reform (Chinadaily.com.cn)
This year marks the 20th anniversary of China joining the World Trade Organization. China is the largest beneficiary of the multilateral trade system, as well as the largest contributor to it. Over the past 20 years, China’s exports of goods have grown more than seven times, and its import volume has risen nearly six times. Last year, China’s export-import volume accounted for 12 percent of the world’s trade in goods.
China’s service exports accounted for 3 percent of the world’s total in 2005, and they increased to 6 percent last year. And its service import’s share in the world’s total rose from 3.3 percent in 2005 to 8 percent last year. China’s rise in the world trade system benefits developed economies, emerging markets, developing countries and the least-developed countries at the same time. China should and has the ability to play a special role in a positive way to promote the world trade body’s reform. Without China’s participation and support, no meaningful agreements can be reached within the current WTO framework.
China supports India’s patent waiver for Covid vaccine proposal (United News of India)
China on Monday voiced it’s support for waiving intellectual property protections for novel coronavirus vaccines to help developing nations suffering from the ongoing pandemic. “China fully understands and supports the developing world’s demand for an IPR waiver for COVID-19 vaccines,” Foreign Ministry spokesman Zhao Lijian said in Beijing. Asked about China’s stand on the issue, Zhao told reporters at a foreign ministry press conference that “China will continue to make a contribution to the fairness and accessibility of vaccines in developing countries.” The proposal has now been co-sponsored by Kenya, Eswatini, Mozambique, Pakistan, Bolivia, Venezuela, Mongolia, Zimbabwe, Egypt, the African Group, the Least Developed Countries Group, and most recently Maldives, Fiji and Namibia – a total of 60 WTO members.
In a sign that food security and nutrition are increasingly seen as key vectors for sustainable development, the United Nations Commission on Population and Development (CPD) approved a resolution likely to enrich and intensify discussions at the upcoming UN Food Systems Summit. The agreement, as well as the UN Secretary General’s report to the Commission to which FAO made substantial contributions, span a vast array of themes – from the need to make healthy diets affordable to all and the importance of assuring income opportunities for all even as capital-intensive industry transformations may reduce the need for existing types of jobs and labor, to stopping illicit cross-border financial flows and the need for governance and ownership of big-data to make sure its benefits are available to all, including smallholders and marginalized people. The breadth of topics illustrates just how complex a task the shift to sustainable agri-food systems will be.