tralac Daily News
The government has proposed radical legislative amendments for South Africa’s industrial policy, which could boost productivity, increase investment and achieve inclusive growth as part of speeding-up economic recovery. Trade and Industry Minister Ebrahim Patel yesterday announced his department’s future strategic focus to galvanise inclusive growth and build local industrial capacity. Patel said the measures would include a further amendment to company law to tackle the gross injustice of excessive pay and give representation at board level to workers. “This is an important way in which we can create meaningful economic inclusion. This can be the new frontier of economic empowerment,” Patel said. “First, we must build a new model of growth and economic inclusion that unites South Africans in the economy and promote transformation.”
More than R25 billion has been committed by major firms for investment in factories, refineries and construction in South Africa over the last five years, following agreement with Government in terms of the provisions of the Competition Act. In addition, more than R3 billion has been committed for supplier development over the same period. Moreover, billions of rands of local procurement have been enabled through measures undertaken by firms as a result of commitments to improve the domestic industrial impact of their procurement. The competition policy statement is one of a series of policy documents released as part of the annual dtic Budget Vote debate.
Communications and Digital Technologies Minister, Stella Ndabeni-Abrahams, has announced that R27 billion has been pledged by operators and vendors to usher in 5G fibre technologies in South Africa. The Minister said this when she tabled the department’s budget vote during a mini plenary of the National Assembly on Tuesday. “We believe that partnerships and collaborations are key to taking our sector to greater heights. “I am therefore pleased to announce that R27 billion is being pledged collectively by the operators and vendors to expand the 4G network, and to deploy the 5G and fibre technologies in South Africa, which has been tested by some operators,” she said.
The Eudafano Women’s Cooperative in Namibia extracts ingredients from seeds of indigenous plants such as marula, a medium-sized deciduous tree, for the domestic and international cosmetics industry. Oil extracted from marula seeds is rich in elements that are essential for the preservation of human skin, making it an ideal ingredient for cosmetics. The cooperative commercializes the marula and other plants in line with a set of guidelines on environmental, social and economic sustainability, known as BioTrade principles and criteria. The term “BioTrade” refers to the supply and commercialization of goods and services derived legally and sustainably from a country’s biodiversity. “We use the plants to support our livelihoods, while conserving them so that they sustain us for a long time,” said Martha Negumbo, the cooperative’s manager.
Kenya plans to boost domestic sugar output in a bid to reduce reliance on imports, a government official said on Wednesday. Lawrence Karanja, chief administrative secretary of the Ministry of Industrialization, Trade and Enterprise Development, told a virtual meeting that one of the challenges facing the country’s sugar industry is the high cost of production as compared to regional and international producers. “The uncompetitive price of locally-produced sugar makes Kenya an attractive destination for imports,” Karanja said during the launch of the Sugar Sub-Sector Strategic Plan by the Kenya Association of Manufacturers, which seeks to guide the industry’s growth, resilience and sustainability.
Kenyan businesswomen have decried the high cost of taxation amidst the Covid-19 pandemic, which has brought their enterprises to their knees. Seneca East Africa, managing director, Ms Annette Kimitei said the high cost of doing business is a major impediment to the recovery of the enterprises still reeling from the pandemic’s economic shock. “We have a new law called the Data Protection Act and we have to pay Sh250,000 for a license to do CCTV configuration. It is so expensive (yet) we are trying to keep the few people we have retained,” she added in The Future of Women in Business virtual meeting.
Maize prices drop as border trade booms (The Standard)
The recent bilateral talks between President Uhuru Kenyatta and his Tanzanian Counterpart Suluhu Hassan that eased cross border maize trade has seen a drastic drop in the produce prices. Farmers in North Rift region claimed yesterday that there is an influx of maize grains from the Eastern Africa Community region that had seen a reduction in prices from Sh2,800 per 90 kg bag last month to Sh2,300 currently. They want the sector to be allocated at least 10 per cent of the national budget saying the gesture, would create an equal level playing ground in agribusiness within EAC member countries.
The African Development Bank and the Government of Uganda have signed two financing agreements totaling around $348 million for the improvement of road transport in Uganda. The first is a $276 million financing agreement for the Kampala City Roads Rehabilitation Project; and the second, valued at $71.8 million, is for upgrading the Kabale-Lake Bunyonyi/Kisoro-Mgahinga road. Minister Kasaija described the projects as “transformative” and in line with his government’s national development plan as well as the African Development Bank’s High 5 strategic priorities.
Moroccan Foreign Minister, Nasser Bourita, on Tuesday, held talks with the Continental Free Trade Area (AfCFTA) Secretary General, Wamkele Mene, during the latter’s visit to Rabat. During the meeting, the Moroccan minister emphasised the importance of the entry into force of the AfCFTA for the commercial and economic development of the continent, the Foreign Ministry said in a statement. The two parties also discussed the conclusion of Phase II on protocols relating to investment, intellectual property rights, competition and electronic commerce, recalling the role of the AfCFTA Secretariat in supporting member states to speed up the negotiations of these instruments. At the end of their meeting, the two officials agreed on the importance of supporting the private sectors of member states to promote intra-Africa trade for a more integrated and prosperous continent.
Ethiopia’s blockchain deal is a watershed moment – for the technology, and for Africa (The Conversation Africa)
At the launch of bitcoin in 2009 the size of the potential of the underlying technology, the blockchain, was not fully appreciated. What has not been fully exploited is the unique features of blockchain technology that can improve the lives of people and businesses. These include the fact that it is an open source software. This makes its source code legally and freely available to end-users who can use it to create new products and services. Another significant feature is that it is decentralised, democratising the operation of the services built on it. Unfortunately, bitcoin, the project that introduced blockchain technology, has hogged the limelight, diverting attention from the technology’s underlying potential benefits.
The British Foreign Secretary, Dominic Raab, has announced £22 million of new investment to build cyber security resilience in developing countries and globally, particularly in Africa and the Indo-Pacific. In a speech delivered at the National Cyber Security Centre’s CyberUk conference recently, Raab announced that the UK would spend about £3 million of the £22 million funding to help Interpol set up a new team that will fight cybercrime in Africa. Nigeria was listed as part of the African countries to benefit from the fund.
African trade and integration
Afreximbank Begins Construction of Africa Quality Assurance Centre in Nigeria (African Import-Export Bank)
Afreximbank has announced the commencement of construction of the Africa Quality Assurance Centre (AQAC) in Ogun State, Nigeria. The Centre will be a state-of-the-art facility with the capacity to offer testing, certification, inspection, and training services covering agricultural products. It is the first in a series of Quality Assurance Centres that Afreximbank intends to establish across Africa to support industrialisation across the continent by ensuring that African products are manufactured to international standards and enabling them to participate in intra-African and global trade. First class quality infrastructure is considered critical in facilitating trade under the African Continental Free Trade Agreement (AfCFTA).
Prof. Benedict Oramah, President of Afreximbank, declared: “African businesses are set for a major step-change as the African Continental Free Trade Agreement (AfCFTA) opens up new markets across the continent and the globe. To make their mark in countries around the world, African products must meet international standards. The AQAC in Ogun State will help deliver the highest quality African goods, strengthening their competitiveness and providing confidence to buyers. This is an important step, not only in underpinning the ‘Made-in-Africa’ brand, but as a driver for greater exports, increased manufacturing and more resilient economies across the continent.”
Intra-African trade is widely perceived as low compared to other regions of the world, an argument made ad nauseum in both academic and policymaking circles. Some observers are especially disparaging about its potential. We beg to differ and argue that intra-African trade has much greater economic significance than is commonly believed. The orthodox narrative is driven by three errors: 1) The comparisons made with other regional blocks are frequently misleading and do not compare like with like; 2) the picture of intra-African trade is distorted by large-scale commodity exports to destinations outside the continent; and 3) there is a systematic failure to recognize the scale of informal cross-border trade.
This Session is being held under the theme: “Developing Integrated and Complementary Value Chains for sustainable recovery and reinforcing operationalisation of the African Continental Free Trade Area (AfCFTA). And it comes against a background of our on-going collaboration aimed at positioning our economies to move toward recovery from the COVID-19 Pandemic which has gravely undermined our health systems and economies.
Trade volumes are down. Commodity prices initially went down but are recovering in some sectors. Capital flight was massive, like in other emerging economies. As a result of all this, Africa went into recession in 2020, something last experienced in 1995. The COVID-19 Pandemic also highlighted Africa’s heavy dependence on imports of both final and intermediate pharmaceutical products. The restrictions on export of personal protective equipment and later vaccines, enforced by some countries consequently put the continent in a perilous position. Africa’s import dependence also extends to food.
The issues that I have highlighted above are basic indicators of the need to boost intra-Africa trade through the development of continental and regional value chains. For us to achieve this, we have the key tasks of: developing integrated and complementary value chains across the continent; digitalizing value chains; and, reinforcing Public- Private partnerships to scale up investments in African manufacturing and agro-processing. Already, there are efforts being made towards harnessing continental and regional supply chains by market players in several African countries. The task is to scale up.
EA Finance ministers juggle to fund recovery but debts mount (The East African)
East African finance ministers are walking a tightrope as they try to fix economies ruined by the prolonged effects of the Covid-19 pandemic and repair national balance sheets saddled with huge debts, shrinking revenue sources and increasing expenditure needs. As the ministers gear up to table the 2021/2022 fiscal year budgets in June, they must come up with ways to fund economic recovery plans without loading more taxes on an already burdened citizenry, or taking up additional debt. Debt servicing obligations have become a nightmare for regional economies, which have seen significant portions of tax revenues used in paying interest on loans rather than fund government operations and development projects.
Reliable and affordable energy key to EAC integration (East African Community)
Reliable and affordable energy sources of energy are key to the attainment of all the four stages of the EAC integration, namely the Customs Union, Common Market, Monetary Union and Political Federation. EAC Secretary General Hon. Dr. Peter Mathuki said that energy was a driver and enabler of all sectors of the economy, adding that the harmonisation of Partner States’ national policies governing energy was therefore critical. Dr. Mathuki said that harmonising energy policies in the region and making energy affordable was crucial to improving the business environment in East Africa and increasing its attractiveness as an investment and trade hub. “The first thing an investor seeking to set up in a country usually asks is the cost of energy. We need to reduce the costs of energy in the region to facilitate investment,” said Dr. Mathuki.
EAC Integration Efforts Gain Steam (The Star, Kenya)
Efforts geared towards the integration of the East African Community (EAC) region are gaining traction despite historical headwinds. Political squabbles that threatened the prospects of the integration efforts may be all but behind us following Tanzania’s recommitment to the initiative. Following strenuous trade relationships between EAC partner states, evidenced by the introduction of increasingly protectionist trade policies by governments within the region, signs of positive movement towards a more cohesive trade block are welcome. Increased cooperation between the member states’ governments on regional infrastructure developments promises that the dreams of a fully integrated region are achievable. The Kenya – Tanzania Natural Gas Pipeline project, the rehabilitation of the Kenya – Uganda railway and positive progress with respect to the Tanzania – Uganda oil pipeline all stand to boost regional integration efforts in the long run.
The electricity supply industry is under pressure to accommodate the increase in renewables share on the grid. However, it is a welcome challenge. New technologies, including solar and wind, support decarbonisation efforts and increase electrification rates. Still, it is a concern for distribution engineers and planners responsible for keeping the network stable and resilient who must now consider factors such as reverse power flow, fluctuations, and integrations. At their disposal are years of tacit knowledge, home-grown calculation tools, cloud-based digital modelling software, and outsourcing the task to consultants. But which solution is best suited to tackle the challenges associated with maintaining high reliability of supply while increasing integrated distributed energy resources (DERs) on the network?
The African Union in collaboration with international partners has launched the Africa Migration Data Network (AfMDN) to strengthen the coordination and sharing of knowledge for the effective production of quality migration statistics in Africa. The network will also serve as a framework for advocacy for mobilization of financial resources for the production of migration statistics, in particular the conduct of specific surveys on migration. Migration data and statistics remain an essential component for good migration governance, underscoring the importance of quality, accessible, disaggregated, reliable and timely data to inform actions, public opinion and evidence-based policies.
The ECOWAS Regional Competition Authority (ERCA) has organised a virtual capacity building session for Members of its Consultative Competition Committee (CCC) from May 17 to 21, 2021. The session is aimed at developing the capacity of members of the Consultative Competition Committee. The first session of its kind since the commencement of ERCA’s activities and derived from ERCA’s roles and responsibilities, as enshrined by the Supplementary Act A/SA.2/12/08 on the establishment, functions and operation of the ECOWAS Regional Competition Authority which provides that ERCA shall contribute to the training of the staff of national competition authorities with a view to supporting them, among others, in the management of investigations and competition-related information, establishment of databases, undertaking advocacy in respect of competition and consumer-related issues.
The Covid-19 pandemic has led to an unprecedented economic crisis worldwide, with disastrous social consequences. After 25 years of continuous growth, Africa is severely hit and has suffered a recession in 2020. The International Monetary Fund (IMF) estimates that additional financing of up to $285 billion would be needed during 2021-25 for African countries to step up the spending response to the pandemic, with about half of it for African low-income countries. The middle-income countries also require special attention. Absent a collective action, the financing and objectives of the 2030 Agenda for Sustainable Development and the African Union’s 2063 Agenda will be compromised.
Most regions of the world are now launching massive post-pandemic recovery plans, using their huge monetary and fiscal instruments. But most African economies suffer the lack of adequate capacities and such instruments to do the same. We cannot afford leaving the African economies behind.
This requires collective action to build a very substantial financial package, to provide a much-needed economic stimulus as well as the means to invest for a better future. Our ambition is to address immediate financing needs, to strengthen the capacity of African governments to support a strong and sustainable economic recovery and to reinforce the vibrant African private sector, as a long-term growth driver for Africa.
Africa: IFC Announces $2 billion Investment in SMEs and Trade to Support Recovery from COVID-19 (International Finance Corporation)
Targeting sectors hit hard by COVID-19, IFC today announced a $2 billion commitment to support smaller businesses and increased trade in Africa to galvanize the continent’s economic recovery from the pandemic and to sustain and create jobs and business activity. IFC will invest $1 billion in new direct financing for MSMEs, the backbone of African economies, including via mezzanine financing and risk-sharing instruments. IFC will invest a further $1 billion in support of international trade finance for Africa to facilitate the flow of imports and exports of essential goods, including food and medical products. The combined $2 billion package is among IFC’s largest ever commitments to specific initiatives in Africa and comes as the continent grapples with the ongoing fallout from COVID-19, which has plunged the region into recession, reduced foreign direct investment flows, and pushed millions more Africans into poverty.
Battle of development narratives: EU-Africa relations in the multipolar world (Oxford Research Foundation)
As the world has changed from a unipolar hegemony to a multipolar one with competing global powers, the Western development paradigm that seeks to grant assistance to ‘underdeveloped’ nations has openly turned from an allegedly altruistic project into an endeavour of geostrategy. By tracing the roots of its discourse, it is clear how development has always been part of a geopolitical and geoeconomic project. For the European Union (EU), the world’s largest development donor, to set up a new partnership with Africa, one of the largest aid-receiving regions, beyond donor-recipient relations and offer a credible alternative to Chinese influence in the region, it must radically revisit its development narrative.
The Covid-19 pandemic has dragged African economies into a fall of about 1.4% in GDP, with smaller economies facing contraction of up to 7.8%. This has forced many already poor and heavily indebted countries to further borrow from the International Monetary Fund just to survive the pandemic. In fact, many have already borrowed from the future. With debt overtaking total economic output, how will these African nations recover? The answer lies in the complete integration of the African continent. Individually, African countries are weak, but united they could unleash Africa’s true potential. Integration starts with political leaders having the will and courage to break with a colonial mindset that keeps Africans apart. Firstly, African leaders must honour the commitments they have made and implement the African Continental Free Trade Area (AfCFTA). AfCFTA must be the priority in the formation of policy and regulation in every signatory country.
Practice True Multilateralism and Galvanize Strong Support For Africa’s Development (Embassy of the People’s Republic of China)
The world is undergoing the most serious pandemic in a century. No country is a fantasy-land that can insulate itself from the virus, and no country should be left behind in the global response effort. The purpose of China’s proposal for this open debate is to urge the international community to pay attention to the severe challenges brought about by the pandemic to the peace and development in Africa, build consensus, and form synergy. It is aimed at getting the international community to work with African countries to defeat the virus, set off post-pandemic reconstruction, remove root causes of conflicts, and galvanize momentum towards lasting peace and sustainable development in Africa. China would like to offer four proposals.
United Kingdom government-owned development finance institution CDC Group will be providing a debt commitment of USD 100 million to agricultural conglomerate Export Trading Group. Export Trading Group (ETG), an agricultural business in sub-Saharan Africa, has been offered debt financing of USD 100 million from CDC Group. Explaining the significance of such an investment for the African economy, CDC Group’s managing director and head of private equity and corporate debt Tony Morgan said in a statement: “Agriculture and rural development are vital engines that are accelerating Africa’s economic transformation and meeting global food and health needs.”
Investor and trade interest in Africa remains strong despite challenges around Covid-19, senior officials from the United States, Germany and the United Kingdom said at the recently concluded annual conference of the African Private Equity and Venture Capital Association.
“We average somewhere between $4 billion to $5 billion of investment a year. We want to increase that. Somewhere a little north of 20% of our allocation has been going to Africa, which we want to increase. So, if you take $5 billion a year, and 20% of that, that is a billion. I would like to see that substantially increased in the next few years in climate, in health, in technology and in infrastructure,” Marchick said.
Wade-Smith said Africa was definitely on the UK’s radar. “We are working really closely with governments to create that enabling environment, spotting whether there might be regulations that need updating or implementing more concretely and regularly, and I am really working with investment promotion agencies across the continent to help to create the right projects in the right way that will inspire those investors to come flooding back into Africa,” she said.
Spreading the Gains from Trade More Widely (World Bank)
Global trade has contributed to growth and poverty reduction in the past three decades, but gains from trade can be more inclusive, the World Bank said today. Spreading the benefits of trade more widely, within and between countries, can play a key role as the world seeks to recover from the COVID-19 pandemic, which has reversed years of poverty reduction. New data and tools developed by the World Bank can allow policy makers to ensure trade delivers more for the poor, according to The Distributional Impacts of Trade: Empirical Innovations, Analytical Tools and Policy Responses report. By identifying in advance those sectors and regions that are most affected by changes in trade patterns, policies can be designed to maximize the gains and mitigate potential losses.
“There is no question that the rise in trade over the past 30 years has helped to dramatically reduce global poverty, but the benefits were not shared equally,” said Mari Pangestu, World Bank Managing Director of Development Policy and Partnerships. “Trade plays a vital role in pandemic response, ensuring food and medicine can cross borders freely and vaccines are distributed where they are needed. Better policies are needed to make trade more inclusive, as we work to build back better and set a path toward green, resilient and inclusive development.”
The European Union put forward a plan on Wednesday it believes will help boost production and availability of COVID-19 vaccines more effectively than a proposed waiver of patent rights now backed by the United States. Under pressure from developing countries to agree to waiving intellectual property (IP) rights for vaccines and treatments, the EU plan will focus on export restrictions, pledges from vaccine developers and use of existing World Trade Organization rules. “Universal and fair access to vaccines and treatments must be the global community’s number one priority,” EU Trade Commissioner Valdis Dombrovskis told the European Parliament.
The Chair of the negotiations on fisheries subsidies of the Negotiating Group of Rules, Ambassador Santiago Wills of Colombia, has circulated a new draft text for a World Trade Organization (WTO) fisheries subsidies agreement to members. WTO members are aiming to reach an agreement on curbing harmful fisheries subsidies in July 2021. On 11 May, Ambassador Wills introduced a new draft text based on members’ collective work that seeks to bring members closer to an agreement. He told delegates the draft text aims to “serve as the basis for work toward a clean text to present to a meeting of ministers on 15 July.” Key revisions in the new draft text include narrowing the flexibilities provided under provisions for overfished stocks, recognizing these are stocks already in the worst condition; sharpening the focus of WTO work on subsidies, not on fisheries management; removing language that may have inadvertently had implications for the operation of international fisheries agreements; and transparency and notification obligations linked to proposed flexibility entitlements.
The development path followed to achieve the eligibility criteria for graduation has important implications for the challenges and vulnerabilities that each country will face after graduation, and the means at its disposal to address them. The dynamics that drive LDCs to achieve graduation matters also to their post-graduation performance. As UNCTAD argued, a country’s development process continues indefinitely beyond its graduation point, and its subsequent success depends critically on the foundations built in the course of graduation. How graduation is achieved is thus as important as when it is achieved. The Committee for Development Policy (CDP) identified at least three pathways leading to graduation with different implications for productive capacity and overall progress towards sustainable development. The Enhanced Integrated Framework (EIF) addresses the components of the productive capacity-building process in the LDCs through its dedicated windows of support.
Term of Commonwealth boss in focus as meeting is pushed back (The East African)
The decision to delay the Commonwealth Heads of Government Meeting (Chogm) for the second time due to Covid-19, has left the Secretary-General’s position in limbo, even as leaders protest the travel bans imposed by the United Kingdom. Announcing the postponement on May 7, Commonwealth Secretary-General Patricia Scotland and Rwandan government, the would-be hosts, said the “impact” of Covid-19 had made it difficult to prepare for the meeting which is usually a physical biennial gathering announced. The immediate problem now is on the question of the position of Secretary-General. Traditionally, the decision to extend the term or elect a new person rests with Chogm. And until members meet, the position remains in limbo.
After a contraction of 3.3 percent in 2020 – which was the worst recession since the second world war – the global economy is now on a path to recovery. Last month, we lifted our global forecast to 6 percent in 2021 and 4.4 percent in 2022. We got to this point because of the unprecedented policy response from countries, which included $16 trillion in fiscal action and massive liquidity injection by central banks. Without these synchronized measures by countries, the global contraction last year would have been at least three times worse.
What is clear, though, is the dangerous prospect of divergence across countries. The global recovery is powered by only a few countries with advanced vaccination efforts and successful containment, leaving poorer countries at greater risk of falling behind. The implications of this divergence are dire. Over half of the developing countries that were once catching up to advanced economy income levels are now set to fall further behind. Emerging markets face the risk of tighter financial conditions and capital outflows. Many developing countries carry higher debt burdens – some of the poorest already face a high risk of debt distress. The sad reality is that much of the past hard-won development gains will be wiped out.