tralac Daily News
The Department of Trade, Industry and Competition (dtic) has released a Trade Policy Statement, which seeks to build industrial capacity and drive manufacturing exports in the wake of the Covid-19 pandemic. Dtic Minister Ebrahim Patel, on Friday, said the release of the statement was in the context of the adoption of a policy of promoting industrialisation and localisation, recently undertaken by the dtic. Access the files here.
Interesting times for South African citrus (FreshPlaza)
When considering the current citrus season, a number of uncertainties appear: why is the Middle Eastern lemon market so quiet? How is South East Asia, and China specifically, going to react to the increased volume of Star Ruby grapefruit sent there? And on the topic of China: will hostility between that country and Australia translate into greater opportunity for South African oranges and soft citrus?
“There are a lot of external factors playing a huge role, of which the biggest is still Covid,” says Gary Britz, managing director of ELE Trading. South African exporters are experiencing a double whammy, he says: firstly the increase in Dollar-based freight rates, and now the strength of the Rand which trades at just above R14 to one US Dollar – a R4 difference to last year this time when it was R18 to the Dollar. (Shipping disruptions have also caused a surge in paper pulp prices, pushing up packaging costs.)
Continued inefficiencies at the Port of Cape Town could hurt agricultural exports and the economy of the Western Cape in general, the province’s member of the executive council for agriculture Ivan Meyer said on Friday. In a statement, Meyer said the Western Cape was responsible for 50 percent of the country’s agricultural exports and the port was a vital cog in the wheel of the provincial and national economy. “Any inefficiencies in this port will therefore harm the Western Cape’s economy and cost jobs at a time when we desperately need to be creating more of them,” he warned. “On the other hand, if we get this right, many people will benefit. In fact, according to our research, growing our exports by five percent over five years will create approximately 19,000 new jobs in the Western Cape.”
Critical structural reforms taking too long – BLSA (Engineering News)
The structural reform required to transform South Africa’s economy has “frustratingly” progressed very little, notwithstanding the establishment of Operation Vulindlela, Business Leadership South Africa (BLSA) CEO Busi Mavuso asserts. She says organised business has consistently argued that South Africa’s economy needs structural reforms – changing the fundamental capacity of the economy through policy – if it is to grow. Among the changes needed are spectrum migration to open up broadband; the restructuring of the energy supply industry to ensure reliable, low-cost power; investment in infrastructure to support the economy; and various policy changes to improve access to skills, including skills visas.
Botswana dodges bullet as India suspends vaccine exports (Mmegi Online)
The country’s COVID-19 vaccination programme is expected to remain on track despite the Serum Institute of India (SII) this week’s announcing it will stop exporting doses to Africa and other countries for the next seven months as the virus ravages its home country. As the news reverberated around the world, it emerged that Botswana is only one of five African countries insulated from the freeze in production. Botswana, South Africa, Namibia, Mauritius and Libya are self-financing their participation in the COVAX facility and thus will not be receiving their supplies from India, but from other AstraZeneca producers in Europe and South Korea.
Kenya’s trade deficit widens 28pc on imports of machinery, goods (Business Daily)
Kenya’s trade deficit widened by 28 percent in the quarter ended March, mainly on increased expenditure on manufactured goods and machinery imports. Fresh data by the Central Bank of Kenya (CBK) shows that the country’s trade deficit – the difference between exports and imports – grew to Sh317.49 billion in the period under review from Sh247.78 billion in the first quarter last year. A trade deficit occurs when a country’s imports exceed its exports during a given time period. The value of imports grew 19 percent to Sh507.54 billion in the quarter ended March, outgrowing the value of Kenya’s exports that rose 6.3 percent to Sh190.05 billion in the period. The slow growth in the value of Kenya’s exports came at a time local traders are still reeling from the restrictions imposed to curb spread of the Coronavirus disease that disrupted movement of agricultural products.
New Kenyan Port Aims to Be East Africa’s Biggest (Bloomberg)
Two Maersk vessels made maiden calls at Kenya’s new Indian Ocean port last week as the country launched the first of a planned 32 berths at the harbor it hopes will become the market leader on this stretch of coast. The Lamu facility will cost an estimated $5 billion and supplement the clogged Mombasa port, which lies 340 kilometers (313 miles) to the south in Kenya’s second-largest city. The existing harbor is the region’s biggest, serving hinterland countries including Uganda, Rwanda and eastern Democratic Republic of Congo.
Across Africa, ports suffer from aging equipment and other inefficiencies that cause delays and lead to higher handling costs than elsewhere in the world, according to the African Development Bank. With Lamu, Kenya is planning to be the go-to port for landlocked Ethiopia and South Sudan. But luring new business there could prove challenging.
The government is engaging stakeholders in the review of 22 laws under the Ministry of Industry and Trade with the view to improving Tanzania’s business environment. The review will also allow a smooth implementation of the blueprint for regulatory reforms to improve the business environment, according to Industry and Trade minister Kitila Mkumbo, who tabled his budget for the 2021/22 financial year yesterday. The proposed Trade Remedies Act of 2021 will also control importation of products, market distortion by subsidized products which get to the local market at lower prices. Prof Mkumbo said the proposed law was already submitted to responsible government organs for further action.
Zimbabwe bans maize imports as it prepares for bumper harvest (The East African)
Zimbabwe has suspended maize imports, citing a big harvest of the staple crop this year after years of food shortages. The southern African country last year spent $300 million on maize imports and donors were feeding more than half of the population due to successive droughts. According to the government’s latest crop and livestock assessment report, the country will harvest 2.7 million tonnes of maize during the 2020/21 summer cropping season, which is three times last year’s output and is more than the country’s annual consumption, and the highest yield in 20 years. It would be the first time the country will have a maize surplus after almost two decades of food shortages following a chaotic land reform programme at the turn of the millennium.
The government is entirely responsible for problems facing the sugar industry, according to the Kenya Association of Manufacturer’s (KAM) Sugar Sub-Sector report. The report lays blame on the government and puts the responsibility of reviving the sector on it. In its 2021-2025 Strategic Plan launched last week, KAM’s Sugar Sub-Sector team stated that to get the industry back to its feet, the government would have to ensure there was an effective regulatory framework and oversight mechanism for coordinating imports and exports. It called for stringent enforcement mechanisms to save the industry from sugar coming from Comesa and East African Community regions, as well as other parts of the world, through charging the required duty.
Ministry eyes trade boom with 2021/22 budget (Dailynews)
The Ministry of Trade and Industries has out- lined its robust plans for 2021/2022 financial year, whose main focus is bolstering trade, investment and boosting the industrial sector. Tabling his budget in the August House yesterday, the Minister for Trade and Industries, Professor Kitila Mkumbo, requested lawmakers to endorse 105.67bn/- for both recurrent and development expenditures. According to him, on trade, his ministry plans in the 2021/2022 budget to among other things, intensify bilateral, regional and multilateral business dialogue so as to widen markets and investment in the country. “We will also intensify dialogue on Continental Free Trade Area (CFTA) as well as increasing business talks with EAC, SADC and COMESA, among others,” he said.
The 2021 Macroeconomic Outlook report by the Nigerian Economic Summit Group (NESG) has urged the federal government to develop industrial policy and sectoral plans for priority areas as well as address the challenge of insecurity in the country. The report disclosed that the manufacturing sector is one of the six sectors that have the potential to create jobs and reduce poverty. The report also noted that for the sector to create jobs and reduce poverty, private investments would play a major role. It maintained that Nigeria’s reliance on imports, its large market and the coming into effect of the African Continental Free Trade Area (AfCFTA) agreement present a huge opportunity for investment in the manufacturing sector, especially in agro-processing and light manufacturing. Also, the report noted that Nigeria’s manufacturing sector faced several challenges even before the outbreak of the COVID-19 Pandemic.
Nigeria’s trade sector contracts by 2.43% in Q1 2021 (Nairametrics)
Nigeria’s trade sector contracted by 2.43% in real terms in the first quarter of 2021. This is according to the recently published GDP report by the National Bureau of Statistics (NBS).Its recorded growth rate represents 0.39% points higher than the 2.82% contraction recorded in the corresponding period of 2020 and 0.77% points higher than -3.2% recorded in the previous quarter (Q4 2020).Quarter-on-quarter growth stood at -13.10%, which is higher than the quarter-on-quarter growth recorded in the first quarter of 2020 at -13.79%.
The deterioration of the security situation at the beginning of the year and the prolonged closure of the trade corridor between Bangui and Cameroon have had a substantial social and economic impact. The cut-off of the country’s main source of supply led to a sharp rise in consumer prices and affected production owing to a lack of inputs. While the reopening of the corridor has allowed trade flows to resume, they remain lower than in the past. Owing mainly to lower imports, the current account deficit would decline to about 6½ percent of GDP in 2021 from 8½ percent of GDP in 2020.
Africa’s economic recovery is key to global growth (Independent Online)
We cannot enjoy a full global economic recovery if the main engine of future economic growth – Africa – is not recovering. With this in mind, French President Emmanuel Macron convened a Summit on Financing African Economies in Paris on Tuesday. Ramaphosa made strong remarks at the summit on Africa’s vision for economic recovery, and in this way shaped the agenda. The summit was a culmination of efforts begun by Ramaphosa when he was Chair of the African Union last year, when he appointed Special Economic Envoys to interface with the international financial institutions on the economic challenges facing the African continent and to mobilise support. As AU Chair, Ramaphosa had tried to secure a strong and inclusive economic recovery in Africa in the wake of the Covid-19 pandemic.
Trade blues stalk Southern Africa (The Southern Times)
Restrictions on movements instituted by most countries as a COVID-19 control measure have taken their toll on informal cross-border trade in the SADC region, a United Nations agency has said. On the formal trade front, countries in the region variably recorded surpluses and deficits in the first quarter of the year. Most SADC member states are heavily reliant on exports of raw and/or semi-processed metals, minerals and agricultural produce. At the same time, they are big importers of finished goods. “Informal cross border trade, which accounts for up to 40 percent of total intra-SADC trade with an estimated value of US$17,6 billion, has been adversely affected by the COVID-19 pandemic because of border closures and travel restrictions throughout the region. These measures have had a negative impact on the livelihoods of informal cross border traders,” the IOM said.
The Economic Commission for Africa (ECA) will on 28 May launch a report of a survey it carried out of the perception of East Africa’s private sector on the African Continental Free Trade Area (AfCFTA). Conducted in collaboration with the East African Community (EAC) and the East African Business Council (EABC), the survey was partly to inform the EAC regional AfCFTA strategy and to document how the private sector can maximize the benefits of the continental agreement. The survey had the objective of consulting the EAC private sector to get its perception on the level of awareness, opportunities, constraints and critical reforms needed to maximize the benefits of the AfCFTA to ensure its inclusivity in the EAC AfCFTA implementation strategy, action plan and road map.
Stephen Karingi, ECA’s Director of the Regional Integration and Trade Division, said: “Without the prospect of real benefits, the private sector will not invest in new cross-border commercial ventures, hence their importance in being at the centre, driving its implementation agenda.”
Intergovernmental organisations and private sector actors from West Africa will discuss the implementation of the African Continental Free Trade Area (AfCFTA) in the sub-region. This will take place during a virtual regional forum for West Africa co-organised by the Sub-Regional Office for West Africa of the United Nations Economic Commission for Africa (ECA), the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU) on May 26 and 27. This two-day meeting is part of the implementation of the AfCFTA, which entered its operationalisation phase on January 1, 2021, thus laying the foundations for a process of strengthening intra-African trade. It will be held in a context where West African economies are marked by a strong predominance of small and medium-sized companies operating in the informal sector and are not very productive, whose constraints have been exacerbated by the Covid 19 pandemic and where the role of intergovernmental organisations and the private sector in the effective implementation of the AfCFTA is essential.
The United Nations Economic Commission for Africa (ECA) says it will continue to work closely with its member States, the African Union Commission and other key stakeholders towards the effective implementation of the African Continental Free Trade Area (AfCFTA) that is expected to deepen and expand intra-African trade and help the continent build forward better in the aftermath of the COVID-19 pandemic. Responding to Canadian Prime Minister, Justin Trudeau’s statement announcing funding of $15.2 million to the ECA’s African Trade Policy Centre (ATPC), Executive Secretary, Vera Songwe, said the AfCFTA provided an excellent policy framework for Africa to build inclusive and resilient economies post-COVID-19. To make this happen, she said, the ECA will continue to work on innovative ways to help address Africa’s development challenges by assisting countries and regions to domesticate the AfCFTA within their own realities to make it implementable.
A landlocked country like Botswana strives to use its geographic location as a transport and logistics hub to leverage growing regional trade and expand its portfolio as a land-linked pathway to the southern African market. This will require massive investments in road, air, and rail transport infrastructure to improve regional connectivity. It will also require innovative policymaking to prepare the domestic market for the coming opportunities. What is clear is that Africa does not trade enough, especially with itself and this is attributed to the lack of sufficient infrastructure. The African Development Bank (AfDB) has previously estimated that the infrastructure deficit in Africa amounts to between $130 and $170 billion a year; with an estimated financing gap of $68 to $108 billion. These deficits are and have been costly to the economy of the continent and lead to stunted economic growth.
The East African Business Council (EABC) is calling for an increment in the Covid-19 stimulus packages to the agriculture sector by EAC Partner States and the establishment of an East Africa Community (EAC) Food Reserve to improve agricultural productivity and coordination of distribution of food across borders, amid the pandemic. The new study by the East African Business Council (EABC) with the support of the African Economic Research Consortium (AERC) and Bill and Melinda Gates Foundation recommends an increase of the COVID Stimulus Package to the Agriculture Sector, from a paltry USD 3.14 million (0.002% of the total stimulus, to USD 157.2 million at least 10% of total stimulus). This is set to promote a deliberate shift from rain-fed agriculture and from low energy to high energy technology-based agriculture to improve agricultural productivity and household income as well as ensure food security.
China’s support for the ideologically driven freedom movements in Africa during the Cold War years was paid back when African vote in 1971 got China past the hump to claim its seat at the United Nations. While their interest in each other is the legacy of those times mutual economic and strategic interests have drawn them closer over the years. China’s commercial engagement with Africa ballooned especially since the time China opened its economy. China – Africa trade has grown 40-fold in the last 20 years and is now Africa’s biggest trading partner and the top lender. Throughout the continent China has built soccer stadiums, hospitals and other buildings that touch lives of ordinary folks who still carry scars of centuries of humiliation through Western colonialism. China’s latest multi-trillion, multi-country, multi-ocean Belt and Road Initiative (BRI) has provided another ambitious platform for its engagement with the African continent.
Andrew Selous MP has hailed the UK’s exit from the EU as an opportunity to greater strengthen ties with South Africa going forwards. He said the two countries already do a significant amount of trade each year – worth £8billion in 2020 even with the pandemic – but the UK’s new internationalist outlook would provide fresh opportunities for the two Commonwealth partners. “I wouldn’t say we ever left Africa, so I wouldn’t say the phrase ‘Britain is back’ is the right one but we are definitely looking to re-vitalise and re-energise our relationship,” he told this website. “There’s a great deal to build on what is an already very established relationship but it could be so much more.” It’s the most industrialised and diversified economy in Africa and it’s the UK’s biggest trading partner in Africa, which is probably a result of hieratic links, language links, the legal systems are the same.
Speaking to G20 leaders and the heads of international organizations on 21 May, Director-General Ngozi Okonjo-Iweala said WTO members could contribute to greater equity in the global distribution of COVID-19 vaccines by lowering supply chain barriers, fully using existing production capacity, and addressing issues related to intellectual property, access and innovation.
Support to temporarily lift intellectual property rights for Covid-19 vaccines by the United States, France and New Zealand is the clearest sign yet the proposal might see the light of day. Request for the waiver was initially submitted by South Africa and India in October 2020 but has since been co-sponsored by 60 other countries. Rwanda has also been expressing its voice. The co-sponsors are now proposing a three-year waiver. Things are looking up, however, though there’s some way to go. While the European Union has pledged one billion dollars to build vaccine manufacturing hubs in Africa, a handful rich of countries home to pharmaceutical companies – Japan, the United Kingdom, Switzerland, Australia and Brazil – still harbour strong reservations about the patent waiver that will allow the manufacture.
WTO members exchanged views with public and private sector experts on the growing challenges and opportunities facing businesses in the use of trade preferences, with a particular focus on product origin requirements. The discussion took place at a webinar entitled “What Drives the Utilization of Trade Preferences?” hosted by the WTO Secretariat on 19 May.
According to the WTO’s Preferential Trade Arrangements Database, 24 WTO members have 36 schemes in place providing non-reciprocal preferential market access for products originating from developing countries and least developed countries (LDCs). In addition, there are over 300 reciprocal regional trade agreements (RTAs) in force.
The facilitators of small group discussions shared updates on progress made in the work to bridge the differences on text proposals in areas such as open internet access, open government data, online consumer protection and paperless trading. The co-convenors – Australia, Japan and Singapore – believe that a “clean” text on an additional four topics is within reach by the summer break. These comprise open government data, e-contracts, online consumer protection and paperless trading. The initiative has so far finalised two negotiating texts on unsolicited messages, otherwise known as spam, and electronic signatures and authentication. A new small group was established on electronic transactions frameworks and will start working based on proposals submitted by members.
Global trade after COVID-19: From fixed capital to human capital (Observer Research Foundation)
Some commentators have trumpeted the “end” of globalization in the wake of rising protectionism over the last half decade, the sudden economic stops wrought by COVID-19, and the corollary disruptions of supply chain activity around the world. The truth, though, is that for companies and investors involved in the exchange, transmission, and sale of goods, services, technology and finance, globalization is anything but dead. Rising economic nativism has taken various forms within the last few years and has in some cases been accelerated in the wake of the COVID-19 pandemic. Regardless of the underlying causes of domestic inequality and social anxiety, politicians have acted out against trade in the following ways:
Egypt upholds detention of Ever Given in Suez Canal (Daily News Egypt)
An Egyptian court rejected, on Sunday, an appeal against the Ever Given container ship’s continued detention in the Suez Canal, according to Reuters and local media. The appeal was launched by the ship’s Japanese owner, and follows its detention by Egyptian authorities after it had blocked maritime traffic in the important international trade route for six days in March. The complaint was attached to a case at the Ismailia economic appeals court, in which the Suez Canal Authority (SCA) is seeking $916m in compensation from the Ever Given’s owner, Shoei Kisen. The legal move seeks to gain financial reparations for the blockage and the operation to free the ship.