tralac Daily News
Global supply chain disruptions have been a significant source of concern this year – not just the delays resulting from the Ever Given blocking the Suez Canal – but the ongoing difficulties manufacturers are having in predicting demand and ensuring they have the inventories to meet it. This week the Producer Price Inflation (PPI) figures will reflect how much of an inflationary effect these supply constraints have on domestic prices. Economists are predicting an April producer inflation rate that ranges from 6.7% through to 7.1%.
Investec economist Kamilla Kaplan believes that “the global supply chain issues linked to demand outstripping supply and to transportation delays have translated to accelerated cost inflation for producers locally and globally” and predicts that the April PPI will reflect the impact of this. These supply chain issues have been fuelling inflation concerns and determining the direction of financial markets for the past few months – and manufacturers are still grappling with them. The latest industrial output and Purchasing Managers’ Index (PMI) data provide further evidence of the strains imposed by strong demand and supply shortages.
It may only be a matter of time before the country as a whole will have entered a third wave. According to our health experts, the recent surge in new infections is due to the increasing number of social gatherings where people are not observing essential health protocols. We must remember that the virus does not move from place to place by itself; it relies on the movement of people. The less we travel, the less the virus is spread.
As the African continent we are pushing ahead with efforts to expand our vaccine manufacturing capacity with a view to be self-sufficient in vaccine production. We are also part of the global effort to ensure that all countries have access to sufficient vaccines as a matter of urgency. We are continuing to urge all countries to support a waiver of the TRIPS agreement at the World Trade Organisation so that COVID-19 vaccines and treatments can be produced on a greater scale, at lower cost and at a faster pace.
FMD: ‘Commodity-based trade can protect economy’ (Food for Mzansi)
A leading veterinarian has warned that the suspension of South Africa’s foot-and-mouth disease-free status will have severe economic consequences for livestock producers and associated industries. The warning by Dr Peter Oberem, chief executive of Afrivet, comes as KwaZulu-Natal farmers are coming to terms with a clampdown on the movement of cloven-hoofed animals in several regions. This, after an outbreak of foot-and-mouth disease (FMD) was identified in cattle in Mtubatuba, about 200km north of Durban. “To lose this FMD-free accreditation has very severe consequences on the… country’s ability to trade internationally with livestock, livestock products and even sometimes other agricultural products,” said Oberem.
A report by Euromonitor International has documented the extraordinary growth of the illicit alcohol trade in 2020 as a direct consequence of the prohibition of alcohol sales. The research report entitled, Illicit Trade: Alcoholic Drinks in South Africa in 2020, was jointly commissioned by the South African Liquor Brandowners Association (Salba), the Beer Association of South Africa (Basa) and Vinpro. The report indicated that illicit alcohol trade has grown at a compound annual growth rate (CAGR) of 17% since 2017 and now stands at 12% of the R177.2bn total industry market value. Kurt Moore, CEO of Salba, said, “This expansion of the illicit trade has had a devastating social impact on our citizens’ health and well-being, is stalling economic recovery and fuelling the engines of organised crime.”
On railway transport, Kenya is certainly on the right track (The Standard)
As it marks its fourth anniversary on May 31, 2021 Madaraka Express has been credited with revolutionising travel in the country, offering charm and tranquillity that can’t be matched by other modes of transport. Madaraka Express service has also fostered new investment opportunities for Kenyans and thus contributed to community well being and economic growth. The local tourism sector has also been greatly impacted. Additionally, the service has impacted positively on the lives of many Kenyans, both young and old, through employment directly and indirectly. Between January 2018 and April 2021, the trains moved a total of 12,875,402 tons of cargo.
It is noteworthy that the changing landscape of the railway transport industry poses significant human resource challenges. For this reason, operators must develop knowledge transfer best practices to ensure that vital information and skills are retained within the industry.
Current account deficit widens on rising imports (Business Daily)
Kenya’s current account deficit widened marginally as imports grew at a faster pace compared to export earnings in the first four months of the year. Data from the Central Bank of Kenya (CBK) shows the deficit, measured as a percentage of the gross domestic product, stood at 5.2 percent in the 12 months to April, up from 5.1 per cent in March. The CBK data shows that although exports grew by 5.5 percent in the period, and diaspora remittances were up 23.3 percent higher compared to 2020, the big jump in the import bill has meant that the deficit has widened by 40 basis points since December. The imports have been driven by higher demand for consumer goods and supplies used by the manufacturing sector.
New fund set up to ease debt payments (Business Daily)
Kenya has created a special fund to ease future cash flow pressures on government revenues arising from fast-maturing debts which are forecast to double to nearly Sh1 trillion in the next three years after expiry of grace period. “The Fund shall be used to cushion for amortisation of liabilities arising from national government loans, redeem maturing… loans to alleviate rollover risks and facilitate debt restructuring and smoothening of maturity profile,” read the Public Finance Management (Sinking Fund) Guidelines.
Kenya and Tanzania begin implementing measures to ease trade (The Star, Kenya)
Kenya and Tanzania have begun implementing measures to ease trade between the two nations. Tanzania for instance has agreed to facilitate the clearance of soft drinks and removing inspection fees for processed products with standardization marks including wheat flour. The countries also agreed to facilitate maize entry to Kenya, as well as to waive the excise duty for glass products from Tanzania.
SMEs digest: How Covid-19 impacted traders market access (The Citizen)
Despite favourable rains, food security in Tanzania was compromised last year after the outbreak of Covid-19. Farmers – both smallholders and commercial crop producers – could not access their traditional markets and key inputs. The situation was compounded by the closure of borders with the neighbouring states, especially in the northern zone regions.
Zimbabwe and Zambia are working on setting up industrial joint ventures riding on the recent signing of a memorandum of understanding (MoU) aimed at facilitating close collaboration between the two countries towards rejuvenating the manufacturing sector. Industry and Commerce Minister, Dr Sekai Nzenza, told regional ministers who attended the 4th Comesa Committee of Ministers of Industry last Thursday that the joint venture efforts would assist the two countries to unlock higher economic potential in line with regional industrialisation ideals. The two neighbouring countries will seek to utilise complementarities of national resources in key sectors to drive value-addition of skills, technology and marketing, among other capabilities, said Dr Nzenza.
Zambia produces about 55,000 metric tons of raw cotton each year. After processing, it exports most of its raw lint without adding any value to the fibre and imports most of its absorbent cotton wool products such as ear buds and swabs. This robs the country’s entrepreneurs of the business opportunities created by adding value to the raw lint. But one Zambian entrepreneur is determined to change the situation.
AfCFTA: Nigeria’s implementation strategy out in June – Official (Premium Times)
Funmi Folorunsho, African Continental Free Trade Agreement (AfCFTA) Co-champion on Transportation, says the National Implementation Strategy document would be published in June. She noted that the implementation strategy document would address in detail issues like having a dispute resolution centre, rules of origin and the like, and how to go about getting things done. According to her, since the signing of the Agreement, President Muhammadu Buhari had established the National Action Committee, with a specific mandate of preparing how Nigerians would optimise the benefits of AfCFTA. “So, as at today, what we have is the preparation of what is called the National Implementation Strategy for Nigeria’s participation in AfCFTA,” she said.
From a “triangular trade” that sees its nuts shelled in Asia before being shipped to the US, top cashew producer Ivory Coast aims to process more of its own crop for sale in the huge American market. Starting from the present yearly average of just 10 percent, producers aim to shell half by 2025, Adama Coulibaly, director of the Cotton-Cashew Council, told AFP. This year alone the country’s capacity should increase by 100,000 tonnes. But processing more nuts domestically will mean a shift away from traditional export relationships, which currently see most raw nuts sent to Vietnam and India.
In Ghana, only two companies have done trade deals under the African Continental Free Trade Area (AfCFTA) agreement, according to the Ghana Investment Promotion Centre. But here in South Africa, no one had a single deal to brag about at the webinar hosted by the Gauteng Growth and Development Agency on Friday.
Five months after the AfCFTA came into effect, opening up a free trade area that connects 55 countries and 1.2 billion people on paper, trading tariff-free with other countries in the continent remains a dream for many businesses as leaders are still ironing out more details. Only 38 countries have ratified the agreement so far. So, free trade is a reality that’s so close yet so far, which has made those who were sceptical about it want to say: “I told you so.” But at least more information is coming forward now. The AfCFTA Secretariat’s secretary-general, Wamkele Mene, told those attending the webinar on Friday that challenges with getting the wheels turning were always going to be there.
Women in mining sector could benefit from AfCFTA (The New Dawn Liberia)
In Africa, women are involved in the production of diamonds, gold, coloured gemstones, cobalt, copper, the so-called 3T minerals (bearing tin, tungsten and tantalum), industrial minerals and construction materials, some of which they fashion into finished goods – from pottery and bricks to jewellery. It is necessary to consider, even at this stage, the AfCFTA’s potential impact on women in the mining sector – whether positive or negative. A focus on such impact would help determine the achievement of the aspirations of the AU’s Africa Mining Vision (AMV) that was adopted in 2009, and seeks “Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development…” and notably mentions gender inclusion as one of its key tenets, though the mechanics of that have yet to be worked out.
The East African Community Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) has urged the EAC Regional Coordination Committee to review and harmonise the Covid-19 testing charges, in addition to the validity and mutual recognition of the certificates with a view to ensuring the safe and smooth movement of goods and persons in the region. The SCTIFI noted with concern the non-recognition of Covid-19 certificates by Partner States, the unharmonised charges for Covid-19 testing and the validity of Covid-19 certificates amongst Partner States. The SCTIFI further observed that notification procedures were not being followed, a situation that essentially constitutes yet another Non-Tariff Barrier (NTB) to trade within the region.
The Vice Presidential Candidate of the People’s Democratic Party, PDP, in 2019 elections, Mr Peter Obi, has given, among others, low volume of export trade in African region, general lack of policies implementation, excessive urge to consume rather than produce, corruption and leadership failure, as the reasons for continued retrogression and under-development of the African continent, noting that if the African Trade Agreement were properly implemented, the continent would reap great fruits of development.
“Trade is the driving force behind China’s Silk Road and Belt & Road Initiative (BRI). Trade is the reason that Singapore, a country with no natural resources and a population of less than 6 million people has the best Human Capital Index (HCI) ranking (88%) in the World. Trade is the reason that a war ravaged country like Vietnam is now an export powerhouse in South East Asia. These strides were not accidental but were shaped by visionary leadership and deliberate policies.”
The EFF marks the 58th Anniversary of the founding of the Organisation of African Unity, which is continentally and globally celebrated as Africa Day. On this day, the EFF re-affirms the principle contained in our Founding Manifesto that, “the development of the African continent is inextricably linked with the development of South Africa. No amount of sustainable socioeconomic development and stability will be realised in South Africa unless the state plays in active role in the economic development of the African continent. This, obviously, should include the development of trade corridors that link up the entire African continent and create capacity to consume goods and services produced on the continent”. Building of a strong continental economic emancipation movement which will fight for the return of Africa’s land and resources to the hands and benefit of African people.
Trade experts from Member States of the Economic Community of West African States (ECOWAS) met virtually on the 28th May 2021 to deliberate on instruments to promote intra-regional and continental trade ahead of the ECOWAS Ministers of Trade and Industry meeting scheduled for 3rd June 2021.
During the meeting, the Experts considered (i) the status of the AfCFTA negotiations; (ii) the establishment of the Regional Trade Facilitation Committee (RTFC); (iii) the establishment of ECOWAS Trade Promotion Organizations’ Network;(iv) the amendment of the statutes on the ECOWAS Business Council; and (v) the evaluation of the volume of intra-regional trade taking into account informal cross-border trade. Following the fruitful deliberations, a number recommendations were made for consideration by Ministers of Trade and Industry.
Public health lawyer Safura Abdool Karim says pharmaceutical companies that are manufacturing COVID-19 vaccines are determined to protect their prices despite knowing that third world countries are struggling to get them. Some vaccine manufacturers are accused of bullying poor countries during negotiations to acquire vaccines. “Pricing is the biggest thing that they have been trying to protect because as soon as countries know how much other countries have paid, it gives them more power to negotiate lower prices.” The continental vision for vaccine manufacturing aims to ensure Africa has timely access to vaccines to protect public health security, by establishing a sustainable vaccine development and manufacturing ecosystem in Africa and the proposed ambition to manufacture 60% of Africa’s routine immunisation needs on the continent by 2040, aligned with the call for a New Public Health Order.
The Heads of State approved the 69 PIDA Priority Action Plan II projects during the Africa Union Heads of State and Government Summit held in February 2021. Subsequent to the approval, the African Union Development Agency (AUDA-NEPAD) held a technical meeting on the 5th and 6th of May 2021 to discuss the status of each of the PIDA PAP II Infrastructure projects – these consist of 28 Transport Projects, 18 Energy Projects, 12 Water Projects and 11 Information Communication Technology (ICT) projects. As part of the technical discussions at the event, AUDA-NEPAD, AfDB and UNECA presented the PIDA PAP II Implementation Strategy, Financing Strategy and Partnerships Strategy respectively to showcase how these projects will be supported by the organizations in the implementation phase. AUDA-NEPAD further presented instruments such as the Job Creation Toolkit, Service Delivery Mechanism (SDM), PIDA Quality Label (PQL), Quick Check Methodology (QCM), and the Continental Business Network (CBN).
The 12th Joint Ministerial and Technical Committees on Transport and Communications, Information Technology and Energy are meeting this week. The technical committee meeting kicked-off today, Monday, 31 May 2021 with the key agenda being the consideration of reports on the implementation of the COMESA programmes on transport, Energy Programmes and Telecommunications/ICT Programmes. The meeting brought together over 100 delegates comprising of technical experts from Member States government’s led by Permanent/Principal Secretaries and their delegations, regional and international organizations, and cooperating partners The recommendations of the technical experts will be tabled before the joint committee of Ministers on Wednesday this week for adoption.
By Abebe Aemro Selassie, Director, African Department | The first and perhaps most important reason for my optimism is the more robust development indicators than in the past. Sub-Saharan Africa is a much-changed from 1980 or 1990. It goes without saying that poverty remains unbearably high, the fruits of strong growth in some countries have accrued disproportionately to the better off, and far too many people are still impacted by conflict. But there has also been much progress and transformation. The pandemic has illustrated the value of digitalization but is also a stark reminder of the remaining digital divide. Emerging from the pandemic will depend on integrating digital strategies within each country’s broader development agenda.
Trade in the time of parcels (OECD iLibrary)
Today, more parcels are crossing international borders than ever before. While this has given rise to new opportunities, not least for individuals and SMEs who are now more directly engaged in trade, it is also raising new challenges. This paper explores this complex and evolving environment, identifying the types of goods that are traded as parcels and the different actors along the parcels supply chain, as well as the policies to help ensure that parcels get to where they are needed. Empirical analysis shows that progress on digital connectivity and trade facilitation measures, such as increased transparency or automating border processes, are likely to have a greater trade-enhancing impact on parcel trade than on “traditional” trade. In contrast, greater differences in regulations across countries in transportation, courier or logistics services are associated with lower trade in parcels. Overall, enabling benefits from trade in parcels and facing forthcoming challenges requires a comprehensive policy approach across a number of areas and throughout the parcel supply chain.
Prospects for the world economy have brightened but the recovery is likely to remain uneven and, crucially, dependent on the effectiveness of public health measures and policy support, according to the OECD’s latest Economic Outlook. As long as a large proportion of the world’s population is not vaccinated and the risk of new outbreaks remains, the recovery will be uneven and remain vulnerable to fresh setbacks, the Outlook says. Some targeted restrictions on mobility and activity may still need to be maintained, particularly on cross border travel. This will affect the prospects for a full recovery in all countries, even for those with a fast vaccine rollout or low infection rates.
Although government fiscal support throughout the pandemic has pushed up public debt in most economies, the Outlook says current low interest rates make debt servicing more manageable and should open the way for investments in areas such as healthcare, digitalisation and addressing climate change. Ms Boone insisted “Debt sustainability should be a priority only once the recovery is well advanced, but governments should start planning for an overhaul of public finance management. This is no ordinary crisis and no ordinary recovery. Post crisis policies should be reformed in depth to address more effectively today’s challenges and those ahead.”
The world needs a global partnership to beat COVID-19, achieve the Sustainable Development Goals and address climate change, said the UN Secretary General in a video message for the opening day of the 2021 P4G summit in Seoul, Republic of Korea. The Partnering for Green Growth and the Global Goals 2030 (P4G) event aims to boost market-based partnerships and rally high-level political and private sector action. Mr. Guterres also expressed his concern about the ‘finance and adaption gaps’. He said that developed countries have yet to deliver on the 100-billion-dollar annual commitment to climate action efforts and supporting vulnerable communities that are already suffering the consequences of global warming. Mr. Guterres warned that there is no global partnership if some are left “struggling to survive” and said that this was true for COVID and the distribution of vaccines as well as the climate emergency.
Activists at a demonstration outside the annual general meeting of HSBC in London have demanded the bank and other financial giants provide debt relief to African countries hit hard by the coronavirus pandemic. In an attempt to highlight the role of private creditors in the debt crises of the world’s poorest countries, campaigners with “drop the debt” banners gathered outside HSBC’s AGM at the Southbank Centre. “We’re here today because, although we’re in an enormous global pandemic, private lenders like HSBC are yet to meaningfully suspend or cancel any debt when other countries, even the IMF, have taken action,” said Eva Watkinson, head of campaigns at the Jubilee Debt Campaign. “It’s really shocking that [private creditors] haven’t done more in this crisis. We’re here to say: cancel the debt, fund the vaccines, save lives.”