tralac Daily News
South Africa is experiencing a record trade surplus in the wake of the Covid-19 pandemic with our exports far outpacing imports. This is according to Justin Milo, Standard Bank’s executive head of trade and supply chain finance sales, who said exports could hold the key to South Africa’s economic recovery and growth. Milo said rising global commodity prices, together with increased demand for South African exports by trading partners, was the key driver of local export performance.
Third wave weighing on trade conditions (Engineering News)
Trade conditions during December 2020 and January 2021 suffered a severe second wave of Covid-19 infections, which negatively impacted trade. While trade conditions have subsequently improved, South African Chamber of Commerce and Industry (Sacci) CEO Alan Mukoki says these were down again in May with the Trade Activity Index (TAI) having declined to 36.
The Emerging Black Importers and Exporters of South Africa (EBieSA) is calling on the domestic poultry industry to urgently implement the transformation commitments contained in the Poultry Master Plan. Speirs says that this is despite what was agreed on in the Poultry Master Plan, and which was signed by the local poultry industry and President Cyril Ramaphosa in November 2019. “As soon as any measure to drive transformation is raised, the local industry counters this by saying it will lead to job losses. We see this as nothing more than a diversion strategy and amounts to blackmail,” Speirs notes. EBieSA has also made a submission to the Department of Trade, Industry and Competition (DTIC), warning that further tariffs on imports could impact on food security for the poorest in South Africa. The submission was made in response to the DTIC’s Poultry Tariff Structure Review.
Massmart says localisation project yielding benefits, lauds DTIC (Engineering News)
Wholesale and retail group Massmart says its localisation focus, in partnership with the Department of Trade, Industry and Competition (DTIC), is bearing fruit, with visible benefits being experienced by the group and an increasing number of local suppliers. Massmart, over the past nine months, reviewed its top imported products and determined which of these have the potential to be manufactured more competitively by local manufacturers. “There are several benefits to localising supply. Locally manufactured products present significant supply chain benefits by reducing supply lead times so that stock arrives in our stores faster and more reliably, which translates directly into improved sales,” says Massmart sourcing optimisation executive Von Stander.
Namibia’s foreign reserves stood at 39 billion Namibia dollars (about 2.8 billion U.S. dollars) as of May 31, partly due to an inflow from the International Monetary Fund (IMF) and Southern African Customs Union (SACU) receipts, a central bank official said Wednesday. The IMF funds came in the form of disbursement of IMF Rapid Financing Instrument which partly contributed to the increase from the 34.7 billion Namibia dollars seen in March, said Johannes Gawaxab, the governor of the Bank of Namibia, the country’s central bank, during a Monetary Policy Committee (MPC) announcement. According to Gawaxab, at the current level of 39 billion, the international reserves are estimated to cover six months of imports.
AfCFTA to inspire rebound: Govt (Zimbabwe Independent)
Government has moved to allay private sector concerns that the African Continental Free Trade Area (AfCFTA) would knock them out of business as high quality, competitively-priced products flood the domestic space. AfCFTA was established on January 1, 2021, creating a market of 1,3 billion people with US$3 trillion combined gross domestic product. “I would like to allay private sector fears on unfair trade practices that might arise as a result of trade liberalisation under the AfCFTA by assuring them that the AfCFTA agreement has provisions on trade remedies to defend domestic industries against unanticipated import surges, dumping or subsidised imports, if necessary,” Deputy Foreign Affairs and International Trade minister David Musabayana said during a meeting to discuss AfCFTA.
World Bank eyes Kenya removal from high-risk debt list (Business Daily)
The World Bank Group says it is likely to remove Kenya from countries with high risk of default on loans in 2028 if the authorities stick to a programme aimed to curtailing growth in government expenditure and growing taxes. The multilateral lender says it expects the country’s debt risk profile to improve in coming years on projected recovery in economic growth and exports, helped by fiscal consolidation programme and implementation of policy reforms. “Kenya’s public debt burden is projected to peak in FY2022/23 and then decline consistently, with the present value (PV) of public debt set to fall below the 55 percent high risk threshold by 2028,” World Bank wrote in the report following the $750 million (Sh81 billion) under the Development Policy Operations (DPO) last week.
We have adopted 58 African Regional Standards – UNBS (Daily Monitor)
Previously, the major source of substandard products was through imports. But this has since changed after UNBS strengthened its compliance requirements for imported products requiring that they are inspected and tested in their countries of exports before coming to Uganda. This initiative is being done under the Pre-Export Verification of Conformity (PVoC) Programme. However, with the promotion of Buy Uganda Build Uganda which is aimed at promoting import substitution and encouraging exports of Ugandan products to regional and international markets, we have seen an increase of noncompliance to quality standards from locally manufactured products, especially by Micro, Small and Medium Enterprises (MSMEs) who have significant challenges with capacity and resources required to put in place basic quality management systems to ensure that their products comply to the required safety and quality standards.
Export guarantee safeguards key for promoting regional trade (The Independent Uganda)
Uganda needs an export guarantee scheme for trade with Democratic Republic of Congo and South Sudan, according to the Uganda Manufacturers Association Executive Director, Daniel Birungi. Birungi made the remarks at the recently held post-budget virtual conference in Kampala sponsored by Absa Bank Uganda. Birungi’s call has been previously advanced by many trade experts given that the two countries have experienced political instability that has cost many Ugandan traders billions of shillings. He said: “We have opened up South Sudan and DRC, which is very good work. But the aspect of volatility in these markets requires that we have an export guarantee scheme… so that, when a manufacturer transports their goods to these countries and loses them, they are able to have recourse.”
Museveni, Tshisekedi commission construction of DRC roads (The Observer)
Uganda President Yoweri Kaguta Museveni and his Democratic Republic of Congo counterpart today Wednesday Felix Antoine Tshisekedi Tshilombo commissioned the construction of the cumulative 233km road project between the two countries at Mpondwe in Kasese district in western Uganda, through the minister for Works and Transport will be injecting up to Shs 243.7 billion into the Congo roads project.
The two Heads of State exchanged views on bilateral, regional and international issues of mutual interest. They reiterated their commitment to promoting trade, investment and common infrastructure as well as deepening integration among the peoples of the African continent. They stressed the importance of strengthening cooperation in different sectors including; security, infrastructure connectivity, energy, trade and investment, health, management of transboundary water resources, petroleum and minerals with the view to promoting peace, stability and prosperity of the two countries.
The West Africa Trade & Investment Hub (Trade Hub) on Tuesday announced that it has awarded a $1.4 million (N574 million) co-investment grant to OCP Africa Fertilizers Nigeria Limited (OCP Africa). The hub, funded by the United States Agency for International Development (USAID), said the grant would help boost specialised fertilizer production in Nigeria, in order to help farmers grow crops in commercial scale and support food security in the country. This was disclosed in a statement by Michael Clements, Trade hub’s chief of party. “This project is quite a unique one, and we are excited to partner with OCP Africa to complement the Nigerian government’s policy to leverage locally available resources to expand food production capabilities… Such policies contribute significantly toward achieving the food security goals in Nigeria, in line with the USAID Feed the Future initiative,” he noted.
Nigeria prepares to kick off works to build West Africa gas pipeline (The North Africa Post)
Nigeria’s federal government prepares to launch works to build a pipeline that will channel gas to Morocco through a combined offshore and onshore track. The announcement was made by senior official at the Nigerian National Petroleum Corporation (NNPC), Yusuf Usman, during an interview with local NewsDirect newspaper. Feasibility studies have been completed and Nigeria is about to take a “final investment decision for the project.” After recalling the commitment of the leadership of the two countries to the project, Usman reaffirmed that the project “will pick up a lot of African countries. Some of these African countries have gas they will inject into the pipeline while some don’t have but can take the gas for development, if they cannot pay for the gas, they can get electricity.”
“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors. Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.”
A statement issued by the British High Commission in Accra, copied to the Ghana News Agency, said the meeting built UKGBC 2020, which supported more than £223m of investment in Ghana’s infrastructure. It said the UK Government announced a new programme of support for Ghana Revenue Authority (GRA) and noted that the meeting reflected on the achievements of the UK-Ghana partnership over the past year, including support for the security sector following the recent visit of Madam Priti Patel, the UK Home Secretary. The statement said since the last meeting of the UKGBC, the UK-Ghana economic partnership had supported more than £223m of investment in infrastructure across the country, the biggest UK investment into infrastructure in Ghana in a generation. “This investment has significantly developed the country’s critical infrastructure, combining UK support and expertise with Ghanaian skills and entrepreneurship to build roads, bridges, hospitals, water infrastructure, airports and the expansion of Kumasi market,” it stated.
‘Egyptian economy is rebounding’: Expert (Ahram Daily)
Despite the ongoing impact of the Covid-19 pandemic, economic activity in Egypt is rebounding. According to the World Bank, remittances, portfolio inflows, and external financing continue to support the country’s international reserves. As part of its national development strategy, the government intends to increase exports to $100 billion cumulatively within the next five years, as well as to strengthen private-sector development and tap into its productive capacities to meet the country’s economic ambitions. The AfCFTA represents an important opportunity for Egypt, especially in supporting the country’s ambitions to build fourth-generation cities that will accommodate an estimated 30 million people, providing millions of jobs and catalysing the role of the private sector in driving growth. This is where programmes such as the Arab-Africa Trade Bridges (AATB) Programme, which aims to drive inter-regional trade and investment flows between Arab and African countries, are supporting both the Egyptian public and private sectors to identify and build stronger commercial partnerships, develop export capacity, and enhance trade potential across key growth sectors.
The Economic Commission for Africa (ECA) initiated on Tuesday a coordination mission to the national authorities and the United Nations System in Côte d’Ivoire, with a view to increasing the country’s capacity to manage migration issues. The visit, which took place from 8 to 10 June, 2021, was held as part of a project led by the ECA in collaboration with the United Nations Department of Economic and Social Affairs (UNDESA), the International Labour Organisation (ILO) and the International Organisation for Migration (IOM).
The project, which covers Côte d'Ivoire, Mali, Morocco, Senegal, South Africa, and Zimbabwe, aims to increase these countries’ capacity to design migration policies and programmes tailored to their needs, based on factual data, and in line with their ambitions to implement the Sustainable Development Goals (SDGs), Agenda 2063 for Africa's Development, and the recommendations of the Global Compact for Safe, Orderly and Regular Migration (GCM). The ongoing programme also aims to provide a framework for intra-African dialogue and exchange on migration issues, so as to provide these countries with an opportunity to share their experiences and good practices.
AfCFTA Young Entrepreneurs Federation launched (Graphic Online)
African Youth Entrepreneurship groups have launched the AfCFTA Young Entrepreneurs Federation (AfYEF) to mobilise the youth to take advantage of the single continental market. The federation is a league of youth entrepreneurship organizations from across the African continent that serves as a representative voice for young entrepreneurs on AfCFTA. It among other things seeks to train and build capacity of youth entrepreneurs, advocate for them when the need arises and further facilitate trade. For her part, a minister at the Nigeria High Commission, Mrs Esther Adebola Arewa, acknowledged that the success of the AfCFTA was critical to the successful integration of regions on the African continent. She, therefore, advised the youth not to take for granted the AfCFTA Young Entrepreneurs Federation platform, saying “please take advantage of those opportunities that abound”.
Experts and government officials discussed strategies for mobilizing internal resources to cope with the growing debt of African countries and allow the continent to recover better after the Covid-19 pandemic. The webinar, titled “Exploring the Link Between Fiscal Policies and Debt Management”, is the second in a series of webinars on African debt management organized by the African Development Bank with the support of the Government of Japan. According to the director of the governance and public finance management department at the African Development Bank, Abdoulaye Coulibaly, it is necessary “to start a discussion on how to reduce dependence on debt, but also on how fiscal policies and tax policies in particular can contribute to avoiding a situation of debt distress.”
The East African Community (EAC) budget for the 2021/22 financial year will be read in the regional Legislative Assembly here on Tuesday next week. The budget speech will be delivered by the chairperson of the EAC Council of Ministers, Adan Mohammed, who is Kenya’s Cabinet Secretary for EAC Affairs The EAC organs and institutions are expected to spend $90 million during the coming financial year which begins on July 1. According to a statement by Eala, the proposed estimates have been approved by the Council of Ministers – a powerful organ of the regional economic integration bloc. Mr Charles Kadonya, the acting Eala Clerk, said a total of $53.1 million (58 percent of the entire budget for 2021/22) will be raised from the six EAC partner states. The other $37.4 million (42 percent of the total $90 million budget) will be sourced from an array of development partners of the Community.
Tough times not yet over for African airlines (Engineering News)
Around the world, light is now visible at the end of the Covid-19 pandemic tunnel (although the distance to the end of the tunnel varies greatly from country to country). One of the economic sectors that will be most relieved by this is the airline sector, and not least its African, Southern African and South African members. Even before the pandemic hit, many of the continent’s airlines were in financially weak situations, in large part as a result of heavy government charges and taxes, but also because of restricted access to markets within Africa and low load factors. In 2019, African airlines suffered a combined loss of $200-million, despite the continent’s economic growth.
Africa yet to meet target of 10 percent national budget for agriculture (The East African)
In 2003, the heads of state and government of the African Union recognised that greater public spending on agriculture was needed to eradicate hunger and poverty across the continent. This prompted them to make a political commitment – the Maputo Declaration – to allocate at least 10 percent of their national budget to food and agriculture, under the Comprehensive Africa Agriculture Development Programme (CAADP). A new report titled Public expenditure on food and agriculture in sub-Saharan Africa: Trends, challenges and priorities, found few countries have met the 10 percent Maputo target, despite a renewed commitment in 2014 through the Malabo Declaration. Surprisingly research showed that on average, 21 percent of budgets devoted to food and agriculture in the region were not spent, often due to either funds being disbursed too slowly or complications in project implementation.
Coffee agencies in the East African region have proposed the removal of trade tariffs in the continent to boost earnings. A policy brief published by the East African Business Council (EABC) says countries should heavily maximise on the African Continental Free Trade Area (AfCFTA) agreement to search for new markets. The policy, published May 17, 2021, notes that given the economies of scale, the free trade agreement is a golden opportunity for the East African Community (EAC) to export coffee to the rest of the continent. “To this end, the EAC should advocate and push for zero tariff coffee trade, especially processed coffee, across the entire African region as part of the AfCFTA,” it says. EABC says that since all the five countries – Burundi, Rwanda, Kenya, Uganda and Tanzania – produce coffee of high quality, none should consider the beans to be sensitive products. Instead, they should use the opportunity to boost local uptake of coffee. The document is titled, Policy Brief on General Trade Obstacles on Coffee Trade in the East African Community.
Revenues from oil and gas resources have been the value-creating engines for governments across the globe. For African countries, commercializing oil reserves is a major opportunity to fund the breadth of socio-economic industrialization programmes for which they strive and as a result National Oil Companies (NOCs) have been established by many, whether petroleum producing or still in the process of exploring. assets. It is tempting to make the assumption that National Oil Companies must add more value than their international oil competitors but the situation is often more complex. National energy companies usually have multiple roles including revenue generation, local content promotion, providing preferential energy pricing to stimulate the local market and delivering national expertise ranging from geo-data to managing and partnering with international peers. But the window for extracting value from oil is beginning to close as the global energy transition gets underway and NOCs must meet these sometimes diverse objectives while also helping their countries make progress against challenging social development enabling and climate change reduction goals.
IFC and BMZ, the German Ministry for Economic Cooperation and Development, launched a new program today that will leverage greater private sector investments to support the food production value chain across Africa and increase access to finance for rural farmers and businesses. The Euro 21 million Food Systems Development Program, focuses on giving food producers, ranging from smallholder farmers to small and medium-sized agri-businesses in Africa, greater opportunities to improve their incomes. IFC’s technical assistance will strengthen agricultural value chains from farm to market. Supply chain disruptions caused by the COVID-19 crisis have highlighted weaknesses in the food supply system and created an opportunity to explore technology-based solutions that will make the sector more efficient, adaptive, and resilient. Meanwhile, global demand for food will grow by 50 percent by 2030 due to population growth and dietary shifts. This could exacerbate food insecurity for some countries if no action is taken. African countries, in particular, are at high risk of facing severe food insecurity by 2030.
Higher trade levels can facilitate economic growth for Indian companies and transform domestic economies. The Indian office of AfCFTA in New Delhi will support the African efforts in elevating the potential impact it will create on India-Africa trade and bilateral investments. “The vision of Indian leadership of Atmanirbhar Bharat and the African “collective self-reliance” has long been an integral component attempted by African leaders and policymakers, to find Indo Africa-driven solutions to African problems in trade and commerce,” said Varun Jain, the Chairman of the India Africa Trade Council (IATC) committee for AfCFTA.
The continent that’s been described as the last frontier seems to be on its way to deliver on its enormous promise. High economic growth rates, combined with the world’s youngest and fastest-growing population continues to fuel optimism amongst observers. The increasing trend of political stability and cooperation within Africa is also a positive sign. With initiatives like the African Continental Free Trade Area (AfCFTA) and Agenda 2063, a blueprint for socio-economic transformation, Africans are showing ambitions for the future. However, just like Brazil, Russia, India, China, and South Africa (BRICS) in recent years, Africa will need strong strategic partnerships to make things happen. That’s where Europe comes in.
The Monitoring and Evaluation (M&E) exercise that will underpin the Aid for Trade Global Review, due to take place in mid-2022, was one item discussed by members at a Committee on Trade and Development workshop on the circular economy. Ambassador Mujtaba Piracha of Pakistan, the chair of the committee, outlined the process that he envisaged would lead to the Aid for Trade Global Review based on the theme “Empowering connected, sustainable trade”. The need to facilitate economic recovery from the COVID-19 pandemic was highlighted by some members as a theme to be explored. Members noted that the Aid for Trade Stocktaking event last March was a first attempt to survey the trade impact of the COVID-19 pandemic. Another theme that several delegations highlighted as a topic for consideration was the gender dimension to Aid for Trade and how it can contribute to the work in the Informal Working Group on Trade and Gender.
The TRIPS Council of the World Trade Organisation on Thursday agreed to hold a series of meetings till July-end to take stock of the text-based discussions on a proposal seeking patent waivers to deal with the Covid-19 crisis, an official said. This was agreed upon at the informal meeting of the council in Geneva. The meeting follows after the members of the World Trade Organization (WTO) agreed by consensus to start the text-based negotiations on the proposal. “At the informal TRIPS Council meet on June 17, members agreed to a calendar of meetings until the end of July to organise and take stock of the text-based discussions on an urgent IP response to Covid-19,” the Geneva-based trade official said.
Trade plays a key role in producing economic opportunities, helping to create employment and strengthening institutions, which are indispensable factors for lasting peace and stability, Deputy Director-General Xiangchen Zhang said on 17 June. Speaking at the launch of the Global Peace Index 2021, DDG Zhang underlined the importance of the WTO’s Trade for Peace Programme in emphasizing the linkage between trade and peace at a time when the COVID-19 pandemic has worsened fragility risks across the world, particularly in fragile and conflict-affected states.
A transformative recovery in the wake of the COVID-19 pandemic requires a global covenant with full inclusion of middle-incomes countries since they are key actors of global development, Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), indicated. In her presentation, ECLAC’s Executive Secretary indicated that per capita GDP should not be the single criteria for defining development levels and needs, and it cannot be used to exclude Middle-Income Countries (MICs) from concessional finance and trade preferences. In this sense, she stressed that Small Island Developing States (SIDS) are particularly vulnerable. “COVID does not distinguish between income levels, and nor should cooperation to overcome this crisis be guided by GDP criteria,” she emphasized.
Alicia Bárcena noted that MICs are key actors of global development since they account for more than 75% of the world’s population and around one third of global GDP. These countries – in which 62% of people live in poverty – attract 45% of investment, account for 30% of global exports, and are key actors in the implementation of the 2030 Agenda and its Sustainable Development Goals (SDGs). In addition, they represent 96% of the public debt of developing countries (excluding China and India), meaning that debt distress and potential default in middle-income countries could have significant repercussions in global financial markets.