tralac Daily News
This October, OMFIF and ABSA launch the fifth edition of the ABSA Africa Financial Markets Index, the region’s financial market development benchmark. South Africa, the index’s top scorer, is steering through the Covid-19 crisis better than initially expected. Its fiscal deficit is lower than was predicted at the beginning of the pandemic, and the country is projected to experience a more robust recovery in 2021. SARB reviewed its growth outlook at the end of May. The central bank expects a 4.2% GDP growth in 2021, up from the 3.8% it had previously estimated. ‘The stronger growth forecast for 2021 reflects better sectoral growth performances and more robust terms of trade in the first quarter of this year’, explained Lesetja Kganyago, SARB’s governor.
South Africa has undoubtedly discovered some hidden strengths during the pandemic. However, economic recovery is still vulnerable. OMFIF’s ABSA Africa Financial Markets Index will analyse these and other developments that have taken place during the past year in the financial markets of South Africa and 22 other countries from the region.
Court extends suspension of order to stop SGR cargo rule (Business Daily)
The Kenya Ports Authority (KPA) got a reprieve on Tuesday after the High Court extended orders that suspended a decision that would allow importers to choose their preferred mode of transport for their cargo whether by the standard gauge railway (SGR) or trucks. Justice Eric Ogola extended the interim orders until September 30 when a five-judge bench is expected to deliver its ruling on an application by KPA seeking a further stay for 90 days. “The judges have not had time to sit and write a ruling,” said Justice Ogola on Tuesday, the day the bench was to give its judgment.
Tanzanian MPs approve national budget estimates (The East African)
Tanzania’s Members of Parliament have unanimously approved the national budget estimates. They voted Tuesday through open ballot as outlined in parliamentary standing procedures. The government had asked the August House to approve the Tsh36.6 trillion ($15.8 billion) which was unveiled last week by Finance Minister Mwigulu Nchemba. The amount is slightly higher than the previous budget estimates of Tsh34.5 trillion ($14.9 billion) which was approved during the 2020/21 fiscal year which will come to an end on June 30.
Building Back Better: Supporting Egypt’s efforts at inclusive recovery (World Bank Blog)
Egypt’s macroeconomic reforms of recent years helped stabilize the economy, allowing the country to enter the pandemic with a level of economic stability that somewhat cushioned the blow of the COVID-19 crisis. The pandemic’s impact has however impacted the country’s prospects of growth – exacerbating longstanding issues but also highlighting what Egypt can do to recover and build back better in a way that enables the country to fulfill its potential. For this, a multi-dimensional approach is needed to put Egypt on the path to inclusive and green development, to protect the poor and strengthen human capital, to help create private sector jobs, and to strengthen policies, institutions and investments.
U.S. seeks beneficial trade ties with Nigeria, others (The Guardian Nigeria)
The United States – Africa relationship under the government of Biden – Harris Administration, will entail increasing two-way trade and investment between Africa and the United States, working with African Governments as partners in pursuing shared interests such as global health, climate change and the creative industry, Deputy Assistant Secretary of State for African Affairs, Akunna Cook, has said. The US Ambassador to Nigeria, Ambassador Mary Beth Leonard, stated that one of her most important roles as an Ambassador is to advocate for hugely beneficial trade and investment opportunities of which an enabling environment allows companies to expand, thereby creating jobs and growth for the economy of both Countries.
Hope for Nigeria’s trade integration as $430m Enugu-Cameroon road ready soon (International Centre For Investigative Reporting)
The African Development Bank (AfDB) has said that the $430 million highway project linking Enugu in South-East Nigeria to Bamenda in Cameroon will be completed soon. This, when completed, is expected to bolster integration of Nigerian businesses with African peers and support the African Continental Free Trade Area (AfCFTA). The AfDB confirmed this development in a statement on Tuesday, saying that it was part of its investments in West Africa which currently stood at $16 billion.
Malawi, south Sudan strike deal (The Nation Online)
Malawi and South Sudan on Thursday signed a trade agreement that will see Lilongwe exporting its surplus food to Juba to help ease a widening deficit of cereals in Africa’s youngest nation. The two countries officially signed a memorandum of understanding (MoU) in Juba that allows Malawi to export to South Sudan products such as maize, maize flour, sugar, rice, groundnuts and beans. The deal also allows South Sudan to export refined petroleum products to Malawi, a move which is expected to cut costs of importing from the Arab world, according to Minister of Trade Sosten Gwengwe.
Ivory Coast, the world’s biggest cocoa producer, plans to raise ethical standards for all its key exports as it faces increasing consumer pressure to grow the chocolate ingredient more sustainably. Cocoa accounts for roughly half of Ivorian exports, which include rubber, oil and gold. While its exploitation has contributed to the country losing more than 80% of its forest cover since the 1960s, that trend is showing signs of progress. Ivory Coast now seeks to expand forest area to 20% of its territory by 2030.
Egypt has been implementing a comprehensive plan to upgrade its ports at the Red Sea and Mediterranean Sea with the goal of becoming a logistic center in the Middle East and Africa and promoting its presence on the international trade map, said Egyptian experts. “The plan aims to boost the competitiveness of Egypt’s ports, create added value, lure investments, and activate the flow of importation and exportation,” said Mona Sobhy, professor of economic geography and transportation with the Al-Azhar University in Cairo. “Egypt is working on digital transformation of the operation of ports, linking seaports, dry and internal ports, consumption centers and manufacturing areas through road and rail networks, which would facilitate the movement of transport and distribution of exports and imports,” Sobhy said.
IMF Managing Director Kristalina Georgieva today announced that the International Monetary Fund has secured sufficient financing pledges to allow the Fund to provide comprehensive debt relief to Sudan. 101 IMF member countries have pledged to provide more than SDR 992 million (US$1,415.7 million) in financing. This will enable the clearance of Sudan’s arrears to the IMF, allow for the provision of new Fund financing, and facilitate the delivery of the HIPC Initiative and other debt relief to Sudan. This will also help unlock significant amounts of development assistance and create the conditions for higher and more inclusive growth in Sudan.
Supporting a vital engine of economic growth that has been strained by the COVID-19 pandemic, IFC today announced a trade finance guarantee facility to Djibouti-based East African Bank to help local companies engage in cross-border trade. IFC's trade finance facility guarantee of up to $5 million under its Global Trade Finance Program (GTFP) will help EAB provide financing to importers and exporters in Djibouti, supporting the local economy and helping maintain the flow of essential goods into the country, including medical equipment and commodities. IFC's support to EAB is underpinned by the International Development Association's Private Sector Window (IDA PSW), which is providing first-lost guarantees and limit enhancements to the GTFP in low-income countries.
Across the continent, the AfCFTA is seen as an important milestone that has the potential to improve the economic fortunes of the region and to energise its socioeconomic objectives through industrialisation and the strengthening of regional and interstate cooperation. By easing some of the industrialisation constraints, the regional economy can generate more than sufficient jobs and reduce the youth unemployment rate. Ultimately, the success of AfCFTA will primarily depend on the capacity of the African governments to tap into the potential of the youthful human capital.
In fact, 75% of Africa’s population are youth. It has become crucial for young people to be actively involved in the successful implementation of the AfCFTA. It’s a perfect situation for the continent: a massive human capital and a free-trade area. However, without adequate skills, infrastructure and a strong manufacturing sector, the AfCFTA cannot be effectively implemented. Whilst this is a great opportunity for the regional economy, it also risks stagnation if the fundamentals are not addressed as a matter of urgency.
AfCFTA: SON Canvasses Standards’ Harmonisation for Products (THISDAY Newspapers)
In order to reap the full benefits of the African Continental Free Trade Agreement (AfCFTA), there is the urgent need to harmonise products standards in Africa, the Standards Organisation of Nigeria (SON) has said. It further stated that standards’ harmonisation would equally go a long way towards checking the activities of unscrupulous importers and dealers on fake and sub-standard products who would want to use the window opened by the trade pact to carry out economic sabotage. “Africa is no doubt a big market. The advanced countries know this. Africa must therefore put her act properly together to compete with the rest of the world. “ARSO needs to brainstorm concerning the kind, type and nature of products and services that could give Africa comparative advantage and value addition at the global market. It is all about global acceptability, competitiveness and regional economic development.’’
Experts and policymakers, attending a poverty reduction-themed seminar, on Tuesday called on African countries to craft specific strategic cooperation endeavors towards replicating China’s achievements in poverty alleviation. The high-level seminar that was held virtually under the theme “China’s Poverty Reduction Practice Supports African Union (AU)’s Agenda 2063,” was organized by the United Nations Economic Commission for Africa (UNECA), the Chinese Mission to the AU and the China-Africa Institute. Albert Muchanga, AU Commissioner for Trade and Industry, said that China’s rich poverty eradication experience can be replicated in Africa as numerous researches and publications depicted a downward trend in the global poverty statistics with China’s remarkable achievements.
Promoting ‘Brand Africa’ to Realize the Continent’s Tourism Potential (Modern Diplomacy)
The World Travel & Tourism Council (WTTC) and the United Nations Environment Programme (UNEP), launch a major new report today, addressing the complex issue of single-use plastic products within Travel & Tourism. ‘Rethinking Single-Use Plastic Products in Travel & Tourism’ launches as countries around the world begin to reopen, and the Travel & Tourism sector starts to show signs of recovery from the COVID-19 pandemic which has been devastating. The report is a first step to mapping single-use plastic products across the Travel & Tourism value chain, identifying hotspots for environmental leakages, and providing practical and strategic recommendations for businesses and policymakers. It is intended to help stakeholders take collective steps towards coordinated actions and policies that drive a shift towards reduce and reuse models, in line with circularity principles, as well as current and future waste infrastructures.
The President of the African Association of Automotive Manufacturers (AAAM), Mike Whitfield, has said that the current situation wherein Africa seems to be the dumping-ground for used and unwanted automotive products needs to change. He has therefore impressed on the global automotive industry to join forces and establish a strong base in Africa to help accelerate the continent’s economic growth. Speaking in a virtual webinar to explore how the AfCFTA can help shape auto policies for African nations to drive industrialisation, Mr. Whitfield – who is also the Nissan Africa South (NAS) chairperson – said there are enormous statistics to show that the continent holds huge opportunities for the future of the automotive sector, and it is about time global players paid more attention to Africa.
Covid-19: African farmers lost 80% of revenue in 2020 (Food for Mzansi)
Improving value chains and conditions translating to improved livelihoods for farmers and workers in Africa will be at the heart of a global discussion at the Africa Fairtrade Convention (AFC), which kicks off today. This, as new research shows African farmers lost up to 80% of their revenue last year. Speaking during a virtual press conference, Fairtrade Africa programme director Chris Oluoch said farmers in Africa lost 80% of their revenue due to the pandemic. Furthermore, as companies closed shop due to lack of access to markets as most countries closed their borders, many workers also lost their jobs. Furthermore, the pandemic, Oluech reckons, triggered a wake-up call for governments to increase their investment in protecting African farmers from these losses.
Making FTZs useful to agric (The Nation)
The food sector is an economic powerhouse, a jobs creator and major contributor to the Gross Domestic Product (GDP). Policymakers across Africa are making efforts to provide the most conducive condition for the industry to thrive. In the last 10 years, attention has been given to upgrading the agricultural transportation system, including the establishment of logistics and manufacturing clusters, to lift food production. Addressing the Africa Economic Zones Organisation (AEZO) meeting, African Development Bank (AfDB) President, Dr Akinwunmi Adesina noted that special economic zones are helping to grow the economies of many countries. His words: “Their numbers have exploded from less than 200 in the 1980s to 5,000. Collectively, they have contributed exports worth $3.5 trillion, roughly 20 per cent of global trade in goods.
The 14th meeting of the EAC Sectoral Council of Ministers on Agriculture and Food Security is currently ongoing at the EAC Headquarters in Arusha, Tanzania and through hybrid means. Among the items on the agenda are: consideration of the reports on Implementation of previous Council and Sectoral Council Decisions, EAC Regional Project on Aflatoxin Prevention and Control, Lake Victoria Fisheries Organization and Competitive African Rice Initiative in East Africa Project (cari-ea). In addition to the agenda for discussion will be reports on livestock development, harmonization of farm inputs as well as resource mobilization.
A big push in a rapidly urbanizing continent kicked off today as the Food and Agriculture Organization of the United Nations (FAO) launched the Green Cities Regional Action Programme for Africa. The Programme aims to apply innovative solutions and turn urbanization into an opportunity for cities to become more sustainable, more resilient, provide access to healthy foods and ensure a better life for everyone. The initiative aims to scale-up fast-action measures for large, medium and small cities to be more resilient, food and nutrition secure, with pleasant natural environments, more integrated nutritious food production-and-distribution systems benefiting residents and farmers alike.
S. Korea, African development bank ink deal on energy, infra projects (Yonhap News Agency)
South Korea's finance ministry said Tuesday it has clinched a US$600 million deal with Africa's development bank to expand its investment in energy and infrastructure projects in the continent over the next five years. The Korean government, the African Development Bank (AfDB) and the state-run Export-Import Bank of Korea inked the so-called Korea-Africa Energy Investment Framework, according to the Ministry of Economy and Finance. The move is aimed at building a cooperative financing scheme between the country's low-interest loan program and the AfDB as part of efforts to support energy and infrastructure projects in Africa.
Despite the overwhelming dominance of services in the world economy, the manufacturing sector continues to punch above its weight. It remains a main driver of the productivity growth needed to spur technological change and innovation, essential for both job creation and well-being. This is especially true for developing countries, making industrialization a crucial part of efforts to achieve the Sustainable Development Goals (SDGs). We should therefore be concerned about signs emerging in the world’s poorest countries. Data sets are scarce, but there is evidence to suggest that the COVID-19 pandemic has had a severe impact on small and medium-sized enterprises (SMEs) and on the informal sector in least developed countries (LDCs). Without swift action from governments and the international community to get key industrial sectors back on track, a protracted downturn may be on the cards, with knock-on effects on development and efforts to cut poverty.
WTO members considered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at the landmark 100th session of the Committee on Regional Trade Agreements (RTAs) on 21 June. Dr Ngozi Okonjo-Iweala, Director-General, said the Committee’s work is especially valuable as trading relationships become more complex under new agreements. “There has always been a close relationship between RTAs and the multilateral trading system,” she said. “The work done by the Committee helps us understand how this relationship is evolving and is a regular reminder of how important it is for RTAs and the multilateral trading system to work towards the same goals,” she said, noting that over 190 RTAs have been reviewed in the Committee.
EU ignores India, S Africa’s patent waiver plea at WTO (Times of India)
The European Union has submitted a draft declaration at the World Trade Organization (WTO), “ignoring” the objectives of intellectual property (IP) waiver jointly sought by India and South Africa on Covid drugs and vaccines. While the waiver proposal is backed by over 100 countries, the EU has resisted it for eight months now. The EU declaration, which reiterates its position of using existing provisions under the WTO’s TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement during the pandemic, is being perceived by public health experts as a diversionary tactic. This could delay the progress of reaching a consensus on the waiver, which is critical to address the stark inequities in access to Covid vaccines globally, they added.
COVID-19 recovery: some economies will take longer to rebound – this is bad for everyone (World Economic Forum)
In 2020, the global economy contracted by 4.3%, with some countries doing considerably worse than others. Two main factors underpin the speed of a country’s economic recovery from the pandemic: the strength of its COVID-19 policy response, and the success of its vaccination programme. Importantly, policy action varied significantly across countries in type, size and scope. The pandemic hit emerging markets harder than advanced economies, unlike in the aftermath of the 2008 global financial crisis. Many poorer countries have found it harder to contain and mitigate the virus because of their limited healthcare capacity, and with less ability to expand public spending, suffered greater losses from the pandemic. But divergence in the speed and scale of economic recovery also entails substantial risk to individual countries as well as their trading partners. The COVID-19 economic crisis has exposed the fragility of existing international trade structures, where countries are highly dependent on one another. These interdependencies arise from the global value chains – production broken into multiple stages and completed in different countries – accounting for 70% of current global trade.
The World Bank Group today announced its new Climate Change Action Plan that aims to deliver record levels of climate finance to developing countries, reduce emissions, strengthen adaptation, and align financial flows with the goals of the Paris Agreement. The Action Plan for 2021-25 broadens World Bank Group efforts from investing in “green” projects to helping countries fully integrate their climate and development goals. The Plan also comes as countries seek sustainable pathways out of the disruption caused by the COVID-19 pandemic. “Our new Action Plan will identify and prioritize action on the most impactful mitigation and adaptation opportunities, and we will drive our climate finance accordingly,” said World Bank Group President David Malpass. “We will be delivering climate finance at record levels and seeking solutions that achieve the most impact.”
Efforts to accelerate global actions to ensure that all people have access to clean energy and electricity received a lift today as The IKEA Foundation and The Rockefeller Foundation announced plans to launch a $1 billion fund to boost access to renewable energy in developing countries, and a consortium of organizations led by Kenya, Malawi and the Netherlands advanced a call to action for clean cooking. At the same session, Google reaffirmed its commitment to source carbon-free energy for all of its operations in all places, at all times, by 2030, setting a high bar for other tech companies. These announcements came today as the UN opened a week of Ministerial Thematic Forums on energy. The Forums, running from 21 to 25 June, are part of an effort to engage governments, businesses and financial institutions to develop “energy compacts” that spell out plans to ensure universal access to clean energy and a pathway to net-zero emissions.
The latest SME Competitiveness Outlook 2021, released today, focuses on empowering small businesses to rebuild from the pandemic in a way that prepares them to face the looming climate crisis. ‘Going green is both a survival imperative and a business opportunity,’ said ITC Executive Director Pamela Coke-Hamilton. ‘Small businesses must rebuild in a way that prepares them for future shocks and strengthens their competitive position.’ Small businesses make up more than 50% of all jobs and emissions worldwide, so their level of resilience and sustainability matters.
The cost of electricity from new solar and wind plants is increasingly undercutting the operating costs alone of existing coal‑fired power plants and strengthening the case for their early retirement, a newly released International Renewable Energy Agency (Irena) report confirms. Published on June 22, the ‘Renewable Power Generation Costs 2020’ report states that over 800 GW of existing coal capacity already costs more than new solar photovoltaic (PV) or onshore wind projects commissioned in 2021. It adds that retiring these plants would reduce power generation costs by up to $32.3-billion yearly and avoid around three-gigatonnes of yearly carbon dioxide emissions. “With new renewables, energy efficiency and, in some regions, natural gas all reducing existing coal‑fired power plants’ capacity factors, these higher costs look set to be the norm,” the reports asserts.