tralac Daily News
Pandemic has presented ‘economic reset’ opportunities (Engineering News)
Deputy Minister of Employment and Labour Boitumelo Moloi said on Wednesday that while the Covid-19 pandemic has been catastrophic, it has, in many ways, presented a lot of economic reset opportunities in the process. She was addressing delegates at the launch of Switzerland’s Institute of Management Development’s (IMD’s) 2021 World Competitiveness Yearbook Survey (WCY). The event was organised by Productivity SA, an entity of the Department of Employment and Labour.
South Africa ranked sixty-first in economic performance, government efficiency and infrastructure and fifty-eighth in business efficiency. “Of great importance to us should always be the amount of heart and objective data that is used to determine our country’s productivity and competitiveness. It is the usefulness of data collected by other institutions, which could be the IMD’s competitors, such as the World Economic Forum, that we should measure against our challenges as a country,” she said.
Given Africa’s rapidly growing population, demand for food is set to escalate dramatically in the medium term, creating new growth opportunities in agriculture. By 2030, 20% of the world’s population is expected to be in Africa. The growing population will place immense pressure on Africa’s food supply, consequently requiring substantial investment, particularly from the private sector, to guarantee food security. Agricultural Business Chamber of South Africa chief economist Wandile Sihlobo views the law of productivity as a hindrance to trade activity on the continent, because too few countries have the volumes required to be able to trade. To improve on that productivity, he believes further policy interventions are needed to attract investment. In achieving increased agricultural productivity on the continent, Sihlobo believes regional value chains need to be embraced. For example, he says, the poultry sector in South Africa is not very competitive, owing to high input costs, including soybeans as feedstock.
Statistics South Africa has published its latest figures showing that consumer price inflation has hit a 30-month high. Steep fuel prices have also contributed to increasing costs in the transport sector. There’s been a drastic rise in the prices of essential food items like cooking oil and tomatoes. These hikes over the past year have contributed to the rise in the consumer price index to 5.2% in May compared to 4.4% the previous month.
Nam exports more live animals than beef (The Namibian)
For the past five months Namibia has exported more live animals than it has slaughtered for value addition and export, the Meat Board of Namibia’s statistics for May indicate. According to the statistics, the country exported 45 623 live animals, while local slaughtering stood at 29 379 head of cattle for both export and local consumption during the period under review. This indicates that more live animals are sold while the country restocks its livestock sector. A new trend of the country importing more beef than usual has also emerged.
Kenya will begin implementing a key trade deal with the European Union (EU), after partners in the East African region allowed Nairobi to go first. The revelations emerged on Monday night as President Uhuru Kenyatta toured Brussels, the Belgian capital that also hosts the headquarters of the European bloc. A communique released after the meeting with EU chiefs indicated Kenya will be allowed to move forward with implementing the agreement, even after EAC member states hold reservations. “Trade relations between Kenya and the European Union are an important underpinning of the Strategic Dialogue and the two partners will seek ways to strengthen their cooperation in this field,” said a joint statement issued after the two sides agreed on implementing relations under the Strategic Dialogue Framework. “[This will be through] the implementation by Kenya and the European Union, based on the principle of ‘variable geometry’, of the Economic Partnership Agreement between the European Union and the East African Community.”
IMF to give Kenya additional $407m budgetary support (The East African)
The International Monetary Fund (IMF) executive board has approved the release of an additional $407 million budgetary support for Kenya after being satisfied with the government’s commitment to socio-economic and structural reforms under its 38-month financing programme with the East African nation. In a statement Wednesday the Fund said the Board’s decision allows for an aggregate immediate disbursement of $407 million, bringing Kenya’s total disbursements for budget support under the under the Extended Credit Facility (ECF) and the Extended Fund Facility (EFF) programme to about $714.5 million.
Governor of the Bank of Ghana, Dr Ernest Addison, has said that the Bank will continue to provide strong policy support to aid the economic revitalization process under government’s CARES (Obaatan pa) programme. He said in that direction, monetary and financial sector policies would be designed to anchor the disinflation process, create supportive frameworks for credit enhancement, and enhance the financial digitisation process to support businesses and overall economic growth. Dr Addison made these remarks at the Ghana National Chamber of Commerce and Industry (GNCCI) Chief Executive Officers Business Forum in Accra, Wednesday, June 23. The Forum was on the theme: “Redefining Business Success: The path for Business Value, Resilience and sustainability.”
Rwanda’s High Commissioner to Ghana, Dr Aisa Kirabo Kacyira, has underscored the steady development of mutual ties between Rwanda and Ghana, in spite of disruption caused by the COVID-19 pandemic. She noted that the strong relations between the two countries, which had developed over the past 27 years and enhanced through the shared vision of the governments of both countries, should serve as a catalyst to propel trade and investment flows between the two countries for economic growth and improvement of livelihoods in the face of the implementation of the African Continental Free Trade Area agreement. In this regard, Rwanda has identified three key areas of focus for stronger cooperation with Ghana, namely tourism, trade and business investment, and education.
Somalia, Ethiopia agree to trade fish for miraa (Nairobi News)
Somalia has agreed on a barter trade deal with Ethiopia that enables them to export fish to their neighbours in exchange for Khat (miraa). The deal is part of a landmark bilateral agreement signed by the leaders of these two countries on Monday, June 21, 2021. The agreement appears to be part of a handshake between the neighbouring countries that have not been seeing eye to eye on several diplomatic matters for the past decade. Experts have said the new pact, other than boosting bilateral trade relations between the two countries, will also spur development in the Horn of Africa by creating employment opportunities.
Mr Wamkele Mene, the Secretary-General of the African Continental Free Trade Area (AfCFTA) Secretariat, says 38 countries have now deposited their instrument of ratification of the agreement establishing the AfCFTA. Mene, who disclosed this while speaking with newsmen on Wednesday in Abuja, said that it was at the initial stages of AfCFTA implementation. He said though ratifying an international instrument involved a lot of processes but governments were encouraged to be fast for full AfCFTA implementation and benefits across the continent.
“We are still waiting for others to ratify the agreement. “But I am not worried that we are about 38 because in ratifying any international instrument, processes including legal and political processes needed to be followed for a country to be in a state of readiness. “There are countries that are ready with custom’s infrastructure that is required to be able to trade in a commercial and meaningful sense, examples are South Africa, Egypt, Ghana and Kenya. “These are countries that have introduced the necessary customs procedures for the trading to start happening,” he noted.
Africa’s Trade Revolution Needs Peace (CNBCAfrica)
Besides causing untimely deaths and suffering, and destroying infrastructure, conflicts impede economic activity and undermine formal and informal cross-border trade. Informal trade between Mali and Algeria, for example, has fallen by more than 64% since 2011, largely owing to the conflict in northern Mali and the closure of the two countries’ border. The negative impact of wars on trade can be long-lasting. Globally, violent conflict is estimated to cause a 26% reduction in exports in the year that hostilities begin, rising to 35% five years later and 58% after a decade. Across Africa, where the median duration of conflict is about four years, the negative spillovers of wars on trade could persist in the medium and long term. High-intensity conflicts also hinder trade and economic integration indirectly by triggering a sharp rise in military expenditures.
On Friday, The Nigerian Economic Summit Group said that many more Nigerians are expected to fall into the poverty trap amid rising unemployment in the country. The NESG, a private sector-led think-tank, noted in its economic report for the first quarter of 2021 that the country’s economic growth in the period under review was relatively weak. It said, “Nigeria’s economic growth trajectory is better described as jobless and less inclusive even in the heydays of high growth regime in the 2000s. “While the Nigerian economy recovered from the recession in Q4 of 2020, the unemployment rate spiked to its highest level ever at 33.3 percent in the same quarter. “With the COVID-19 crisis heightening the rate of joblessness, many Nigerians are expected to fall into the poverty trap, going forward.”
The Deputy Trade and Industry Minister nominee, Nana Ama Dokua Asiamah-Adjei says Intra-African Trade will soon compete with other developed countries. According to her, African Continental Free Trade Area (AfCFTA), is targeting 52% of intra-African trade increase by 2022. “Intra-Asian trade is well over 60%, intra-European trade is well over 50%, and intra-North American trade is well over 40%. “Currently, intra-African trade stands at 12% and it is the target of the AfCFTA that by 2022, the intra-African trade will increase to 52%.” Nana Dokua Asiamah-Adjei posted on social media in his quest to educate the public on Tade and Industry If this is achieved; Africa will be ranked among the best trade hub in the world.
Nigerian women in the maritime industry have been charged to explore investment opportunities in the African Continental Free Trade Agreement AfCFTA which came into full effect in January 2021. President of the Women’s International Shipping and Trading Association, WISTA, Mrs Eunice Ezeoke, made the charge in Lagos while heralding the association’s 2021 Business Luncheon and Magazine Launch in Lagos with the theme: “AfCFTA: Investment Opportunities for Women in Trade.” She said that the association is contented that Nigeria has keyed-in and embraced the AfCFTA adding that the Federal Government is presently sensitising the various stakeholders in the public and private sectors on how to take advantage of the new agreement.
Beware of debt distress, Okonjo-Iweala, Adesina warn African leaders (Guardian Nigeria)
The Director-General of the World Trade Organisation (WTO) and ex-Minister of Finance, Dr. Ngozi Okonjo-Iweala; President of the African Development Bank (AfDB), Dr. Akinwunmi Adesina; Governor of the Central Bank of Egypt (CBE), Tarek Amer and other regional economic stakeholders, yesterday, expressed concern about rising national debts, warning that majority of countries in the continent to face a high risk of falling into a debt trap. They expressed their concerns during the ongoing African Development Bank Group’s 2021 Annual Meetings, warning African political leaders to explore other funding options and scale up debt management transparency. The experts observed that majority of the countries are grappling with sustainability just as debt servicing has become a major burden on the regional economy. Okonjo-Iweala observed that the current debt burden pre-dated COVID-19 but was worsened by the pandemic. Noting that “prevention is better than crisis management”, she warned that Africa could not afford to fall into a debt trap again.
Africa is now facing the world’s fastest growth rate for new COVID cases, with an exponential trajectory even more alarming than during the second wave in January. Based on current trends, this wave will likely surpass previous peaks within the next week. The warning signs are clear: a two-track pandemic is leading to a two-track recovery. Africa is already falling behind in terms of growth prospects. This year, we project the global economy to grow by 6 percent, but only half that – 3.2 percent – in Africa. This ought to change, for the sake of Africa and for the benefit of the world. And it requires international cooperation on multiple fronts.
A June 2021 African Development Bank White Paper, Entrepreneurship and Free Trade: Africa’s Catalysts for a New Era of Economic Prosperity, states that entrepreneurship must be at the heart of efforts to transform Africa’s economic prospects. The paper posits the Covid-19 crisis has triggered shifts that open up prospects for enhancing resilience and economic growth. As African economies begin rebounding from the crisis, the continent stands at an inflection point. The report also notes a number of trends that could bring about more inclusive economic growth are beginning to take hold – including digitalization and the emergence of business opportunities linked to greening economies. The right interventions could open the door for the continent’s young and dynamic entrepreneurs and help build linkages with the large firms that are the key drivers of supply chains to create jobs and revenues to help scale up businesses.
The Economic Commission for Africa (ECA) on Tuesday 22 June 2021 unveiled findings of a study titled “Energy Prices in Africa: Transition Towards Clean Energy for Africa’s Industrialization.” The presentation, which was made during a virtual ministerial meeting, indicates that 600 million people in Africa do not have access to electricity and 900 million have no access to clean cooking fuel. Meanwhile, electricity access rates in 24 countries are below 50%. “Access to cheap and clean energy is an essential component of Africa’s transformation and industrialization,” said Oliver Chinganya, Director of the African Centre for Statistics (ACS), who moderated the session. The ACS Director said, “in the context of AfCFTA deployment and implementation, supplying economies with affordable fuel is integral to supporting actions for faster achievement of the Sustainable Development Goals and Africa’s Agenda 2063.”
With a number of countries across Southern Africa experiencing a deadly third wave of Covid-19 infections, Amnesty International and 27 other Non-Governmental Organizations are calling on regional leaders, businesses, foreign governments and donors, to ramp up efforts and increase resources to speedily vaccinate as many people as possible. The organizations are also calling on high income countries and their groupings, including G20 and G7, to ensure that the intellectual property rights do not to prevent any country from upholding the right to health. “A number of countries across Southern Africa, including Namibia, South Africa.”
The Extraordinary Summit of the Heads of State and Government of the Southern African Development Community (SADC) was held at Joaquim Chissano International Conference Centre in Maputo, Republic of Mozambique, on the 23rd June 2021.
10. Summit launched the SADC at 40th Publication, and urged SADC citizen to use the Publication to appreciate the history of SADC.
11. Summit committed to enhance SADC regional and national capacities in research and manufacturing of pharmaceuticals and other essential drugs and medicines, promotion of traditional and alternative medicines, and the development of vaccines.
12. Summit urged SADC Member States and the International Community to support the proposal for a temporary waiver of certain provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to allow more countries to produce COVID-19 vaccine, for more efficient response to the COVID-19 pandemic.
13. Summit called upon the World Trade Organization (WTO) to finalize negotiations on the waiver of certain provisions of the Agreement on Trade-Related Aspects of the Trade Related Intellectual Property Rights (TRIPS), and expedite its operationalization.
14. Summit called for the end of vaccine nationalism and for equal access to vaccine by all countries.
New plan to mitigate Covid impact on East Africa logistics (Business Daily)
Shippers and freight forwarders have agreed to develop a regional stimulus-response plan in efforts to mitigate the effects of the Covid-19 pandemic on business and spur regional trade. This is among a raft of policy proposals arrived at following an industry study at the Nairobi and Naivasha inland container depots, the border towns of Namanga and Malaba as well as Rusumu in Rwanda. The study conducted between March 2020 and March this year established that over 75 percent of transport and logistics businesses in the East African community were negatively impacted by the Covid-19 pandemic.
The President of the Democratic Republic of Congo, H.E. Felix Tshishekedi, will on Thursday this week launch the East African Community’s verification mission to the country in the eastern Congolese town of Goma. The Summit of EAC Heads of State at its 21st Ordinary Meeting held on 27th February, 2021 considered the application by DRC to join the Community and directed the Council to expeditiously undertake a verification mission in accordance with the EAC procedure for admission of new members into the EAC and report to the 22nd Summit.
“Intra-EAC trade has increased among the EAC Partner States in the past 10 years. And we have no choice. That is why we are widening to include the DR Congo to become the 7th member of the EAC,” EAC Secretary General Hon. Dr. Mathuki said in a tweet shared on the Community’s official twitter handle @jumuiya. DRC shares a border with five EAC Partner States namely Tanzania, Burundi, Rwanda, Uganda and South Sudan.
EAC tax harmonisation efforts still poor – report (Daily Monitor)
Despite having the same theme for the financial year 2021/2022 Budget, the six regional East African Community member states have not done much in harmonising their tax regime. This results into unnecessary trade competition which paves way for protectionism, which threatens regional integration. This is according to a report titled: Analysis of Tax Measures in the East African Community Member States: Are we moving towards a harmonised tax system? The report which was presented yesterday during the post EAC Tax and Budget Dialogue FY 2021/22 in Kampala by the executive director of SEATINI Uganda, Ms Jane Nalunga on behalf of other Civil Society Organisations with regional presence among them EATGN-Kenya, Policy Forum Tanzania and Tax Justice Network Africa, further disclosed that there is limited effort to harmonise tax laws at regional level.
The private sector employs most of the workforce in some countries. In private sector, activities are guided by the motive to earn money. A 2013 study by the International Finance Corporation (part of the World Bank Group) identified that 90 per cent of jobs in developing countries are in the private sector. In some cases, usually involving multinational corporations that can pick and choose their suppliers and locations based on their perception of the regulatory environment, local state regulations have resulted in uneven practices within one company. Uganda has reaffirmed its commitment towards the East African Community (EAC) integration and urged the Secretary General to revitalise the Community’s strategies by engaging more with the private sector and other stakeholders to enhance integration. Uganda’s High Commissioner to Tanzania, Richard Kabonero expressed his country’s commitment recently in Arusha when he paid a courtesy call to the Secretary General of EAC Dr Peter Mathuki.
“It is a critical that the EAC Secretariat involves the private sector especially as we move closer to the latter stages of integration,” said Amb Kabonero. The High Commissioner commended the efforts of the EAC’s towards the inclusion of Democratic Republic of Congo into the EAC as Summit directed. “Admitting the DRC to the EAC presents an opportunity to increase trade flows and it may play a key role in promoting stability in the region,” he said. “It is high time EAC partner states find a way to work together against COVID-19,” said the envoy.
Technology startups and the venture capital ecosystem that transforms ideas and fledgling companies into disruptive businesses are growing globally – a phenomenon that the Boston Consulting Group (BCG) explores in a recent report on the expansion and maturation of African tech startups. According to the authors, Africa enjoys a fertile environment for tech entrepreneurs due to the continent’s youthful and growing population, rising internet penetration, and the application of emerging technologies that have the potential to improve access to healthcare, financial services, education, and energy. As such, the research paper focuses on the meteoric growth of tech startups throughout the continent, persistent challenges and structural barriers stymying these firms’ further growth, and policy recommendations to overcome these obstacles and develop Africa’s innovation hubs.
Investment climate bounces back – IFLR’s Africa Market Makers Guide launched (International Financial Law Review)
With a young population and a grand consumer base, Africa remains the world’s goldfield of economic potential. The African Development Bank projects that the continent’s real GDP will increase by 3.4% in 2021, after contracting by 2.1% in 2020. The rebound will be spearheaded by a number of resumed infrastructure projects, a rebound in commodity prices, and further government support for pandemic-hit businesses. With Africa’s fondness for imagination and entrepreneurship, new solutions will appear to overcome obstacles. As governments, businesses and investors strive for prosperity, the demand for legal advice remains high. Associating with experts who are closest to the action, IFLR brings you an exclusive insight into some of the most important developments from the continent. In spite of the pandemic and social unrest arising from the Hirak movement, Algeria has successfully revamped its investment framework in order to attract foreign financiers.
The African Finance Ministers and the World Bank Group met today to fast track vaccine acquisition on the continent and avoid a third wave. In a boost to the African Union’s target to vaccinate 60% of the continent’s population by 2022, the World Bank and the AU announced that they are partnering to support the Africa Vaccine Acquisition Task Team (AVATT) initiative with resources to allow countries to purchase and deploy vaccines for up to 400 million people across Africa. This extraordinary regional effort complements COVAX and comes at a time of rising COVID-19 cases in the region. World Bank financing is available to support the purchase and deployment of doses secured by AVATT. “A key priority in this initiative is to make sure the purchase of vaccines translates into people getting vaccinated,” noted Vera Songwe, the Executive Secretary of the ECA.
The fourth Trade Dialogues session dedicated to the business community was organized jointly with the International Chamber of Commerce (ICC) and brought together over 80 business representatives who discussed their priorities in the various areas of the WTO’s work. DG Okonjo-Iweala said: “I am very pleased to have facilitated another Trade Dialogues with the private sector. Our rules directly impact businesses’ ability to move goods and services across borders and tap into new markets. Because they deal with these realities every day, they can help us and the members understand what is working well, and more importantly, what is not. This is much needed input as we work to deliver results between now and our 12th Ministerial Conference in early December.”
ICC Chair Ajay Banga said: “Global trade is the foundation for global prosperity and global trust. Over the past decades, global trade has helped to close economic gaps, foster diversity, drive innovation and efficiencies. We have to be ready to make the most of this moment – and that will come not by talking about the future of the WTO, but by empowering and building the WTO of the future. The ICC stands ready to shape a more inclusive, sustainable global trading system that will benefit us all.”
The most recent data, including the first months of 2021, confirm that global manufacturing production continues to recover, following a major drop during the first half of 2020 due to COVID-19. However, the pace of recovery is unequal. While manufacturing production in some countries, such as China, has reached and exceeded its pre-crisis production level, other countries still show only weak signs of recovery. The latest World Manufacturing Report, published by the United Nations Industrial Development Organization (UNIDO), includes the most recent official data on manufacturing production across the world and points to a year-over-year growth of 12.0 per cent in the first quarter of 2021. However, the report also shows the different pace of recovery in different regions.
A record injection of International Monetary Fund resources this year could fund a facility to lower the costs for developing economies selling sovereign debt abroad, according to the head of the United Nations Economic Commission for Africa. Uneca’s Vera Songwe said she’s proposed a facility to bolster the liquidity of the secondary market for emerging and frontier-market debt, reducing the premium some issuers are charged by investors that can’t immediately trade their bonds.
“We are not asking for any special treatment for frontier and emerging market economies. We are actually trying to perfect the market,” Songwe said in an interview at the Qatar Economic Forum. “We can reduce the cost of the bond or give an additional premium if you are going to invest the resources in sustainability or green growth, renewable energy, better infrastructure.”
The UN Global Compact 2021 Leaders Summit was a 26-hour virtual marathon bringing together global business leaders and partners to create a sustainable and socially responsible world. A range of new announcements was made, and programs were launched. The new UN Global Compact Strategic Plan was released for “bold and rapid progress to boost business action,” according to Sanda Ojiambo, CEO and executive director at the UN Global Compact. A framework for action on Sustainable Development Goal 16 focuses on improving practices for corporate governance. An anti-corruption collective action playbook will fight against entrenched corruption. And a new report on climate action sets bold targets for businesses.
A wake-up call on digitalisation (Central Banking)
António Guterres, the UN secretary-general, launched the Task Force on Digital Financing of the Sustainable Development Goals (SDGs) in November 2018. The group was asked to identify and recommend ways in which digitalisation could be harnessed to better align financing with the UN’s SDGs. Two years later, in August 2020, the Task Force published a report, People’s money – Harnessing digitalization to finance a sustainable future, which has proved a wake-up call to many. The report found that digitalisation is playing an important role in aligning key aspects of global finance with the UN’s SDGs, and is already a feature of our global economy and of our global financial system, in both private and public finance. It would not be possible to have US$1 trillion worth of green bonds if large-scale datasets and rapid real-time data flows were not becoming the norm. Nor can carbon markets exist without a sophisticated digital infrastructure. Equally important is that financial and product innovation are driving new ways of financing in both education and health, not simply at the larger institutional scale, but also at the individual level – even at the lower levels of income.
“The pandemic has shown that the resilience of businesses matter,” said ITC Executive Director Pamela Coke-Hamilton. “Going green is a survival imperative; the longer firms take to act, the higher the costs become.” Although small businesses account for more than 50 per cent of global emissions, only 38 per cent invested in environmental adaptation, compared to 60 per cent of large firms. “Developed countries have the financial means to sustain their economies and protect the most vulnerable. But most developing and least-developed countries are unable to do the same,” Ms. Coke-Hamilton said. She added that if such resilience among micro and small businesses had been necessary during the pandemic, “it will be even more crucial in addressing climate change”, whose economic disruption will be like “a COVID-19-size pandemic happening every decade”.
Regional agreements are not a new feature of the global trade system; they have been around long before multilateral trade rules were even established. What is new is the recent surge in their number, from less than 50 in 1990 to more than 300 today, and especially their increased complexity. While WTO rules still form the basis of most trade agreements, regional agreements have in some sense run away with the trade agenda. As Pascal Lamy recently put it: More than tariffs, trade agreements today are about regulatory measures and other so called “non-tariff measures”, that were once the exclusive domain of domestic policymaking. For these reasons, “deep” trade agreements, as trade experts refer to this new class of agreements, are fundamentally different than the previous generation of trade agreements. (Lamy, 2020). A new CEPR-World Bank eBook (Fernandes et al. 2021) brings together recent research on the economics of deep trade agreements (DTAs). What are the determinants of DTAs? How do their detailed provisions affect trade and non-trade outcomes? Are these effects different from those of shallow trade agreements?