tralac Daily News
As the lockdown regulations, tightened by President Cyril Ramaphosa on Sunday, continue to put pressure on small, medium and micro enterprises (SMMEs) financially and operationally, 6 in 10 business owners said they were proactively planning for and anticipating growth in the next year. This is according to the Mastercard SME Index released yesterday, which surveyed 300 SMMEs in South Africa between April and last month. While 84 percent of South African SMME owners said the pandemic has negatively impacted their revenue, looking forward, 79 percent were projecting that their earnings will either hold steady or grow in the next year.
Nigeria’s Access Bank PLC faces tough competition from incumbents as it ramps up operations in South Africa, but could find success in niche markets. On May 27, Access renamed its recently acquired unit Grobank Ltd as Access Bank South Africa Ltd. At a press conference to mark the rebranding, the unit’s CEO Bennie van Rooy said it would launch a “full retail banking suite” and highlighted opportunities to provide trade finance, treasury services, loans, and international payments to corporations. Access Bank has long had subsidiaries scattered across sub-Saharan Africa, but they have not been key priorities. Such was the scale of the opportunity in Nigeria that it made little sense for the country’s banks to invest much in their foreign subsidiaries when they could make more money on a single domestic deal, said Ronak Gadhia, Director of Research on Sub-Saharan African Banks at EFG Hermes.
Last month, at the UBA Africa Day event which centred on the importance of fixing infrastructure and customs unions to enable the implementation of the African Continental Free Trade Agreement (AfCFTA), the Director-General of the World Trade Organisation, Dr Ngozi Okonjo-Iweala, spoke some profound words on the subject matter. “To make it work, we need to do a few more things, including logistic issues that prevent us from benefitting. Some parts of the continent are doing better than us on implementing than others, we still have lorries lined up by border and we are looking for digital passports and things, so that they can move easily… “We need to make it easier to move goods from one part of the country to the other,” she said, citing that Africa must make free trade work to enable the return to economic growth in a post-pandemic world. Nigeria became the 34th African country to fully ratify and submit its Instrument of Ratification of the AfCFTA.
Nigeria’s Minister of State for Petroleum Resources, Timipre Sylva, says the country has “accidentally” discovered 206 trillion cubic feet of gas reserves while searching for crude oil. 206 trillion cubic feet of gas is about 5,834 billion cubic meters of gas. This year, Turkey explorers announced they had discovered 405 billion cubic meters of gas. To put it in context, Nigeria discovered more than ten times the size of gas by “accident” than what Turkey discovered “on purpose”. Nigeria’s crude oil and natural gas resources are the mainstay of the country’s economy. According to the EIA, Nigeria has an estimated 200.4 trillion cubic feet (Tcf) of proved natural gas reserves by the end of 2019 which puts it as one of the highest in Africa. Nigeria exports natural gas primarily as LNG.
Mobile money transactions up 56pc in five months to May (Business Daily)
The value of cash handled by mobile money agents in the five months to May rose by nearly Sh1 trillion compared to a similar period last year, indicating the continued recovery of the economy in the second quarter of this year. Central Bank of Kenya (CBK) data show agent transactions in the period rose by 56.1 percent or Sh982.76 billion to Sh2.73 trillion from Sh1.75 trillion in the corresponding period in 2020, with higher volumes in May boosting this year’s numbers. May recorded a higher amount of transaction volumes compared to the first four months of the year, the CBK data shows.
The Reserve Bank of Zimbabwe (RBZ) has started operationalising the incremental export incentive scheme, which will see some exporters retain up to 100 percent of the qualifying portion of their earnings, as it seeks to drive export-led growth. All gold producers, the central bank said, who deliver gold to Fidelity Printers and Refiners, Zimbabwe’s sole authorised gold buyer, above their monthly average, will be allowed to retain 80 percent on the incremental export scheme. RBZ said large scale gold producers who qualify for the incentive will be allowed to export directly gold equivalent to the incremental portion so they can secure loans to support production.
Kenya pledges to work with Somaliland (Nairobi News)
Kenyan leaders are ready to work closely with the Republic of Somaliland to build trade and social networks in the region. Mandera Senator Mohamed Maalim Mahmoud says Somaliland has become a key ally of Kenya in seeking peace and security in the Horn of Africa. “I and other members of the Kenya delegation are extremely elated to be in Somaliland and to witness and celebrate with the people of Somaliland in two momentous occasions this week,” said the Senator. “The first one is the Inauguration of the first phase of the expansion and modernization of the Berbera Port and launch of its second phase. That was a monumental infrastructural feat for Somaliland and our Eastern Africa Region as a whole,” he added.
‘Tanzania regaining in Africa leadership’ (IPPMedia)
“The secretariat is impressed that Tanzania is now re-engaging and taking a leadership role it has been associated with, since the days of founding president Julius Nyerere,” H.E. Mene Wankele said. The AfCTFA secretariat official who is in the country for a familiarization tour, hailed the various steps taken by the government towards ratification of the treaty, noting that after the end of colonialism, the continent started to work towards opening and linking up the continent to create markets and facilitate trade. Foreign Affairs and East Africa Cooperation minister Liberata Mulamula said Tanzania is in the final process of ratifying the AfCFTA pact. “There are a few issues that have to be sorted out because this is a union government and we have to ensure everything has been considered,” she said.
Bagamoyo Port project: State on revival move (Dailynews)
The government is in talks with Chinese investors on the way forward to kick off implementation of the Bagamoyo port in the Coast region. This was revealed yesterday by President Samia Suluhu Hassan as she was gracing the Tanzania National Business Council (TNBC) meeting held at the State House in Dar es Salaam. “I have good news here, that we have started discussion with the investor who came for the Bagamoyo port project with the aim of opening it, for the greater benefit of our nation and the investment sector,” she told members of TNBC. Earlier, the Chairperson of Tanzania Private Sector Foundation (TPSF), Ms Angelina Ngalula explained the necessity of the country to have a modern port that is capable of hosting large ships. “As a country, we really need to have this port which is strategically located, it can be easily linked to the Standard Gauge Railway (SGR) and Tanzania Zambia Railway (Tazara) infrastructures,” she said.
Libya has the elements for a successful transit trade industry, Fawzia Furjani head of the Libyan Business Council (LBC) eastern branch said Saturday. She was speaking on the closing day of the 4th edition of the Financing Investment and Trade in Africa 2021 conference that was held between 24-26 June at the Laico Hotel, Tunis. The event, organized by the Tunisian African Business Council (TABC) dedicate a day to Libya during which Furjani was speaking. The day was devoted to a workshop entitled: “Reviving the transit route and transit trade and making Tunisia and Libya the gateway to sub-Saharan Africa”. Furjani said Libya is safe and that activating transit trade through it, to and from Africa, is a project that will bring reward to Libya and a source of great income – without dependence on oil.
Misrata Free Zone announced today that the first convoy of goods-laden trucks arrived from the Libyan-Tunisian land border, Ras Ajdir – launching transit trade for the Zone. The convoy of trucks crossed escorted by customs guards. MFZ did not name the goods being transported but revealed that the consignment was for Rouge Supply and Export, adding that it is the first foreign company licensed by MFZ to conduct transit trade. MFZ said transit trade will achieve a set of direct and indirect gains for the Libyan economy, will raise the volume of intra-trade between Libya and neighbouring countries, in addition to achieving a set of benefits as another source of hard currency, and achieving development along the lines that it passes through in the future.
Rwanda passes law on using, growing, exporting cannabis (Taarifa Rwanda)
The 14th Meeting of the Sectoral Council on Agriculture and Food Security (SCAFS) came to a close in Arusha, Tanzania on 25th June, 2021. Chairing the Ministerial Session, Chief Administrative Secretary, Ministry of Agriculture, Livestock, Fisheries and Cooperatives, Republic of Kenya, Mr. Lawrence Angolo Omuhaka, noted the urgent need for the region to implement harmonized policies and to operationalize regional instruments in order to guarantee sustainable agricultural production, trade in commodities and to attain sustainable regional food and nutrition security.
Speaking on behalf of the EAC Secretariat, Director of Productive Sectors, Mr. Jean Baptiste Havugimana noted that more than 70% of the industries in EAC were agro-based, including production of agricultural inputs; while 75% of the traded goods are agricultural commodities and products. “Linking agricultural trade and industry is therefore imperative in promoting agricultural production as industries provide the market for agricultural produce while trade delivers processed agricultural products to the market/consumer,” noted Mr. Havigimana. “Textile industries need to be promoted instead of depending on import of used cloths. It is necessary to promote local consumption and procurement of locally produced goods as emphasized by the Heads of State,” he noted.
Economic Impact of the Pandemic and Policy Responses. Mauritius has been successful in containing the COVID-19 pandemic thanks to strict health measures but the halt in tourism has significantly affected its tourism-dependent economy. A comprehensive set of stimulus measures to mitigate the economic impact of the pandemic, including a wage subsidy and income support for the self-employed, have provided support to firms and households.
SADC-PF Concerned That Some Member States Are yet to Ratify Africa Free Trade Agreement (Parliament of South Africa)
The Secretary General of the AfCFTA Secretariat, Mr Wamkele Mene, told a virtual sitting of the Southern Africa Development Community Parliamentary Forum (SADC-PF) that reducing barriers to trade and increasing free movement of goods will drive Africa’s recovery. “Africa has a unique opportunity to position for industrial development and value addition. Something drastic has to be done to resolve low growth. This is an opportunity to accelerate Africa development.”
Mr K Sibande noted that commodity diversification in Africa is too low and that African countries should trade more with one another. Poor ICT infrastructure, digital penetration and road infrastructure compounds the problem. Mr Sibande asked SADC-PF if it was possible to increase intra-African trade without industrialising. He identified competitiveness, industrialisation and support for regional infrastructure development as key elements in the process. The Southern African Customs Union’s (SACU’s) Ms Paulina Mbala Elago said the low intra-African trade is a characteristic of a lack of market integration. “Trade liberalisation is not sufficient to maximise gains from trade. Importantly, we need to refocus our agenda on industrialisation.”
Sub-Saharan Africa: We Need to Act Now (IMF Blog)
Sub-Saharan Africa is in the grips of a third wave of COVID-19 infections that threatens to be even more brutal than the two that came before. This is yet more evidence of a dangerous divergence in the global economy. One track for countries with good access to vaccines, where strong recoveries are taking hold. And another for those countries that are still waiting and at risk of falling further behind. Without significant, upfront, international assistance – and without an effective region-wide vaccination effort – the near-term future of sub-Saharan Africa will be one of repeated waves of infection, which will exact an ever-increasing toll on the lives and livelihoods of the region’s most vulnerable, while also paralyzing investment, productivity, and growth. In short, without help the region risks being left further and further behind.
The East African Community has tabled before the East African Legislative Assembly the budget estimates for the 2021/2022 Financial Year totalling US$91,784,296. The Chairperson of the Council of Ministers and Kenya’s Minister for EAC, Hon. Adan Mohamed, in the Budget Speech read on his behalf by Chief Administrative Secretary, Hon. Ken Obura, said that the 2021/2022 budget was coming at a time the COVID-19 pandemic had ravaged economies through lockdowns and economic shutdowns that had affected economic performance in the entire region negatively. The 2021/2022 Budget is themed Economic Recovery through Industrialization and Inclusive Growth.
On the EAC Single Customs Territory, the Cabinet Secretary said that during the next financial year, Customs would focus on some key areas, among them: Finalization of the review and development of Customs Union Instruments including the comprehensive review of the EAC Common External Tariff (CET), EAC Customs Management Act 2004, and the EAC Regional Customs bond and the regulatory framework for the Assembly Sector. Customs would also focus on the: Consolidation of the gains of the Single Customs Territory for the full attainment of a fully-fledged Customs Union; Enhancement of Interconnectivity of systems in key sectors to facilitate information exchange; Development of suitable infrastructure to facilitate cross border women traders, and; Strengthening of mechanisms to resolve Customs related Non-Tariff Barriers (NTBs) that hamper intra EAC trade.
Berbera Port enters second phase, opens container terminal (Engineering News)
Trade and logistics multinational DP World on June 28 inaugurated a 500 000 twenty-foot equivalent unit (TEU) a year container terminal at the Berbera Port, in Somaliland. The followed completion of the first phase of the port’s expansion as part of its development into a major regional trade hub to serve the Horn of Africa. DP World has committed to investing up to $442-million to develop and expand the Berbera port. The economic zone will serve as a centre of trade with the aim to attract investment and create jobs, and will target a range of industries, including warehousing, logistics, traders, manufacturers and other related sectors. It will allow producers, suppliers, and customers to operate in a conducive and competitive environment for investment and trade.
Ethiopia, Kenya, and South Sudan on Monday reiterated their commitment to advance the implementation of a mega infrastructure project in the East Africa region, also known as the LAPSSET Corridor Program. Kenya’s Cabinet Secretary for East African Community and Regional Development, Adan Mohammed, said Africa is challenged by unemployment, especially among the youth, low levels of intra-African trade and industrialization, and inefficient agriculture. “The other major issue which is the subject of why we are meeting today is the poor infrastructure that links the continent of Africa together. And that is why we believe that LAPSSET and similar programs will play a very big role reversing these challenges that we are facing today as a continent,” said Mohammed. “For Africa to realize its potential of regional integration through transformative regional infrastructure, harmonization of monitoring policies, standards, the removal of tariff and non-tariff barriers, improving business climate must be the continued areas of focus for all of us on the continent,” he said.
The African Energy Chamber (AEC) is reaffirming its commitment to Nigeria with a planned visit by AEC Executive Chairman NJ Ayuk on the 5th-10th July 2021. With the goal of supporting Nigeria in its efforts to pass the Petroleum Industry Bill, market the country as a premier investment destination, and promote African Energy Week (AEW) 2021 as the ideal networking platform for Nigerian oil and gas companies, Ayuk is prioritizing pan-African partnerships and continent-wide energy growth. Committed to African-focused dialogue, Ayuk’s visit will comprise private meetings with both government representatives, National Oil Company leaders, and private sector executives.
Africa’s e-commerce sector has thrived during the Covid-19 pandemic, but gender gaps and reduced access to finance for women leaves room for economic improvement. E-commerce in Africa has expanded rapidly in the last 20 years and is considered “a powerful engine for economic development” according to Women and E-commerce in Africa, a report by the International Finance Corporation (IFC). Rashida Abdulai, lawyer and CEO of Strand Sahara, an online legal platform serving African businesses, agrees that “e-commerce presents a great opportunity for economic growth across Africa”. Women represent half of Africa’s population and in many African countries, female entrepreneurs outweigh their male counterparts, so “women having the same opportunities as men to thrive on ecommerce platforms will have a huge economic impact on African economies,” Abdulai tells ALB.
The African Association of Automotive Manufacturers (AAAM) has said that the project to harmonise standards across the automotive sector in Africa is on course. AAAM said the African Export-Import Bank (Afreximbank) is supporting the African Organisation for Standardisation (ARSO), as it works to harmonise standards to facilitate the accelerated development of the automotive industry across the continent. The harmonised standards are to be adopted by individual African countries, facilitating cross-border trade, under the African Continental Free Trade Agreement (AfCFTA). According to AAAM, there are 1432 international automotive standards worldwide, developed largely by the International Organisation for Standardisation and the American Society for Testing and Materials. To initiate the process of developing African automotive standards, ARSO prioritised what is referred to as ‘Whole Vehicle Standards’, encompassing motor vehicle components, accessories and replacement parts.
Addressing COVID-19 while building long-term capacity (Proshare Nigeria)
The African pharmaceutical market’s estimated worth is between US $40 - $65 billion, but it remains largely untapped, with a heavy reliance on imports. The market is expected to grow in response to the novel coronavirus (COVID-19) pandemic, a changing disease burden, urbanization, new technologies, health insurance expansion, anticipated continental market integration and industry consolidation. But the ongoing pandemic shows the urgent need to unlock new partnerships and investments to accelerate the local production of medical supplies, medicines and vaccines, which could save lives and create jobs across the healthcare and pharma value chains. As Africa’s pharmaceutical sector continues to respond to COVID-19 with international partnerships, policymakers, investors and other industry players need to pay attention to the changes spurred by the crisis, along with other major trends shaping the market.
The Economic Commission for Africa and NKC African Economics (an Oxford Economics company) will present on Wednesday 30 June their joint report on “Best Practices in Job Creation, lessons from Africa.” The COVID-19 crisis is threatening to leave a lasting negative impact on Africa’s economy and employment opportunities, especially among the region’s bulging youth population. As Africa initiates its economic recovery, this report aims to inform policy makers seeking to accelerate job creation about successful areas of intervention and key lessons through an investigation of 34 employment initiatives. Fifteen African countries were covered as part of this study (Algeria, Angola, Cameroon, Côte d’Ivoire, Egypt, Ethiopia, Ghana, Kenya, Mauritius, Morocco, Nigeria, Rwanda, South Africa, Tanzania and Tunisia).
Trade policy restraint by G20 economies, as well as WTO members more broadly, prevented a destructive acceleration of protectionist trade measures that would have further hurt the world economy, according to the WTO’s latest Trade Monitoring Report. But WTO Director-General Ngozi Okonjo-Iweala cautioned that obstacles to trade remain in place and continue to undermine global efforts to increase and diversify the production of vaccines.
India, China, 50 others to float food security proposal at WTO (Economic Times)
Ahead of a key ministerial meeting of the World Trade Organization this year, India, China and 50 other developing countries are working on a proposal to be able to purchase, stockpile and distribute food to ensure food security. As part of a lasting solution for their public stockholding programmes, the developing countries want programmes such as procurement of food products from farmers at minimum support price and their distribution at subsidised rates to the poor, included in the global rules of agriculture. They also want such programmes to be exempt from subsidy reduction commitments.
Letter from 7 Civil Society Groups to USTR supporting LDC request to extend TRIPS Waiver for as long as they remain LDCs (International IP and the Public Interest)
We urge the United States to support the request of Least Developed Countries (“LDCs”) to the TRIPS Council of the World Trade Organization (IP/C/W/668) for a transition period from implementing the TRIPS Agreement for as long as they remain LDCs. The current transition period is due to expire on July 1, 2021. The preamble of the TRIPS Agreement recognizes the “special needs” of LDCs and their need for “maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base.” Accordingly, Art. 66.1 grants LDCs an automatic right to transition period following a duly motivated request by LDCs. Although LDCs only make up 14 percent of the global population, they account for 50 percent of the world’s extremely poor (i.e., those living on less than $1.90 a day). Their constraints include the very limited availability of skilled labor, productive capacities, access to secondary education, electricity, and internet access. Consequently, LDCs do not have the conditions to benefit from the full implementation of the TRIPS.
In view of the exceptional massive challenges lying ahead for LDCs and uphill battle towards sustainable development with a viable technological base, we are of the view that the LDC Group’s request to the WTO is justified and urge you to support the LDCs’ request.
Many companies can decarbonize their supply chains – and fight climate change – without inflicting major cost increases on their customers. With the potential for huge impact at manageable cost, why has the supply chain sustainability agenda not yet been launched at scale? Many company leaders are eager to cut supplier emissions, but it’s a daunting proposition. While they are getting increasingly adept at tracking and measuring their own emissions, it’s much more challenging for leaders to have the same clarity about their suppliers’ product-specific emissions – especially for companies with tens of thousands of product components and a constantly changing supplier base. They face obstacles in data and analytics, tracking and measuring, procurement, certification, and more.
Investments in renewable energy and sustainable infrastructure are growing, however from January 2020 to March 2021, globally, more money was spent on fossil fuels, which when burned, create the harmful gasses driving climate change. Many countries lack the financial resources to make the transition to clean energy and a sustainable way of life that could reverse climate change. The UN says that climate finance is the answer because not investing will cost even more in the long-term, but also because there are significant opportunities for investors. Significant investments are needed and international cooperation is critical. More than a decade ago, developed countries committed to jointly mobilize $100 billion per year by 2020 in support of climate action in developing countries.
The COVID-19 pandemic has taken its toll on small‑ and medium-sized enterprises and entrepreneurs globally, but they are weathering the storm thanks to strong government support packages, according to a new OECD report. The OECD SME and Entrepreneurship Outlook 2021 looks at measures taken to help SMEs survive, and in many cases thrive, during the pandemic. It also considers the longer-term effects of the crisis and how countries can create the conditions for a greener, more sustainable and inclusive recovery. The report finds that SMEs and entrepreneurs are fundamental in driving the recovery and confirms that government rescue packages are playing a crucial role.
Caring for the environment and local communities is good for business – and that’s just one reason international investors should embed sustainability in each step of their operations. With COVID-19 putting more pressure than ever on small firms, sustainable investment is critical. Yet investors lack information on sustainability requirements and best practices. A new International Trade Centre (ITC) publication, The Business Guide for Sustainability in Foreign Investments, fills that gap. It offers social, environmental and economic practices for international investors entering new markets in developing countries around the world and explains how to comply with both the legal and voluntary requirements. The report is based on extensive research in Ethiopia, Kenya, Mozambique and Zambia, where ITC’s Partnership for Investment and Growth in Africa (PIGA) works to attract foreign direct investment with a high developmental impact.
The global textiles market is estimated at around $1.4 trillion, and employs over 300 million people, especially in developing countries like Bangladesh, Brazil, China, India, Pakistan and Turkey. While socially important, the textile industry is a major source of pollution and waste. It’s characterized by overproduction and overconsumption of low-cost clothes, often produced under poor working conditions and ending up in landfills. Today, consumers, businesses and regulators are realizing the wasteful pattern in which this industry operates. This problem not only concerns the environment but also represents missed economic opportunities. In the quest to make the textiles sector more efficient and less polluting, one answer lies in circular economy approaches connecting downstream and upstream segments of this global industry. This means using more renewable and safe inputs, increasing clothing durability, reuse, or turning used garments into new ones.
G20 to endorse deal on global minimum corporate tax – draft (Global Banking and Finance Review)
The world’s financial leaders will endorse on July 9-10 a deal setting a global minimum corporate tax and call for technical work to be finished so they can approve the framework for implementation in October, their draft communique showed. “After many years of discussions and building on the progress made last year, we have achieved an historical agreement on a new, fair and stable international tax architecture,” the draft said.