tralac Daily News
South Africa is set to emerge from the COVID-19 (coronavirus) crisis weaker than when it entered it despite its solid response to the pandemic, says a World Bank report released today. The report suggests simultaneously implementing policies that preserve macroeconomic stability, revitalize the jobs market, and improve the investment climate to build a more inclusive economy after the pandemic. The World Bank projects the gross domestic product (GDP) for South Africa to rebound to 4 percent in 2021, propelled by the strong global recovery and favorable commodity prices. However, the country’s growth outlook is uncertain with major risks around the path of the pandemic. For 2022, GDP growth is projected to slow to 2.1 percent and 1.5 percent in 2023, suggesting that the average South African will be worse off in 2023 compared to 2019. However, the global recovery presents an opportunity for the Government to address the well-known structural constraints to its growth prospects and to lift the country onto a higher and dynamic growth path.
Toyota suspends production at Durban plant, exports also halted (Engineering News)
Toyota South Africa Motors (TSAM) has suspended production at its Prospecton plant, in Durban, as well as business operations at some of its dealerships in KwaZulu-Natal, as widespread looting and rioting continue in KwaZulu-Natal. Exports from the plant have also been halted. ”The ongoing situation has also impacted the delivery of new vehicles, as well as parts supply in the affected areas,” a TSAM spokesperson tells Engineering News Online.
Import bill tops US$2,77bn (The Herald)
Zimbabwe imported goods worth US$2,77 billion in the six months to June 2021, which reflects a 17,6 percent increase on the external sector payments conducted by the country over the same period last year. The bulk of the imports during the half year period to June 2021 entailed the procurement of critical raw materials, machinery and equipment as well as consumables required by the country’s industrial sector. While figures on Zimbabwe’s exports during the same period were not immediately available, figures from the Zimbabwe National Statistics Agency (Zimstat) show that exports totalled US$1,53 billion in the four months to April 2021.
Zim, Malawi revise bilateral trade agreement (The Herald)
Zimbabwe and Malawi are engaged in talks to revise their Bilateral Trade Agreement to ensure its provisions speak to a modern-day investor and assist in addressing pressing development needs of the two countries. Malawi and Zimbabwe signed a Bilateral Trade Agreement in 1995, which allows duty-free imports on reciprocal basis, provided the goods meet 25 percent minimum domestic content provisions and conform to each other’s standards. The two countries are both members of COMESA and SADC, which means that traders from both states can export or import goods duty-free and quota-free from each other. However, trade volumes between Malawi and Zimbabwe remain concerningly low amid calls for the private sector and cross border traders to seize trade opportunities by leveraging on the available preferential bilateral and multilateral trade arrangements.
This happened following a consultative meeting with all relevant stakeholders in the livestock sector on July 6, 2021; which aims at facilitating the importation and sales of livestock in preparation for the Tobaski feast. “The Gambia Revenue Authority (GRA) will waive all import duties and domestic taxes on livestock during the period,” the ministry states. The statement added that The Gambia Ports Authority (GPA) Ferry Services will reduce the fees for ferry crossing by fifty percent (50%). However, it added that all livestock dealers with more than five (5) animals are required to transport their animals in a vehicle when crossing using the ferry.
Ghana’s Speaker of Parliament, Alban Bagbin, has announced a review of the GIPC Act 2013, Act 865 that will exempt the capital requirement for Nigerian retailers to trade in Ghana. According to a joint communique issued between Ghana and Nigeria, following the Extraordinary ECOWAS Summit, Nigerian retailers will now be exempted from paying a US$1 million capital requirement under the Act to facilitate trade. Making the disclosure before Nigeria’s House of Representatives last week, Speaker Alban Bagbin said the development will end long standing retail impasse between Ghana and Nigeria. “… of particular mention is the reconsideration of the US$1 million minimum requirement for trading enterprises under section 28(2) of the Act. This is to facilitate regularization of the businesses of affected Nigerian retail traders in the trade impasse.”
Minister of Trade Sosten Gwengwe says Malawi Government wants more Malawians, particularly women and youths, to venture into cross-border trade and is also looking to increase the volume of processed products which Malawi exports to countries such as Zimbabwe. Speaking with reporters, Gwengwe said Malawi wants to encourage citizens, majority of whom are women and youths, to venture into cross-border trade and that is why the current budget increased an arrangement called simplified trading regime under Common Marketing for Southern Africa (COMESA) from US$D2000 to US$D3000.
“This trade regime is between three countries Malawi, Zimbabwe and Zambia. We would want our women and youths to trade more by increasing our volume but beyond that we would also want to export a lot more of our processed and semi-processed products especially the agriculture products to Zimbabwe. All we need is to have takers to Zimbabwe that’s is why we have this kind of exhibition but it will also benefit Zimbabweans and we are hopeful for strong trading ties,” he explained.
Before the pandemic, Uganda’s economy grew, on average, by about 6 percent. However, even then, per capita income growth had started to slow because of high population growth. The global and domestic shocks hit Uganda hard, halving its real GDP growth to only 3 percent in fiscal year 2019/20, and opening sizeable fiscal and external financing gaps. An earlier disbursement in May 2020, alongside other donor funds, helped support the government’s efforts to mitigate the impact of the pandemic. But they were not sufficient to prevent an increase in poverty, in particular in urban areas.
Businesses Urged to Invest in Cybersecurity (East African Business Week)
“It is key to note that, regardless of the exciting opportunities technology has to offer during this period, customers are likely to have some reservation, one of them the security of digital platforms,” Mr. Budhabhatti said during a recent discussion hosted by Centenary Bank in Kampala, under the theme: How Technology Can Improve Business performance. “The growth of digital banking avenues calls for businesses to invest more in promoting cybersecurity as a way of further protecting their customers’ funds, as they conveniently access financial services at the different touchpoints,” he explained. The shift from traditional to digital banking is a journey, he added, and therefore, a lot of sensitization is required to settle such fears while creating more awareness about the benefits of using digital platforms.
COVID-19 has exacerbated the non-tariff barrier restrictions on free movement of persons, according to the Chairperson of the COMESA Business Council, Mr. Marday Venkatasamy. He said this was due to the emerging discriminatory practice of certain approved World Health Organization (WHO) vaccines being a prerequisite for international travel. “The business community requests an appeal by the African Union against this inequitable practice,” he added pointing out that the practice was coming at the time when Africa is exploring ways of developing its own vaccines.
South Sudan struggles to meet the EAC integration rules (The East African)
South Sudan is yet to harmonise its internal laws to conform to the East African Community integration. It is also yet to repeal internal laws that impede free movement of people under the Common Market’s six freedoms. This is because the country lacks both human capital and technical capacity, a move that has seen the president appeal to his neighbours for help. “It is in our best interest to ease the movement of people and goods within the region in order to facilitate trade and investment as well as contribute to our end goal of East African regional integration,” said President Salva Kiir. “Please put in place mechanisms to increase South Sudan’s level of participation in intra-regional trade in addition to initiatives that will enable the people of South Sudan to fully capitalise on the benefits of the Community,” said President Kiir.
Factoring, which is a financial management technique allowing a company to liquidate its receivables and recover cash, can be an alternative and complementary solution to financing, in particular for SMEs and SMIs the Governor of the Central Bank of West African States (Bceao), Tiémoko Meyliet Koné said at the official opening, on Tuesday, July 13, of the series of joint BCEAO-Afreximbank-FCI webinars on the theme “Factoring and financing of receivables in Africa”.
The Chairman of the Economic and Financial Crimes Commission, EFCC, Abdulrasheed Bawa, has said that the African 2063 development vision (Agenda 2063) will be a mirage if corruption is not decisively dealt with. According to him, corruption presents a major threat militating against the actualization of the “Africa of good governance, democracy, and respect for human rights, justice and the rule of law… which is the vision of African Agenda 2063”.
Internet Restrictions Hold Back Africa’s Economic Growth, Study Finds (Voice of America)
A report by a non-profit group says Africa needs to increase internet access to boost its economies, especially in the wake of the COVID-19 pandemic. While Africa’s locally routed online traffic has increased, only one in five Africans has internet access. High taxes and frequent internet shutdowns by some African governments have also discouraged online trade. “By developing internet exchange points within Africa, we have limited this kind of unnecessary travels of internet traffic outside of Africa to come back to Africa, which has a considerable advantage to improving the user experience, be it the speed, connectivity or even the cost of connectivity,” he said.
The Sustainable Energy Fund for Africa (SEFA) approved seven high-impact projects worth $54 million in 2020, its best year in spite of challenging Covid-19 conditions, according to its recently released 2020 Annual Report. The report, titled Building Foundations for Success, also details the Fund’s success in attracting increased donor funding. SEFA secured commitments worth $90 million from existing and new donors in the year, including from the German Ministry for Development Cooperation and the Nordic Development Fund, both of which joined SEFA in 2020.
Regional economic integration can boost trade in wood products among African countries, according to the findings of a new report produced by the African Natural Resources Centre. The report, Intra-African Trade in Wood Products – Case studies from Benin, Cameroon, Ghana and the Republic of Congo, published on 19 May, explores the role that forest value chains can play in advancing Africa’s development objectives. The continent’s significant forest resources are under-utilized, the report notes. Also, despite the high number of timber-exporting countries in Africa, over 90% of exports are primary products with little value addition. There are plenty of reasons to promote wider intra-African trade of wood products. For developing countries, import substitution is important to advance industrial development but also to eliminate balance-of-payments challenges.
Thirty-eight countries in the African continent are bordered by the ocean or the sea, but for 70% of them, their maritime exclusive economic zones are largely under-exploited. In a video broadcast during the Digital World Water Congress organized by the International Water Association (IWA), the President of the African Development Bank, Dr Akinwumi A. Adesina, extolled the continent’s potential in the matter of the blue economy.
The blue economy is faced with challenges linked to the weakness of the political and regulatory frameworks, non-sustainable human activities such as over-fishing, pollution and coastal erosion, warns President Adesina. The African continent can easily be a dynamic blue economy. The fishing sector alone employes twelve million people, the largest sector in the African blue economy, providing food and nutritional security to over 200 million Africans and generating added value estimated at 24 billion US dollars, which represents almost 1.26% of Africa gross domestic product.
STEM skills important for Africa to realise growth opportunities (Engineering News)
Science, technology, engineering and mathematics (STEM) skills and education are a key lever for economic transformation and will form the foundation of the future workforce to support sustainable growth and development on a continent targeted for its investment potential, says engineering services firm WSP in Africa MD Mathieu du Plooy. With an estimated 20-million young people a year expected to join the African workforce over the next two decades, it is something that must be addressed if the continent is not to miss out on the opportunities for growth and employment provided by the Fourth Industrial Revolution.
Decentralised finance may be the panacea for filling Africa’s investment gap (Namibia Economist)
African countries continue to face substantial financing gaps as they take on projects of all sizes in pursuit of development. To tackle the slowdown in foreign direct investment since the onset of the pandemic, some African countries are actively courting their diaspora and looking for pockets of cash-rich businesses around the continent. Each country is on its own development trajectory. However, continental and regional initiatives, such as the African Continental Free Trade Area (AfCFTA), are being harnessed as broad-based wealth-creation vehicles. The AfCFTA Investment Protocol, one of the many legal instruments that make up the agreement, is still under negotiation.
Even at this stage, the benefits of the agreement are undeniable as institutional capabilities designed to alleviate hurdles to economic development are being deployed at record pace. It will take some time to work through all of the practical and regulatory issues that arise in cross-border trade and investments. Fortunately, the challenges of implementation have not dampened the appetite of Africa-based businesses to expand into other African markets. This trend can be seen in recent large investments going into refineries and pipelines, manufacturing facilities, logistics, telecommunications and technology.
Deepening the EU-African Partnership by Werner Hoyer (Project Syndicate)
Although Africa still suffers some of the highest poverty rates in the world, the continent overall has massive potential to achieve broad-based, sustainable growth this century. International financial institutions must listen to forward-looking African leaders and adapt their investment strategies accordingly. That means both promoting the private sector – the engine of job creation – and changing how we ourselves operate. Across all areas of economic development, investing in Africa’s future represents a win-win, because many of the continent’s biggest challenges are in fact global problems that will affect us all. COVID-19 has made this abundantly clear, offering a warning of what awaits us in an age of climate change. Though Africa is blessed with great natural wealth, political and historical factors have left it afflicted with high poverty rates. Nine of the ten countries with the highest poverty rates are in Sub-Saharan Africa, and the economic fallout from the pandemic is estimated to have added another 32 million to the total.
In the post-Covid period, India and African nations need to collaborate in the four focus areas of public health, digital delivery, skilling and capacity building, and green economy, Minister for External Affairs S Jaishankar has said. “There is no doubt that in Africa, as in other parts of the world, the Covid pandemic has created a new awareness and demand on the public health side. Inequity in access to medicines and vaccines has further highlighted problems. On its part, India envisages health cooperation as reflecting our Global South solidarity,” the Minister said at the ‘CII-EXIM Bank Conclave on India and Africa Project Partnership’ on Tuesday. Highlighting that Covid-19 had led to greater digital dependence, Jaishankar said that the goal must be to use new tools and practices for better delivery on the ground.
Why lack of containers will hurt global trade for a while (Business Daily)
A global shortage of containers continues to hurt global trade with the local freighters feeling the impact as they grapple with delays in deliveries. The situation is even set to get worse as stakeholders in the marine sector project that the shortage, which began last year and attributed to the effects of the Covid-19 pandemic, will persist until 2022. This implies that consumers will have to wait longer for their deliveries and cope with high cost of goods which is in line with an increase in price of containers. “We are now witnessing delays in our deliveries and high freight costs, for instance a cargo that we were to deliver say in July ends up being delivered in August,” said Meshack Kipturgo, managing director Siginon Group.
A global surge in demand for certain goods during the pandemic has upended normal trade flows, stranding empty cargo containers and leading to bottlenecks. The cost of shipping goods to Kenya has been on a steady rise since December last in April with a knock-on effect being the rise in cost of goods locally. ”Importers have had to wait longer or pay a premium to get the containers, a cost that has to be passed over to consumers,” said James Kariuki, chairperson of the Kenya-China Trade Association.
The WTO Secretariat has published an indicative list compiling information on the critical inputs for the manufacturing, distributing and administering of COVID-19 vaccines. The list was jointly produced with the Asian Development Bank, the Organisation for Economic Cooperation and Development, the World Customs Organization, some COVID-19 vaccine manufacturers, researchers Chad Bown and Chris Rogers, the Coalition for Epidemic Preparedness Innovations and DHL. The document was first compiled by the WTO Secretariat as a working document to facilitate discussions at the WTO COVID-19 Vaccine Supply Chain and Regulatory Transparency Symposium that took place on 29 June 2021 and may serve as a useful starting point for other purposes.
Director-General Ngozi Okonjo-Iweala and the chair of the fisheries subsidies negotiations, Ambassador Santiago Wills of Colombia, on 12 July briefed key civil society leaders ahead of the 15 July ministerial meeting aimed at moving WTO members closer to forging an agreement. They also thanked the advocacy groups for the vital outreach needed to keep up the momentum in the negotiations.
Covid-19: Tourism not out of the woods yet (The East African)
There is no light at the end of the tunnel for tourism globally. The latest United Nations World Tourism Organisation (UNWTO) report shows that the losses occasioned by the Covid-induced crash in the sector are expected to be worse than previously projected. In fact, the slump in tourism will contribute to a real gross domestic product (GDP) loss of about 9.3 percent of the East African economy this year, with the region ranked second among mostly affected regions by the pandemic globally, after Central America.
According to a study by UNWTO on the effects of Covid-19 on tourism released this month, North Africa is expected to record a 7.6 percent GDP loss with West Africa being the least affected, reporting only a 4.6 per cent decline. The study says the crash in international tourism could cause a loss of more than $4 trillion to the global GDP for the years 2020 and 2021 and that a four-to 12-month standstill in international tourism would cost the global economy between $1.2 trillion and $3.3 trillion, including indirect costs.
Life in mining dependent countries significantly improved – ICMM (Mining Weekly)
Life in mining-dependent countries has improved significantly in the 23 years leading up to 2018, with strong governance the key to improving socio-economic well-being, the International Council on Mining and Metals (ICMM) said on Wednesday. A report that analysed 41 social metrics grouped under 12 relevant United Nations (UN) Sustainable Development Goals (SDGs) showed that there had been significant progress made on socio-economic development across three-quarters of the metrics. “This report builds on the extensive research we conducted in 2018, challenging the notion that an abundance of natural resources in host countries damages economic and social progress,” ICMM CEO Rohitesh Dhawan stated in a release to Mining Weekly.
As nations grapple with the issues surrounding global COVID-19 vaccine manufacturing and distribution, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement has found itself in mainstream conversation in the US more than ever before. In October 2020, the governments of India and South Africa, with the support of 62 WTO member states, proposed a TRIPS Agreement waiver proposal that would temporarily waive intellectual property rights protections for technologies needed to prevent, contain, or treat COVID-19, including vaccines and vaccine-related technologies. More than 100 low-income countries support this proposal, but it is receiving much opposition from many high-income countries, including some European Union (EU) member states, the UK, Japan, Canada, and Australia. On May 5, 2021, the Biden administration announced support for negotiating this waiver, intensifying debate in the US and the EU – but so far the US has not gone further than its announcement of support.
The TRIPS waiver is critical to ensuring an equitable distribution of vaccines around the globe. High-income countries already have widespread vaccination campaigns well underway, while many low-income countries have yet to administer a single dose. Without a TRIPS waiver, the gap between vaccination rates in high-income and low- and middle-income countries (LMIC) will only widen.