Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News
Photo credit: Bloomberg


Updates on looting and protests in South Africa

Supply China Latest: Mass Looting Blocks a Key African Trade Gateway (Bloomberg)

Widespread social unrest gripping South Africa following the arrest of a former president saw key logistics arteries for the continent shuttered as rioters torched trucks and caused millions of dollars in damage to stores and warehouses, spurring concerns about looming shortages. The Road Freight Association says more than 35 trucks have been either wholly burnt out or very badly damaged since July 10 on key routes in KwaZulu-Natal province, home to sub-Saharan Africa’s biggest port of Durban, as well as in the coal-rich Mpumalanga region and the economic hub of Gauteng, where Johannesburg is located. The arson led to the closure of the N3 highway that links Durban to Johannesburg and is also the start of trucking routes used to transport goods and commodities to and from nations as far north as the Democratic Republic of Congo.

“The cost to the South African economy will run into billions of rand lost as business confidence from foreign investors, and those who use South Africa as a transit hub, turn away from us,” Kelly said. “The ‘Gateway to Africa’ has been lost and these attacks will further cement the move of transit freight from South Africa to neighboring countries.”

Ports, key rail line disrupted by violence – Transnet (Engineering News)

Economic impact of riots and looting in South Africa and wider emerging problems (BusinessTech)

Investors not giving up on South Africa (IOL)

“South Africa correctly prides itself as a country with an excellent constitution in which the rule of law and property rights are enshrined,” Vuslat Bayoglu, the managing director of the mining investment company Menar, told Independent Media on Wednesday. While some foreign investors in South Africa were concerned about the potential long-term impact on investor sentiment, there still remained a strong commitment to invest in the country in the hope that the state was able to contain the current situation and restore order.

South African protests disrupt citrus exports (FreshFruitPortal.com)

South African farmers have been hit by days of unrest and looting as trucks carrying produce are prevented from delivering to markets. The country’s citrus exports through the port of Durban have been halted after violence erupted in the KwaZulu Natal and Gauteng regions.

Citrus Growers Association Chief Executive Justin Chadwick said trucks carrying citrus have been unable to use the main arterial roads to the Durban port, where more than half of the citrus is exported. He also said that harvesting and packing could not be stopped since producers would then face losing their crops, Farmers Weekly reported. Instead, fruit was being palletised and kept in cold storage on farms until the roads were safe again. “Most cold storage facilities in the [Port of Durban] have closed down, as have the fresh produce facilities. People can’t get to work so there is no one there to operate the ports,” he was quoted as saying.

South Africa after COVID-19 – light at the end of a very long tunnel (Brookings)

Like most other countries, South Africa could not escape the pandemic. It suffered the loss of lives and livelihoods. But there is also light at the end of a very long tunnel. The government responded swiftly and strongly to the crisis while also spearheading an international alliance for the distribution of vaccines in Africa. If the South African government would carry out with the same determination long-standing economic reform as it was fighting the pandemic, COVID-19 could serve as a turning point in reenergizing South Africa’s economy and labor market.

Addressing structural constraints to growth behind and at the border could support exports and higher growth, and so preserve the sustainability of public finances. The experience of major emerging economies shows that the two most potent factors for reducing public debt-to-GDP ratios are economic growth and primary surpluses. The implied priorities are self-evident: a better climate for investment and trade, and prudent fiscal policy.

South Africa Invests in Biodiversity to Promote Rural Development and Conservation (World Bank)

South Africa is stepping up investment for its wildlife and biodiversity sectors thanks to a grant of $8.9 million from the Global Environment Facility (GEF). The Catalyzing Financing and Capacity for the Biodiversity Economy Around Protected Areas Project aims to enhance South Africa’s stewardship of its rich biodiversity and expand the benefits of protected areas for local communities. It will also help address high unemployment and limited livelihoods options in and around protected areas as well as inequality in rural economies. The project supports South Africa’s efforts to foster the unrealized potential of its wildlife and biodiversity sectors as drivers for economic growth, including through expanding conservation areas and mitigating threats to protected areas and conservation objectives.

SA and Kenya Working on Economic Protocols to Promote and Grow Their Economies – Deputy Minister Gina (the dtic)

The Deputy Minister of Trade, Industry and Competition, Ms Nomalungelo Gina says South Africa and Kenya are working on several economic protocols, to promote and grow their economies. She said that the countries were actively collaborating in the sectors of tourism, fisheries, energy, Information and Communication Technology (ICT) and agriculture to carve a mutually beneficial path and to promote and grow business opportunities in the two respective economies. Gina said this during South Africa-Kenya webinar to explore business opportunities between the two countries. Gina said that while both countries were pioneers in ICT, which is becoming the mainstay of the modern economy, South African and Kenyan entrepreneurs should be encouraged to collaborate in developing business solutions and new enterprises that will enhance trade between the two.

Kenya counts on Dar mission to unlock trade barriers (The Star, Kenya)

Kenyan manufacturers are hopeful the just concluded trade mission to Tanzania will help open up trade between the two countries. The visit comes amid renewed political ties between the two countries. Last week, local manufacturers led by the Kenya Association of Manufacturers (KAM) were on a trade a trade mission to Tanzania, organised in partnership with the Confederation of Tanzania Industries. “One thing stood out; trade relations between the two countries can flourish given sustained political goodwill and mutual understanding between businesses,” she added. While Kenya and Tanzania have for years shared strong trade relations, non-tariff barriers, high cost of production and cheap imports from outside the East Africa Community (EAC) have impacted trade between the two countries.

New Lamu port set to host first transshipment cargo (Business Daily)

The Lamu port will handle its first transshipment cargo today as a ship from Zanzibar will be calling at the facility to deliver freight meant for the Far East. The Kenya Ports Authority (KPA) says the AMU 1, a Kenyan owned ship from Tanzania carrying 63 containers of goods is expected to dock at the facility. Transshipment is where cargo or container get moved from one vessel to another while in transit to its final destination. It mainly happens when there are no direct connection between two ports. On Wednesday next week, a CMA CGM ship will pick the consignment from the Lamu facility and ferry it to Dubai and the Far East country.

Factbox: Nigeria’s oil overhaul faces last battles over fuel, northern drilling (Reuters)

Nigeria’s lawmakers are on the cusp of clearing an oil industry overhaul that has eluded the nation for two decades. Final passage of a package of measures is expected as early as Wednesday due to alignment between the National Assembly and President Muhammadu Buhari. But added provisions, including one that could give the Dangote Group an effective monopoly on fuel, launched last-minute battles in Africa’s largest oil exporter. Currently 23 companies have refining licences, according to the Department of Petroleum Resources. Most process less than 12,000 barrels per day (bpd). The Dangote refinery, under construction in Lagos by billionaire Aliko Dangote, has a nameplate capacity of 650,000 bpd.

Poor infrastructure costing Nigeria $17.1b yearly, says AfDB (The Nation Newspaper)

The African Development Bank (AfDB) says Nigeria loses about four percent of her Gross Domestic Product growth annually because of poor infrastructure. This amounts to $17.1 billion yearly using the 2020 GDP figures. Nigeria’s infrastructure deficit he lamented “is one of the main constraints to industrial development and national competitiveness. Estimates indicate that Nigeria’s infrastructure constraints cost the country around four percent of its yearly Gross Domestic Product growth”. Given the huge amounts needed to bridge the country’s infrastructure gap, which is about $100 billion annually for the next 30 years, he said time has come to create an enabling environment for Public-Private Partnerships to close Nigeria’s infrastructure gap.

Adding value to exports can overturn negative trade balance with UK – report (The Business & Financial Times)

The Business Climate Report has urged the country to change its old practice of exporting primary products to the United Kingdom (UK), which has persistently resulted in a negative trade balance at the country’s expense. The 2020 report indicated that the UK imported US$242 million worth of goods, while Ghana on the other hand imported US$473 million worth of goods from the UK – presenting a negative trade balance of about US$231 million. This, the report said, is attributed to factors such as the country’s continuous export of raw materials and import of manufactured goods, coupled with a drop in the level of exports against imports in trade with the UK – a trend that may continue for a long time if nothing concrete is done to change the narrative.

Is sustainability the key to unlocking Togo’s textile industry potential? (Oxford Business Group)

With Togo moving to position itself as a regional leader in terms of textile production, the country is increasing its focus on sustainability and digitalisation as it seeks to maximise value across the supply chain. As OBG has recently explored, the global textiles industry is one of the major contributors to climate change: with pre-pandemic annual emissions of 1.2bn tonnes, it is the second-largest industrial polluter, second only to the oil and gas industry. This situation has led many textile industry players to increase their focus on sustainability and other environmental, social and governance principles. “If Togo is to compete on a global stage, it must be prudent with the usage of its resources, and ensure that energy sources are reliable and have a good mix of renewables.”

Egypt: Overcoming the COVID Shock and Maintaining Growth (IMF)

Like most emerging markets, the COVID-19 pandemic has been an enormous shock for the Egyptian economy. Precautionary measures to contain the spread of the virus, including partial lockdowns and restrictions on capacity in public spaces, resulted in a temporary decline in domestic activity, while the government’s budget was stretched as the economic slowdown reduced tax revenues. Egypt also experienced significant capital outflows of more than $15 billion during March-April 2020 as investors pulled out of emerging markets in a flight to safety. Nonetheless, Egypt was one of the few emerging market countries that experienced a positive growth rate in 2020, thanks to the government’s timely response, the short period of lockdown and Egypt’s relatively diversified economy.

Morocco-France trade balance posts surplus in favor of kingdom thanks to automobile industry – French ambassador (The North Africa Post)

Morocco has turned the tide in the trade balance with France over the past decade with a booming automobile industry, French ambassador Hélène Le Gal has told online media le360.ma. “We have gone from a French trade surplus to a Moroccan trade surplus, because Morocco exports much more to France than it imports. Morocco exports automobiles in particular, and that is the big difference,” Le Gal said in an interview. The surplus according to the French diplomat is led by vehicle exports from the kingdom to Europe and France in particular.


Africa: Regional cooperation is crucial for the continent’s growth (The Africa Report)

To accelerate transformation, African countries must collaborate beyond trade to tackle shared challenges, harness regional opportunities, and enable economies to innovate and grow together by removing barriers to progress. The damaging economic legacy of the Covid-19 crisis is likely to be prolonged across parts of Africa, with per capita incomes in many countries not expected to return to pre-pandemic levels before 2025. However, the pandemic’s impact would be far more devastating – and deadly – without highly successful collaboration and coordination among countries.

To add to the challenges, while there is variation across countries, public debt in sub-Saharan Africa is again becoming a concern to policymakers because of the steadily increasing interest burden. Under the backdrop of these immediate issues, it is important to keep the eye on longer-term goals that will provide real solutions to Africa’s problems. The third African Transformation Report published by the African Center for Economic Transformation (ACET) explores the critical need to give new impetus to Africa’s transformation.

AfCFTA’s success relies heavily on Africa’s fintech startups (Quartz)

Fintech companies in Africa are flourishing by producing digital systems and infrastructure to make financial services more efficient. And with the launch of the African Continental Free Trade Area (AfCFTA) at the start of this year, the fintech companies are well positioned to replicate this success by providing solutions for what is the largest free trade area globally by the number of countries taking part in it. AfCFTA presents opportunities for fintech companies in areas including payment facilitation, settlement, and reconciliation, says Niyi Kolade, founder and CEO of Seerbit, a Lagos-based pan-African enterprise payment platform.

Innovative financing structures needed to fund Africa growth (The Business & Financial Times)

Research by the Organisation for Economic Co-operation and Development (OECD) indicates that by 2050, Africa’s cities will be home to almost a billion additional people. As these cities grow, it’s important that the appropriate urban infrastructure – from roads and transport systems to water and waste management systems – is in place to enhance wellbeing and productivity for people living in these areas. Africa’s urban transition also offers opportunities to proactively address critical challenges such as digital transformation and climate change, to ensure cities become centres of sustainable, climate-resilient and inclusive growth. The pandemic has caused a major blow to some of the world’s poorest countries, causing a recession that could push more than estimated 100 million people into extreme poverty. That is why the World Bank and the IMF urged G20 countries to establish the Debt Service Suspension Initiative (DSSI).

Africa’s Agricultural Sector Needs to Be More Appealing for the Youth (BORGEN)

The employment agriculture offers to the continent’s working population is approximately two-thirds. Approximately 11 million young Africans enter the labor force of Africa’s agricultural sector every year. At best, only a quarter of these new workers will find paying jobs over the next decade. On average, each country contributes 30-60% of gross domestic product and about 30% of the value of exports. Overall, agriculture in Africa contributes to major continental priorities such as eradicating poverty and hunger, boosting intra-Africa trade and investments and rapid industrialization and economic diversification. However, the youth in Africa from the latest generation isn’t seeing the crucial importance of having a career in agriculture. Rather, many discard it as a viable career path and take a very negative stance against farming.

Innovation has Maintained COMESA’s Performance Trajectory (COMESA)

Amidst the prevailing Covid-19 situation, the implementation of the COMESA regional integration programmes has picked pace, with a notable consistent budget absorption under Member States funding on operational expenditures. According to a recent performance update by the COMESA Secretariat, there has been an upward trajectory in programme activities in the second quarter of the year as restrictions on movement of people in the region eases. These have been made possible through the adoption and application of information, communication technologies, which have built the organization’s resilience to implement its programmes.


Progress in streamlining trade procedures continues despite COVID-19 crisis, UN survey shows (UNECA)

Countries across the globe are continuing to move towards a seamless and efficient trading environment, within and beyond national borders, by simplifying and digitalizing formalities in international trading, helping to sustain international trade despite the disruption caused by the COVID-19 pandemic, according to a survey released today by the United Nations regional commissions. The Survey covers not only the trade facilitation measures in the WTO Trade Facilitation Agreement, but also digital trade facilitation measures associated with the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific, a UN treaty which entered into force earlier this year. The Survey also pays special attention to sectors and groups with special needs, such as the agricultural sector, small and medium enterprises and women traders. A new module on trade facilitation during times of crisis like the COVID-19 pandemic was integrated this year.

Ngozi Okonjo-Iweala on how the WTO can tackle vaccine scarcity and global recovery (Atlantic Council)

The unequal global recovery from the COVID-19 pandemic is fragile, warned World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala, and “there’s one thing behind that all: The issue of vaccine equity.” “We’re not really going to have what is [a] sustainable recovery” as long as vaccine scarcity continues, Okonjo-Iweala said at an Atlantic Council Front Page event hosted by the Council’s GeoEconomics Center. “The supply scarcity is driving behavior,” she said, not only fueling countries to competitively bid on vaccines, but also to “bid away vaccines from COVAX,” the global coalition tasked with improving COVID-19 vaccine access. “That’s why COVAX has been struggling to deliver what it should.” Okonjo-Iweala outlined ways the WTO can alleviate the scarcity problem across the supply chain for COVID-19 vaccines: by encouraging the removal of trade restrictions while working with manufacturers to unlock bottlenecks and spread their production expertise. “Without the transfer of technology and know-how, you also cannot manufacture or increase output,” she said. Members of the WTO are negotiating a proposal to waive intellectual property rights for COVID-19 vaccines, and Okonjo-Iweala hopes “they will come to a conclusion that is pragmatic, allowing developing countries to have access but also [protecting] research, development, and innovation.”

WTO members consider revised proposal for transparency reforms at Goods Council meeting (WTO)

The WTO Goods Council discussed at its meeting on 8-9 July a revised proposal to enhance members’ compliance with transparency obligations, one of the main pillars of the WTO system. The proponents presented the changes to their proposal and sought support as members prepare for the 12th Ministerial Conference (MC12) in late November. Some of the key changes include reordering and simplifying the technical assistance and capacity building provisions, which would be broadened to include all members, and the expansion of the role of the Working Group on Notification Obligations and Procedures to facilitate improvements in notification processes.

WTO issues new edition of World Tariff Profiles (WTO)

The special topic for this issue is the use of non-tariff measures (NTMs). Using data in UNCTAD’s Trade Analysis Information System (TRAINS), this chapter looks at three indicators of the use of NTMs: the frequency index, the coverage ratio and the prevalence score. These indicators reveal the percentage of products affected by NTMs, the share of trade subject to NTMs, and how many measures apply to a particular product group. The chapter reveals that almost 60 per cent of imported products need to comply with at least one NTM. In terms of trade value, almost 80 per cent of imported goods are subject to NTMs.

UN chief says race to reach SDGs ‘can and must’ be turned around (United Nations)

The COVID pandemic has taken four million lives, devastated the global economy, pushed a further 124 million people into extreme poverty and continues to inflict profound suffering – dramatically impacting progress towards the Sustainable Development Goals (SDGs), the UN chief said on Tuesday at a key international forum. “Nearly one person in three around the world could not access adequate food in 2020 – an increase of nearly 320 million people in one year”, Secretary-General António Guterres told the Opening of the Ministerial Segment of the High-Level Political Forum on Sustainable Development (HLPF), the UN’s core review platform of the 2030 Agenda for Sustainable Development and its 17 SDGs.

World Bank Budget Support in the Time of COVID: Crisis Finance… with Strings Attached (Center for Global Development)

World Bank budget support projects throughout the COVID-19 global health emergency contain significant policy conditionality. On average, each budget support program required the recipient government to implement 8 policy reforms to secure funding – a reasonable constraint in “normal” times but at odds with the twin imperatives of speed and flexibility in crisis times. In addition, over two-thirds of the World Bank budget support reform conditions were not directly relevant to the COVID-19 crisis. Instead, they focused on a longer-term reform agenda. This puts the World Bank out of step with the International Monetary Fund (IMF) which has routed a significant portion of its COVID-19 financing through programs with little to no conditionality.

UN report: Pandemic year marked by spike in world hunger (FAO)

There was a dramatic worsening of world hunger in 2020, the United Nations said today – much of it likely related to the fallout of COVID-19. While the pandemic’s impact has yet to be fully mapped, a multi-agency report estimates that around a tenth of the global population – up to 811 million people – were undernourished last year. The number suggests it will take a tremendous effort for the world to honour its pledge to end hunger by 2030. This year’s edition of The State of Food Security and Nutrition in the World is the first global assessment of its kind in the pandemic era. “Unfortunately, the pandemic continues to expose weaknesses in our food systems, which threaten the lives and livelihoods of people around the world,” the heads of the five UN agencies write in this year’s Foreword. They go on to warn of a “critical juncture,” even as they pin fresh hopes on increased diplomatic momentum.

Increasing legality and transparency in the timber trade (FAO)

The Food and Agriculture Organization of the United Nations (FAO) today launched a new online portal providing information on forest-related laws around the world in order to help promote legal forest management, timber production and trade, and contribute to efforts to make forest resource use sustainable. The first such portal of its kind, developed with support from the Japanese Government, TimberLex provides information on legislation relating to forest management, timber production and trade from 46 timber consumer, processing and producer countries. Illegal logging and related trade are estimated to account for 10-30 percent of the global timber trade – or $ 30-100 billion annually – and impairs poverty alleviation, food security and climate change mitigation while undermining efforts to manage forests sustainably. In an effort to address this issue, major wood-consuming countries are increasingly imposing requirements for timber imports to document their legal status.

IFAD’s new investment programme to boost private funding of rural businesses and small-scale farmers (IFAD)

Rural businesses, which are so vital for transforming our food systems, will get a much needed boost from an ambitious new financing programme launched today by the UN’s International Fund for Agricultural Development (IFAD), as part of its broader efforts to address rising hunger and poverty levels in the world’s poorest countries. The Private Sector Financing Programme (PSFP) aims to spearhead an increase in much-needed private investment in small and medium-sized enterprises (SMEs), farmers’ organizations and financial intermediaries servicing small-scale farmers, which are too often neglected by investors. It will provide loans, risk management instruments (such as guarantees), and equity investments.

United Nations’ agri fund zooms in on private sector SMEs in Africa (Engineering News)

The United Nations’ International Fund for Agricultural Development (Ifad) has launched a new financing programme that will help aid rural businesses in the food systems of the world’s poorest countries. The Private Sector Financing Programme aims to spearhead an increase in much-needed private investment in small and medium-sized enterprises (SMEs), farmers’ organisations and financial intermediaries servicing small-scale farmers, which are often neglected by investors.

The $22B Spent On Overfishing Subsidies Is ‘Madness’: UN Special Envoy (Green Queen)

The United Nations secretary-general’s special envoy for the oceans, Peter Thomson, has urged states to put an end to fisheries subsidies. Describing the $22 billion in funding to overfishing operations as “madness”, Thomson said it is now time for countries to “do the right thing by the ocean”. At a recent virtual webinar hosted by Friends of Ocean Action (FOA), Thomson said countries must end the “environmental and economic madness” of funding fishing operations. Every year, countries funnel $22 billion to fisheries that are driving the unsustainable depletion of ocean fish stocks. Right now, we are stripping the ocean at a dizzying rate. One-third of the world’s fish stocks are overfished, according to U.N. estimates. 90% of fish are already fully exploited, overexploited, or depleted​.


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