tralac Daily News
China’s economy, which accounts for 18% of global GDP, is characterised by near-frantic planning, consolidation and expansion activities. The economic growth rate of 18.3% in the first quarter of this year will, according to the World Bank, result in an annual growth of between 8% and 9% for 2021. As the world’s largest market and with huge consumption potential, the Chinese current “dual” approach of enhancing domestic economic activity while reinforcing international economic interaction, will provide exciting new trade and investment opportunities inter alia for South Africa, Africa and the developing world .This was one of the key messages that emerged from a productive and useful China-South Africa Trade and Investment Roundtable in Hangzhou, capital of China’s prosperous Zhejiang province, last week with the theme “A New Development pattern with New Opportunities”.
The new World Bank Group Country Partnership Framework (CPF) is aimed at supporting cooperation with South Africa in its efforts to stimulate investment and job creation as the country recovers from the impacts of the COVID-19 pandemic on lives, livelihoods, and the economy. The strategy covers five years from 2022 to 2026.
South Africa continues to experience significant challenges that are compounded by the ongoing COVID-19 crisis. South Africa’s gross domestic product (GDP) contracted by 7% in 2020 and the fiscal deficit is estimated to have reached 12.9% of GDP resulting in rising public debt which reached 78.8% of GDP in 2020. The number of people living in extreme poverty increased by an estimated 10% in 2020, and the most vulnerable continue to be disproportionally affected by the economic fallout from the pandemic. The WBG will focus on three broad areas under the new CPF: (i) increased competition and an improved business environment; (ii) strengthened micro, small, and medium enterprises and skills development to boost job creation; and (iii) improvements in the infrastructure investment framework and selected infrastructure services.
Day-old chicks crisis hits Kenya after new tax cuts production (Business Daily)
The country has been hit by a shortage of day-old chicks after the State introduced a 25 percent excise duty on imported fertilised eggs from July 1, a poultry industry association has said. The Kenya Poultry Breeders Association (KPBA) said production of day-old chicks would drop by 28.57 percent to one million this week from an average of 1.4 million per week. Hatcheries have been relying on imported fertilised eggs from Turkey to meet the high demand from local egg incubators amid disruption caused by the Covid-19. In the newly passed Finance Act 2021, all imported eggs attract two types of excise duty such as fresh/table eggs (tariff 0407.21, 0407.29 and 0407.90) and fertilised eggs for incubation/hatching (tariff 0407.11 and 0407.19).
Sugar imports up 9pc in May on increased demand (Business Daily)
The volume of sugar imports grew by nine percent in May as the government covered for a slump in domestic production, a new report shows, cushioning consumers from a potential rise in prices of the sweetener. The Sugar Directorate data indicates the volumes imported in the review period stood at 24,735 tonnes up from 23,138 in the corresponding period last year. Enhanced imports have seen a kilo of the sweetener drop to Sh109 a kilo from an average of Sh117 in the same period last year. “Imports amounted to 24,735 tonnes in May 2021. The white refined sugar imports totalled 8,120 tonnes while mill white/brown was 16,615 tonnes,” said the directorate in the monthly report.
The Director-General, World Trade Organisation, Dr Ngozi Okonjo-Iweala, has said that the global trade agency was working to facilitate trade and investments in Nigeria. She explained that the WTO under her leadership was involved in the actualisation of the African Continental Free Trade Agreement to enable Nigeria to benefit more economically. This, she said, would generate more industries, manufacturing, and also increase trade between Nigeria and other countries.
“One of the things I’m thinking about now is how the WTO can help support trade and investment in the country. How can we help with the actualisation of the African Continental Free Trade Agreement? We have the largest population and the largest market. “In order for us to benefit more from the trade, we have to add value to our own products and so, we have an investment facilitation agreement here at the WTO that we are negotiating. Once we do that, it’s something that can create a better environment to attract investment.”
There are indications that companies operating in the Nigeria’s manufacturing sector may be manipulating the tariff concessions in foreign trade in manufactured goods valued at over N4.8 trillion in the first quarter of 2021. Details of the manufacturing trade statistics of the National Bureau of Statistics, NBS, shows that rather than produce locally under the concessionary tariff, the goods are imported. Moreover, the same round-tripping is said to be going on in export manufacturing where concessions are used to import the items and then re-export them. Consequently, on both counts huge foreign exchange is expended in supporting local manufactures that are heavily import dependent.
Still reeling from the effects of Nigeria’s border closure on its economy, the government of the Republic of Benin has imposed new import duty of CFA9 million (N6.5 million) per transit truck on Nigeria-bound cargoes transiting through the country, which are exempted from all forms of duty under the Economic Community of West African States (ECOWAS) protocols on transit goods.
In what appeared to be payback over Nigeria’s closure of some borders in 2019 that lasted more than a year, the Republic of Benin, two weeks ago, stopped 3,700 Nigerian-bound cargo-laden trucks from Cote d’Ivoire, Ghana and Togo at Ilakoji – the border between Togo and the Benin Republic. It was gathered that the Benin authorities claimed it suspected the goods were not produced in West Africa. By law, a transit good is not supposed to be charged for import duties in the transiting country, it is expected to just pass through but the trapped trucks can still not cross the Ilakoji and Seme border up till date, according to importers. Many of the importers lamented that majority of the goods were billed to be sold during last week’s Sallah festival but they could not move them down to Nigeria, which has resulted in heavy losses as some have even collected part payment from their customers.
The federal government in collaboration with the United Arab Emirates (UAE) have agreed to track huge illegal movement of gold from Nigeria to Dubai. Mr Olamilekan Adegbite, Minister of Mines and Steel Development, announced this in the News Agency of Nigeria (NAN) Forum. According to Adegbite, Nigeria government is currently negotiating a bilateral agreement with the UAE to check every gold entering Dubai from Nigeria. He noted that huge quantity of gold were being moved from Nigeria illegally on a daily basis to Dubai, adding that the gold passed through UAE police freely unknown to them that royalties were not paid to Nigeria.
The COVID-19 (coronavirus) pandemic has pushed the Rwandan economy into recession in 2020 for the first time since 1994, according to the World Bank’s latest Rwanda Economic Update. The 17th edition of the Rwanda Economic Update: The Role of the Private Sector in Closing the Infrastructure Gap, says that the economy shrank by 3.7 percent in 2020, as measures implemented to limit the spread of the coronavirus and ease pressures on health systems brought economic activity to a near standstill in many sectors. Although the economy is set to recover in 2021, the report notes the growth is projected to remain below the pre-pandemic average through 2023.
While the Algerian economy showed signs of recovery during the second half of 2020, firms and workers have been deeply affected by the economic recession. The temporary decline in international oil prices further deteriorated the fiscal balance, banking liquidity and the external balance, despite the depreciation of the Algerian dinar. The economic outlook points to a fragile recovery throughout 2021, and its sustainability hinges on the acceleration of reforms to foster private sector growth and restore macroeconomic balances. GDP is expected to grow by 3.7 % in 2021 and 3.3% in 2022, when it is expected to reach its pre-pandemic level. While the Algerian economy is expected to benefit from the rebound in gas production in 2021, the recovery in non-hydrocarbon sectors is expected to be slow and gradual.
New IMF reports
A Legal Practitioner, Mr Ebenezer Amadi has said that the establishment of the African Continental Free Trade Area (AfCFTA) was set to boost the trade and economic growth of Africa and to strengthen integration among African country. He stated that the market designed to contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs; Lay the foundation for the establishment of a Continental Customs Union at a later stage; promote and attain sustainable and inclusive socioeconomic development, gender equality and structural transformation of the State parties, enhance the competitiveness of the economies of State Parties within the continent and the global market.
AfCFTA Prosperity Requires More African Seafarers, Ships and Ports (The Maritime Executive)
The standard expectation would be that AfCFTA trading – taking place on a continent of few islands and many landlocked states – would happen mostly by rail, road or plane. In fact, the first goods traded under the AfCFTA regime were carried by ship from a Ghanaian cosmetics company to Guinea on 4 January. AfCFTA interconnectedness is needed to drive economic growth and development across the continent in the coming years. Africa’s maritime industries and actors will be vital in achieving this outcome, as sea transport offers the cheapest and fastest way of moving the largest quantity of goods across long distances.
African decision makers must prioritise the expansion and improvement of the continent’s maritime transport infrastructure, which struggles to deal with the current level of import and export. The development of port infrastructure in most African countries lags behind the rest of the world – only three African ports are featured on the 2020 list of top 100 global container ports. High freight rates, poor turnaround time in cargo clearance, and inadequate storage capacities are just some of the many problems that strain African ports’ competitiveness.
Why AfCFTA will not succeed – GUTA explains (GhanaWeb)
Since the implementation of the African Continental Free Trade Area (AfCFTA) in January this year, it has been fraught with some challenges. Key among these stumbling blocks is the global pandemic, coronavirus. Though the AfCFTA Secretariat is trying its best to make this a dream come true, the Ghana Union of Traders’ Association (GUTA) believes the initiative will not flourish as expected. According to the President of the Association, Dr Joseph Obeng, data on the Free Trade Area is scanty hence, depriving traders of knowing the advantages of AfCFTA. Dr Obeng, addressing the press during the week intimated that AfCFTA will only be successful if African countries solely trade in goods manufactured in their country of origin to prevent dumping.
“Continental Free Trade Area will not succeed… it can never succeed until we have made conscious efforts to industrialize Africa…. It’s about time that the Continental Free Trade Area let the citizens of Africa know the dos and don’ts. If they are multi-dumping, they should let us know so that if a country has gotten its law discourages dumping, then everybody understands that it is never in contradiction with the rules and engagement that is set by the Continental Free Trade.”
Africa-based firms still keen to expand despite AfCFTA enactment challenges (The East African)
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.
But to ensure that the AfCFTA serves as a framework for progress, development and inclusive economic growth of Africa, Amadi said that policy makers should make supportive complementary policies designed to support structural transformations, complementary policies such as consumer protection and competition policies need to be put in place.
Small and medium-scale enterprises in Africa continue to face trade facilitation challenges despite improvements achieved on the continent as data for 34 countries. According to the Fourth United Nations Global Survey on Digital and Sustainable Trade Facilitation released last week by the UN regional commissions, countries across the globe are moving towards a seamless and efficient trading environment within and beyond national borders by simplifying and digitalizing formalities in international trading. This is helping to sustain international trade despite the disruption caused by the COVID-19 pandemic, it reveals.
Push for production of virus vaccines within EAC (The Citizen)
The East African Community (EAC) bloc must invest in the production of Covid-19 vaccines so as to hold back the pandemic. High cost of vaccinations, low access to vaccines and slow roll out risk holding back the regional economies from quick recovery. “EAC bloc should urgently embark on joint investments in vaccine manufacturing,” said Nicholas Nesbitt, the chairperson of the East African Business Council (EABC). He said international investors should be reached out for the ‘local’ production of the vaccines in order to hold back Covid-19 onslaught.
T he EAC has been implementing the MRH programme since March 2012 with the aim of harmonising technical requirements and optimising processes for medicines regulation to facilitate timely access to safe, affordable, efficacious and quality essential medicines, vaccines and medical devices for treatment, management and diagnosis of diseases of public health importance. Once complete, the common information management system, which will be linked to all Partner States and the EAC Secretariat and will facilitate implementation of harmonised regulations, guidelines, templates and tools for medical products, vaccines and medical devices in line with Article 118 of the Treaty of the Establishment of the EAC.
This report presents economic performance for the SADC region in 2020. It also presents the outlook for business environment in the region for the same period. In addition, the report presents the economic outlook in the short to medium term for the region; and main factors behind the outlook. Further, it highlights issues to inform policy direction both at national and regional levels.
Economic growth in the region contracted by 4.8 per cent in 2020 lower than the growth of 2.1 per cent recorded in 2019. The region’s current account balance as a ratio of GDP widen from an average deficit of 4.2 per cent in 2019 to a deficit averaging 4.7 per cent in 2020. SADC international reserves increased to 5.9 months of import cover in 2020 from 5.3 month of import cover in 2019 as a result of the subdued demand. Global growth in 2020 contracted by 3.3 per cent from a growth of 2.9 per cent in 2019, largely driven by the decline in commodity prices, trade policy uncertainty, escalation of trade tensions and rising debt.
The ECOWAS Commission through the West African Tax Transition Support Programme (PATF) has organized a two (2) day awareness seminar on the implementation of tax reforms in the region. In his opening address, the representative of the Commissioner, Economic Policy and Internal Taxation Mr. Habasso Traore said that “West African Tax Transition Support Programme (PATF) is a new programme funded by the European Union delegation for the benefit of UEMOA, ECOWAS and Member States”. He highlighted the four main objectives of the programme as improving management of domestic taxation, strengthen the regional fight against fraud and tax evasion, optimizing the institutional capacity of UEMOA, ECOWAS and Member States and promoting public debate on domestic taxation in partnership with civil society, private society and the academia.
Around 1,600 people from all over Africa and Japan gathered over six days to explore closer business ties at the Third Japan-Africa Business Forum, which this year attracted the highest number of participants since its launch. Koji Yonetani, a senior official in the Japanese Ministry of Foreign Affairs, delivered a speech on issues to be addressed at the 8th Tokyo International Conference on African Development (TICAD8) next year. Yonetani, Director General in the African Affairs Department, identified two major themes that should be addressed at TICAD 8. Firstly, the solidarity of the international community to overcome the Covid-19 pandemic. Secondly, a “better recovery” in Africa by utilizing the power of the private sector. He said “public-private dialogue will be an indispensable and important element of TICAD 8 next year, in order to harness the power of the private sector.”
China, Africa and the big coronavirus debt relief question (South China Morning Post)
When the coronavirus began to batter economies around the world early last year, G20 members – including China – came up with a debt relief scheme to help the most vulnerable countries. The Debt Service Suspension Initiative (DSSI) launched on May 1, 2020, offered temporary help to dozens of African nations. In all, about US$5 billion in assistance to 40 eligible countries has been granted under the scheme, including US$2.1 billion from China. In November, China clarified, saying it had suspended US$2.1 billion of debt service payments from 23 African countries. As the coronavirus continues to ravage Africa, trade flows and economic activity have yet to recover and some countries from Angola to Zambia are appealing for further bailouts.
Global services trade remained sluggish in the first quarter of 2021, falling 9% year-on-year after posting a 21% decline for the full year of 2020 driven by continued weakness in travel services. New COVID-19 variants have further delayed the recovery of international travel; however, other services sectors, such as transport, are starting to bounce back, with variations across regions due to the uneven distribution of vaccines and differing rollback of pandemic restrictions.
At a meeting of all WTO delegation heads on 23 July, Director-General Ngozi Okonjo-Iweala called on members to bring focus and flexibility to intensive negotiations scheduled for the autumn so they can strike meaningful agreements in areas such as fisheries subsidies, agriculture and pandemic response ahead of the 12th Ministerial Conference (MC12). The chairs of different negotiating groups set out their plans for taking talks forward immediately upon delegations’ return from the August holiday.
Is the emerging world still emerging? (IMF Finance & Development)
Two decades on, the BRICs promise lingers
Without COVID-19, GDP growth in the past decade would have been about 3.6 percent – just below the 3.7 percent experienced in 2000-09. Not bad given all the challenges, and contrary to the mood of pre-pandemic times. Indeed, each decade has witnessed stronger economic growth than the 1980s and 1990s, each about 3.3 percent. Hundreds of millions of people have been taken out of absolute poverty as a result, in part because of the growth miracle led by the so-called emerging markets, of which my beloved BRICs were front and center.
The year 2021 marks the 20th anniversary of my coining the acronym “BRICs” to summarize the likely rising economic relevance of Brazil, Russia, India, and China and the implications of their rise for global governance. As the world looks to the remainder of 2021 and beyond, what can we expect from emerging markets?
The reforms approved by the IMF’s Executive Board seek to ensure that the Fund can flexibly support Low Income Countries (LICs’) financing needs during the pandemic and the recovery while continuing to provide concessional loans at zero interest rates. The centerpiece of the approved policy reforms is a 45 percent increase in the normal limits on access to concessional financing, coupled with the elimination of hard limits on access for the poorest countries. The Executive Board also approved a two-stage funding strategy to cover the cost of pandemic-related concessional lending and support the sustainability of the Poverty Reduction and Growth Trust (PRGT). The first stage of the strategy aims to secure SDR 2.8 billion in subsidy resources (to support zero interest rates), and an additional SDR 12.6 billion in loan resources which could be facilitated by the “channeling” of SDRs.
COVID-19 vaccine inequity will have a lasting and profound impact on socio-economic recovery in low- and lower-middle income countries without urgent action to boost supply and assure equitable access for every country, including through dose sharing, according to new data released today by the United Nations Development Programme (UNDP), the World Health Organization (WHO) and the University of Oxford. An acceleration in scaling up manufacturing and sharing enough vaccine doses with low-income countries could have added $38 billion to their GDP forecast for 2021 if they had similar vaccination rates as high income countries. At a time when richer countries have paid trillions in stimulus to prop up flagging economies, now is the moment to ensure vaccine doses are shared quickly, all barriers to increasing vaccine manufacturing are removed and financing support are secured so vaccines are distributed equitably and a truly global economic recovery can take place.
In Building Forward Fairer: Women’s rights to work and at work at the core of the COVID-19 recovery, the International Labour Organization (ILO) highlights that between 2019 and 2020, women’s employment declined by 4.2 per cent globally, representing 54 million jobs, while men suffered a three per cent decline, or 60 million jobs. This means that there will be 13 million fewer women in employment this year compared to 2019, but the number of men in work will likely recover to levels seen two years ago. This means that only 43 per cent of the world’s working-age women will be employed in 2021, compared to 69 per cent of their male counterparts. The ILO paper suggests that women have seen disproportionate job and income losses because they are over-represented in the sectors hit hardest by lockdowns, such as accommodation, food services and manufacturing.
“There is no pathway to this goal without the leadership of the G20. This signal is desperately needed by the billions of people already on the frontlines of the climate crisis and by markets, investors and industry who require certainty that a net zero climate resilient future is inevitable”, the Secretary General urged in a statement. The UN chief reminded that science indicates that to meet that ‘ambitious, yet achievable goal’, the world must achieve carbon neutrality before 2050 and cut dangerous greenhouse gas emissions by 45 % by 2030 from 2010 levels. “But we are way off track”, he warned.
Like any technology, blockchain can contribute to the SDGs in various ways – from providing food vouchers in refugee camps to enhancing property and land registries to improving access to national identification. So far, however, blockchain innovation has mostly focused on speculative gains in crypto-financial assets instead of creating real value through new products and services. Blockchain is potentially a key technology in a new technological paradigm of increasing automation and the integration of physical and virtual worlds. Its impact goes beyond the economy, as it can transform social interaction, public institutions and our relationship with the environment, and affect countries’ options for pursuing sustainable development.