tralac Daily News
The South African economy recorded its fourth consecutive quarter of growth, expanding by 1.2% in the second quarter of 2021. This followed a revised 1.0% rise in the first quarter of the year. The transport, storage and communication industry increased by 6.9% in the second quarter and made the largest contribution to Gross Domestic Product (GDP) growth, namely 0.5 percentage points, data from StatSA showed.
The trade, catering and accommodation industry increased by 2.2% and contributed 0.3 of a percentage point to GDP growth. Increased economic activity was reported in wholesale, retail and motor trade, and there was increased spending on catering and accommodation services.
The agriculture, forestry and fishing industry increased by 6.2% and contributed 0.2 of a percentage point to GDP growth. The increase was mainly due to increased production of field crops, horticulture and animal products, Stats SA said.
South Africa’s updated NDC climate pledge to be released ‘very soon’ (Engineering News)
Forestry, Fisheries and the Environment Minister Barbara Creecy reported on Tuesday that South Africa’s revised Nationally Determined Contribution (NDC), which is to be deposited with the United Nations Framework Convention on Climate Change later this year, is close to being finalised and will be presented to lawmakers “very soon”. In a briefing of the Portfolio Committee on Environment, Forestry and Fisheries, on the country’s preparations ahead of the COP26 climate negotiations scheduled for Glasgow, Scotland, in early November, Creecy reported that her department was in the process of synthesising the comments received during the public comment period, including those made by the Presidential Climate Commission (PCC).
Kenya sees tourism returning to normalcy in 2 years (Business Daily)
Kenya is launching a robust marketing abroad to lure more regional and international tourists whose numbers have slumped due to Covid-19 travel restrictions. Tourism Cabinet Secretary Najib Balala assured international tourists that Kenya has invested heavily in the vaccination drive to keep both its citizens and visitors safe.
“We cannot ignore the international market ... it has its dynamics and advantages. We have heavily invested in domestic market tourism, Kenya has a thriving domestic market. Kenyans have been supporting the sector but we need to revive international market,” said the CS who spoke during an interview from Cape Verde.
“2024 is the time tourism will go back to normal. Health is going to be the first agenda in everyone’s mind when travelling so we need to vaccinate our people so that travellers can feel Kenya is safe,” he said. The UK is a top tourism source market for Kenya.
Kenya’s current account deficit has remained steady at 5.4 percent of GDP in the 12 months to July, as higher remittance and horticulture earnings balanced out lower service receipts and a rising import bill. Central Bank of Kenya (CBK) data show the current account—which measures inflows and outflows of hard currency—remained unchanged in the month. It was, however, higher in May at 5.5 percent, but CBK expects it to end the year at 5.2 percent.
A strong growth in imports as domestic consumption and production continues to recover has also weighed on the current account, with petroleum, food and industrial goods imports going up significantly this year. Food imports for instance hit a record high of Sh103.34 billion in the six months to June, a 13.6 percent increase on the corresponding period last year. Higher remittance and agriculture export earnings have however helped temper the widening of the deficit.
Kenyan truck drivers say they will resume cargo transport to South Sudan after a two-week boycott over insecurity on the country’s highways. This comes after the South Sudan government, which heavily depends on foreign supplies, assured the truckers of beefed-up security along the Juba-Nimule Highway. It is along this key road that several drivers were recently killed and their trucks torched by unknown gunmen, sparking the boycott.
On the government’s part, South Sudan Deputy Foreign Affairs and International Cooperation Minister Deng Dau Deng told local reporters on Monday that the deal was reached after several negotiations. He, however, didn’t specify whether it was a written agreement and if so, which countries had signed.
The Juba-Nimule highway connects Juba to the border with Uganda, the main route Kenyan drivers use to ferry goods to South Sudan. The highway is notorious for ambushes and illegal roadblocks by some of the militia groups in South Sudan.
South Sudan Freight Forwarders Associations chairman, Mr Emmanuel Kachoul Mayen, reckons the rebels’ motive is to disrupt the supply chain from Mombasa port to South Sudan and to discourage the business community and people of South Sudan who use Mombasa Port as their port of preference.
KPA seeks Sh17.4bn for Lamu port works (Business Daily)
The Kenya Ports Authority (KPA) says it requires Sh17.4 billion to buy equipment and complete the construction of the two berths at the port of Lamu. Tender documents show that the KPA targets borrowing Sh12.4 billion from local and foreign banks, of which Sh3.2 billion will be used to complete construction works at the port that is not yet fully operational.
The launch of the Lamu Port had been delayed thrice over the past two years due to funding challenges and incomplete construction of all three berths. As a result, it has only been able to attract ships that have their own gear for ship operations and roll-on/roll-off shipping like motor vehicle carriers as opposed to container shipping. The KPA says it needs to fund operations at the new port to generate money for servicing debt and creating room for borrowing to acquire new equipment.
That Kenya is now importing more food at the expense of consumers is not a surprise to anyone who has been in a supermarket recently. The cost of basic food stuff has gone up, some, like cooking oil, to eye-watering levels. Many households are having to tighten already tight belts in order to put a meal on the table. Kenya’s local food producers have over the years suffered recurring setbacks in their trade, forcing the country to import food to fill the gap. As reported by the Business Daily on August 23, 2021, the current food import bill stands at an unprecedented Sh103.34 billion between January and June this year. Up to 84 per cent of fish is imported with the largest percentage (70 per cent) coming from China alone. This has largely been attributed to underlying issues on policy and market systems development which have not fully addressed inputs supply, optimal utilisation of available water resources, breeds improvement and diversification, among other factors.
Uganda: Sugarcane growing: Is it a raw deal for farmers? (Daily Monitor)
Despite government earmarking sugarcane as one of the 14 strategic cash crops, it has not really transformed livelihoods and household incomes of the farmers who are commercially engaged in it. This is a consensus that most key stakeholders apart from some manufacturers of this commodity, largely concur with. According to an in-depth analysis of the sugar sub-sector, there is a massive variance between the livelihood and the income levels of the people engaged in sugarcane growing, raising the question whether this economic activity is worth farmers’ time or it is about time they ditched it for another viable venture.
The irony is that there has been increased cane production and milling capacity over the last two and half decades which essentially should result into potential employment opportunities with better incomes, reduced poverty and guaranteed food security.
Nigeria’s trade GDP growth and the AfCFTA (Nairametrics)
Nigeria’s GDP report for the second quarter was recently released showing that Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms in the second quarter of 2021, marking three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020. The growth represented the fastest quarterly growth in five years, with a single sector, the Trade Sector contributing about 16.66% of GDP, a sharp rise of 22% in Q2 2021, and its fastest since at least 2016. According to a recent report by Nairametrics, the reason for trade growth lies in an economic phenomenon termed base effects. In 2020, Nigeria’s trade sector suffered a massive contraction of 16.5%, at the time the 5th straight contraction that started in the third quarter of 2019 when the government announced its border closure.
The growth in Trade represents a major factor for the success of the African Continental Free Trade, (AfCFTA), and Nairametrics also recently reported that the Secretary-General of the Africa Continental Free Trade Area, Mr Wamkele Menes revealed the Pan-African Payment and Settlement System (PAPSS) would save the continent the sum of $5 billion annually when operational. He said: “There is an objective that one day, Africa would be a monetary union.” “Converting the about 42 currencies in Africa with its attendant cost of over five billion dollars yearly is a whole lot and so we want to reduce and eliminate this for the purpose of trading. “Local banks would be able to switch to the platform as we are in consultation with the central banks and by the end of the year, we would be in a position to say the platform is available for all African countries that want to switch to it.
Mr Yofi Grant, Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC), says Ghana is well endowed with human and natural resources to spearhead Africa’s economic emancipation. He said with the country hosting the African Continental Free Trade Area (ACFTA) Secretariat, it was imperative that individuals and businesses took advantage of the opportunity to strike partnerships for growth. The GIPC Boss said it was time Ghana moved away from exportation of raw materials to increase productivity and value addition.
Ghana is a fast-growing economy facing a plastics dilemma. Given the material’s favorable characteristics, plastics are a vital resource. It is used as an industrial input; ensures access to safe drinking water; and plays an important social role by enabling low-income populations to purchase safe drinking water, food, and other basic necessities, sold in low-priced miniature plastic sachets. At the same time, the growth of single-use plastics, estimated to be up to 70% of total plastics consumption, is resulting in a burgeoning plastic waste problem for Ghana. To address its plastic waste problem, Ghana needs to take urgent action to boost a more circular economy. With low plastic waste recovery and recycling rates of 12% and 10% respectively, Ghana could deploy policy instruments to stimulate domestic demand for recycled plastics and increase recovery and recycling rates. Industries such as consumer-packaged goods, construction, textiles, and Ghana’s newly emerging automotive sector could benefit from such interventions. Ghana could also evaluate its capacity to become a regional recycling hub. Stakeholders will need to assess the merits of this approach against the capacity to ensure environmental goals are met. A recent study commissioned by the Global Plastic Action Partnership (GPAP) and the Platform for Shaping the Future of Trade and Global Economic Interdependence – both initiatives of the World Economic Forum – highlights the realities of the plastics landscape in Ghana and how trade policy could be used to achieve a more circular economy and add to domestic interventions. Here are four ideas to consider:
High-speed fiber-optic link between Angola and DRC launched (Africa Science News Service)
Internet Technologies Angola (ITA), part of the Paratus Group, announces the launch of its high-speed fiber-optic link connecting Angola to DRC across Noqui (Angola) and Matadi (DRC). The 600-kilometre connection between Luanda and Noqui, with a capacity of up to 200 gigabits per second, will also provide internet services to municipalities along the route, including Nzeto, Tomboco and Mbanza Congo in the province of Zaire. Following substantial investment by ITA and Paratus Group, this link between Angola and DRC signals the first of many to be launched in the SADC region by the group.
With more inter-SADC fiber connections planned in 2022, this roll-out is part of the ITA/Paratus strategy to interconnect Angola with the region, through fiber, and to realise the group’s strategic vision for establishing Angola as a traffic hub within the SADC.
“For businesses in the SADC region, fiber-optic connectivity is essential”, says ITA Managing Director, Francisco Pinto Leite. “Fiber delivers high speed and reduced latency through a quality connection to the business community. The other key benefit is affordability because, for a comparable satellite connection delivering high bandwidth and speeds, fiber is actually around 70% cheaper.”
What you need to know about the African Continental Free Trade Area (African Business)
The African Continental Free Trade Area is an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3bn people across 54 African countries.
The agreement was brokered by the African Union (AU) and was signed by 44 of its 55 member states in Kigali, Rwanda on March 21, 2018. Trading under the agreement commenced on 1 January 2021, after a sixth month delay as a result of the impact of Covid-19. As of 27 August 2021, 38 of 54 signatories (70%) have deposited their instruments of ratification with the chair of the African Union Commission, according to the Tralac Trade Law Centre. The only country not to sign the agreement was Eritrea, which has a largely closed economy. The AfCFTA Secretariat, an autonomous body within the African Union based in Accra, Ghana, and led by secretary general Wamkele Mene, is responsible for coordinating the implementation of the agreement.
The vice president, Prof Yemi Osinbajo said to increase the competitiveness of African industries is to develop and deepen regional value chains. Osinbajo stated this at the Manufacturers Association of Nigeria (MAN) roundtable on industrialisation in Africa themed: ‘Positioning African Industries for Economic Transformation and Continental Free Trade’. According to the vice president, the theme for the roundtable is an important one. We must all, governments and private sector alike, pay close attention to ‘Positioning African Industries for Economic Transformation and Continental Free Trade.’ He noted that manufacturing is critical to economic transformation, saying that it has been key in adding value to agricultural products and minerals and has also been a major motor of economic growth because it boosts productivity. “Equally compelling from the perspective of Nigeria which has a large population is that manufacturing has the potential to create a large number of sustainable jobs. Given the large number of entrants into the workforce every year and the important role of employment in reducing poverty, there is no doubt at all that industrialization must remain a key priority for African countries,” he said.
He added that “One of the ways to increase the competitiveness of African industries is to develop and deepen regional value chains wherein production systems starting from conception and design right through to supply of raw materials, processing, transport, storage, marketing, and sales take place within our countries and continent. When we export commodities to the rest of the world, we are also exporting jobs and the positive spill over effects such as learning that come with manufacturing are lost.”
UAE targets new Kenya trade deal (Business Daily)
The United Arab Emirates (UAE) plans to sign a comprehensive economic partnership agreement with Kenya to consolidate its position as a gateway for global trade and investment. The UAE said this week the deal with Kenya, alongside six other countries including India, Indonesia, Turkey, UK, Israel, South Korea and Ethiopia will widen its access in the emerging markets. “These comprehensive agreements will help us get wider accessibility to those markets. We are talking about 10 per cent of the global trade and 60 percent of the global populations of those eight countries,” said Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of State for Foreign Trade in a statement.
India-East Africa Community (EAC) to drive enhanced trade partnerships (Hindustan Times)
Indian Economic Trade Organization in association with the India Africa Trade Council organized the INDIA EAC SUMMIT in New Delhi on 3rd September which was attended by the High Commissioners of Rwanda, Tanzania, Uganda and the Ambassador of Zimbabwe in India. The motive was for building up bilateral business relations between both the countries of India and the countries in the EAC region namely Uganda, Tanzania, Rwanda, Burundi, South Sudan, Kenya. The event focused on the emerging relationships with the EAC region with various presentations by the Heads of Missions and thrust on developing partnerships that would be mutually beneficial to these regions especially post Covid 19.
The Minister of Forestry and Natural Resources of the Republic of Malawi, Hon. Nancy Tembo, on 5 September 2021 launched a Financing Facility to support transboundary conservation actions for Southern African Development Community (SADC) Transfrontier Conservation Areas (TFCAs). The SADC TFCA Financing Facility aims to reach a volume of EUR 100 Million in the medium to long term benefitting 18 Transfrontier Conservation Areas (TFCAs) in 16 countries and covering over 700 000 km2 of shared ecosystems in the SADC region. Speaking at the launch, Hon. Tembo noted: “The TFCA Financing Facility will complement efforts by governments of Southern Africa to develop sustainable financing mechanisms for conservation of nature which straddles across international boundaries in the region.” The SADC TFCA Financing Facility is a grant-making mechanism established to support development of TFCAs in the SADC region. The first phase of the financing facility currently funded by the German Government through KfW has an initial budget of €12 million with an overall ambition to reach a target of €100 million
Africa’s Tourism Leaders Identify Investments as Key to Sustainable Recovery (Modern Diplomacy)
The World Travel & Tourism Council (WTTC) and the United Nations Environment Programme (UNEP), launch a major new report today, addressing the complex issue of single-use plastic products within Travel & Tourism. ‘Rethinking Single-Use Plastic Products in Travel & Tourism’ launches as countries around the world begin to reopen, and the Travel & Tourism sector starts to show signs of recovery from the COVID-19 pandemic which has been devastating. The report is a first step to mapping single-use plastic products across the Travel & Tourism value chain, identifying hotspots for environmental leakages, and providing practical and strategic recommendations for businesses and policymakers. It is intended to help stakeholders take collective steps towards coordinated actions and policies that drive a shift towards reduce and reuse models, in line with circularity principles, as well as current and future waste infrastructures.
Virginia Messina, Senior Vice President and Acting CEO, WTTC said: “The COVID-19 pandemic has accelerated the sustainability agenda with businesses and policymakers now putting an even stronger focus on it. As a growing priority, businesses are expected to continue to reduce single-use plastic products waste for the future and drive circularity to protect not only our people, but importantly, our planet. “It is also becoming clear that consumers are making more conscious choices, and increasingly supporting businesses with sustainability front of mind.”
As the world prepares to convene the first UN High-Level Dialogue on Energy in 40 years, attention is focused on the importance of achieving universal access to affordable, reliable, sustainable, and modern energy. A new analysis by the Africa-EU Energy Partnership (AEEP) sheds light on progress toward achieving this in Africa, and what still needs to be done to achieve SDG 7 in the years ahead.
On 31 August 2021, AEEP released the ‘European Financial Flows on SDG7 to Africa’ report. Looking at official development assistance (ODA) data and private sector investments over recent years (2014-2019), the report finds that while a lot remains to be done, SDG 7 is achievable in Africa. And, importantly, the cost of inaction is far greater – both in terms of the risk posed to achieving other Sustainable Development Goals (SDGs), and in financial terms.
Our look at overall energy investment in the region shows that African governments and institutions are leading the way to achieving their energy goals. In 2019 alone, African governments and developments banks spent €12.7 billion of public spending on energy in all its forms, with €10.1 billion of public sector expenditure financed by government revenues and debt. These strong public commitments show the central role that energy plays for many countries.
ECA cyber security week launched (UNECA)
The Economic Commission (ECA)’s Cybersecurity Week 2021 has kicked off in Addis Ababa, Ethiopia and will run for three days from September 7 – 9. This is an effort by the Information and Communications Technology Services Section (ICTSS) to promote the culture of information security at the ECA, and its compliance with UN-wide cyber security policies.
It is estimated that about 80% of personal computers (PCs) in Africa are affected by viruses and malware. “Covid 19 has led to more cyber security risks as many individuals work at home sometimes on their computers and using their own routers, virus protection,” said Mr Cisse adding that the evolution of new technologies and rapid changes in workforce practices has resulted in one pf the greatest challenges for governments and organizations around the world. “Flurry of devices are moving rapidly from analog to digital, the phenomenon is a broad and complex terrain – the internet of things. Everyone needs to be aware of the risks of cybersecurity especially on data protection.”
Commodity dependence increased over the last decade from 93 countries in 2008–2009 to 101 in 2018–2019, according to UNCTAD’s State of Commodity Dependence 2021 report released on 8 September. The nominal value of world commodity exports reached $4.38 trillion in 2018–2019, a 20% increase compared with 2008–2009, the report shows. “Commodity dependence makes countries more vulnerable to negative economic shocks,” said UNCTAD’s commodities head, Janvier Nkurunziza. “It can have a negative impact on export and fiscal revenues and adversely affect a country’s economic development.”
Commodity export dependence in Africa and Oceania is particularly noteworthy, with more than three quarters of countries in both regions relying on commodity exports for more than 70% of their total merchandise export revenues, the report said.
UNCTAD’s largest technical assistance programme, ASYCUDA, is marking 40 years of helping customs offices around the world accelerate the clearance of goods and increase the pace of trade. ASYCUDA’s 2020 annual report released on 8 September outlines how the programme adapted its flagship software, ASYCUDAWorld, to help the countries using it hasten the import of essential medicines and goods as they tackle the COVID-19 pandemic.
UNCTAD’s director of technology and logistics, Shamika N. Sirimanne, said: “Amid the pandemic, ASYCUDA has demonstrated flexibility and innovation, providing excellent value to user countries.” ASYCUDA has assisted 126 countries and territories over the past 40 years to improve their import and export processes. Its software is currently being used in 100 countries, including 39 least developed countries, 34 small island developing states and 21 landlocked developing countries.
According to recent UNCTAD analysis, most LDCs will likely take several years to recover the level of GDP per capita they had in 2019, and compared to developed countries, which may experience a short V-shaped recovery, the median LDC would take roughly three years to climb back to pre-COVID-19 levels of output per capita. Moreover, extreme poverty in LDCs is projected to rise to 35%, equivalent to 32 million people, due to the pandemic.
Confronted with looming fiscal distress, LDCs will need further long-term support to recover and address the structural economic challenges they face. Beyond the recovery, for LDCs to achieve inclusive development, global action should be geared towards supporting LDCs build their underdeveloped production systems.
During the 11th BRICS Trade Ministers’ Meeting held in virtual format on 3rd September, 2021, with Piyush Goyal, Minister of Commerce and Industry, chairing the meeting, discussed among the MSME sector of the member countries. The meeting was attended by Trade and Economic Ministers of BRICS Countries (Brazil, Russia, India, China and South Africa). The MSME Roundtable was held to promote the cause of the MSME sector through learning of best practices amongst BRICS countries. India has also organized a number of B2B events through the BRICS Business Council and the BRICS Women’s Business Alliance to advance business cooperation in BRICS countries.
He stressed for the BRICS countries to work together for strengthening the Multilateral system, with WTO at its core, and need for a balanced and inclusive outcome in the forthcoming WTO Ministerial Conference (MC12) keeping in mind the developmental needs of developing countries and Least Developed Countries. He highlighted the principles of Special & Differential Treatment and the “Common but Differentiated Responsibility”. He also emphasized, amongst other things, on the need for a permanent, adequate and equitable solution to the Public Stock Holding programmes for food security purposes; early outcome of the TRIPS Waiver proposal for vaccines, therapeutics and diagnostics; adoption of emerging new technologies in a swiftly changing world while finding solution to the challenges of data protection and cyber security; and ensuring sustainable consumption and production patterns.
Brazil, Russia, India, China and South Africa may strongly oppose the proposed Carbon Border Adjustment Mechanism (CBAM) by the European Union at the 13th BRICS Summit on Thursday as the five developing countries will likely be the biggest losers from its implementation. In a veiled reference to CBAM, BRICS trade ministers last week cautioned that any measure to tackle climate change must be in conformity with multilateral trading rules and shouldn’t put arbitrary restrictions on international trade. “We underline that all measures taken to tackle climate change must be designed, adopted, and implemented in full conformity with WTO agreements and must not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade,” BRICS trade ministers said in a statement.
President Cyril Ramaphosa has urged African and Caribbean states to join hands in solidarity as the regions face common challenges. He was speaking during a virtual gathering of the inaugural Africa-Caribbean Community (CARICOM) Summit where Heads of State from Caribbean nations and Africa were expected to discuss various issues including trade, investment and ways to mitigate the impact of the COVID-19 pandemic.
Investment prospects, climate change and food security will be among the topics discussed at the Egypt International Cooperation forum (Egypt-ICF), which opens today (September 8). The conference will try to “advance dialogue on international cooperation” as the global economy gradually recovers from the strain of a pandemic. The event, under the patronage of Abdel Fattah Al Sisi, the President of Egypt, will bring together national and international policymakers, multilateral and bilateral development partners, private sector, civil society, and think-tanks to join efforts in identifying the parameters of sustainable recovery. The two-day event, at Cairo’s Ritz-Carlton hotel, will also be streamed online on the forum’s website. It will comprise panel discussions, specialized workshops that delve into sector focus, capacity building sessions for participants, as well as development cooperation projects’ visits.
How African countries can benefit from plan to reform global tax (World Economic Forum)
As of July 2021, over 130 countries and jurisdictions, including many African countries, have joined a new two-pillar plan to reform global tax rules and ensure that multinational corporations (MNCs) pay their fair share of taxes irrespective of where they operate.
Pillar One of the Agreement on base erosion and profit shifting (BEPS) seeks to ensure a fairer distribution of profits and taxing rights among countries with respect to the largest multinationals including digital companies, while Pillar Two introduces a global minimum corporate tax rate that has the effect of protecting the tax bases of countries and putting a floor on tax competition amongst jurisdictions.
Today, many African countries are unable to tax highly digitalised businesses as a result of current international tax rules, which only allocate taxing rights to a country where non-resident businesses create sufficient physical presence in that country. With taxing rights of over $100 billion in multinational profits expected to be reallocated to market jurisdictions annually under Pillar One, ATAF argues that the rules will be effective measures that can be used to address the current imbalance in the allocation of taxing rights between source and residence countries which deny source countries such as African countries of much-needed tax revenue.
“The first and most important issue is that of the negotiations on fisheries subsidies reform. … Concluding these negotiations, which are now in their final stage, is the Organization’s number one priority and we hope that an agreement can be reached by the end of the year prior to our Ministerial meeting in November,” DDG Paugam said. “If I had just one message to convey here at the IUCN Congress, I would request everyone’s support in encouraging the governments engaged in these negotiations to secure an ambitious outcome.” DDG Paugam also cited discussions among several WTO members on plastics pollution, which could lead to new initiatives on marine litter, and stressed how broader discussions at the WTO on trade and the environment could assist ocean conservation. “My key message is that, among all the instruments of international cooperation, trade policy instruments can and must be mobilized for the health of the ocean,” he said.