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Growth in South Africa is projected to rebound from -6.4 percent to 4.6 percent –World Bank (IOL)
The World Bank has revised South Africa’s growth forecast for 2021 as gross domestic product (GDP) would be supported by a favourable global environment and base effects. In its biannual Africa Pulse report, the World Bank said growth in South Africa was projected to rebound from -6.4 percent in 2020 to 4.6 percent in 2021. This is a significant GDP outlook from the 4 percent projection the bank forecast in July at the height of civil unrest and riots in South Africa, and more so from its 3 percent April forecast. The World Bank said the R38.8 billion relief package to support businesses and the R350 monthly payment to households that were affected by the pandemic as well as by riots and lootings, respectively, had boosted economic activity. However, the World Bank warned that South Africa was facing numerous challenges going forward, including a record unemployment rate of 34.4 percent.
Infrastructure projects get the greenlight (SAnews)
Infrastructure investment in South Africa has made significant strides in the current financial year, with four projects worth a collective R21 billion getting the green light for implementation, the Infrastructure Fund (IF) has revealed.
Unveiled by President Cyril Ramaphosa in 2018, the blended finance R100 billion fund was expected to provide catalytic finance over 10 years, leveraging as much as R1 trillion in new investment for strategic infrastructure projects. In relation to the four projects, the IF had already gone through the Infrastructure South Africa (ISA) processes to get the projects approved. “What we’re excited about is that even in the first year of the operation of the IF, there was commitment from Treasury under the current constrained fiscal environment, R4 billion in the current year, R6 billion and 8 billion in the following years. So we’re talking about R24 billion of the R100 billion. We’re excited about that because there’s always this trust gap that we make commitments, but we don’t follow up.”
Troubled South Africa sugar industry pushes for biofuel subsidy (Engineering News)
South Africa’s sugar industry is in talks with the government over a potential subsidy that could see it convert more than a third of its annual output into biofuel, according to a group representing companies in the sector. Currently 800 000 tons of the industry’s annual output of 2.1-million tons is being exported at a loss, according to the South African Sugar Association.
SA firms won’t invest cash as long as there’s heightened uncertainty - Kganyago (Eyewitness News)
South African Reserve Bank Governor Lesetja Kganyago told a webinar hosted by the Centre for Development and Enterprise (CDE) on Wednesday night that there was uncertainty about policy and also the way forward with regards to COVID-19.
Current account deficit narrows slightly (Namibia Economist)
Stronger exports outweighed the adverse impact of weak investment incomes and lower Southern Africa Customs Union receipts, resulting in a slight narrowing of the external deficit. The current account deficit narrowed to N$3.1 billion in the second quarter of 2021 compared with a larger deficit of N$3.8 billion in the first quarter of 2021, according to the Bank of Namibia’s latest Quarterly Bulletin.
Namibia’s goods trade deficit narrowed to N$6.3 billion in the quarter under review, compared with a deficit of N$8.8 billion in the first quarter.
Ministry moves to save dairy industry (Namibian)
A TASK force set up by the agriculture ministry recommends a number of measures to save the dairy industry from collapse, including introducing quantitative controls on imported dairy products, said minister of agriculture, water and land reform Calle Schlettwein in the National Assembly recently. The Namibian highlighted the plight of dairy producers and the threat to 1 500 jobs in the sector, early last month. Schlettwein said restrictions on imported dairy products were the only viable short-term measure that would safeguard and support the industry, spur production and support value chain development. “It is a domestic measure that can be imposed, similar to what is happening in the horticultural industry through the Market Share Promotion scheme managed by the Namibia Agronomic Board,” he said. “However, this measure can only be implemented through the Ministry of Industrialisation and Trade as the custodian of the Import and Export Control Act, 1994.”
Kenyan Startup Seeks to Raise $100 Million for Africa Growth (Bloomberg)
Kenyan startup Sendy Ltd. seeks to raise $100 million by 2022 to fund the digital logistics platform’s plan to expand in western and southern Africa. The Nairobi-based company, which facilitates door-to-door deliveries between individuals and businesses, will use the funds to commence business in the new markets, including Nigeria, Egypt, Ghana and South Africa, co-founder Malaika Judd said in an interview. Sendy, backed by Toyota Tsusho Corp, is seeking growth and partnerships amid the continent’s push to boost trade through the African Continental Free Trade Agreement. The World Bank forecasts the accord will increase trade within the region by 80% to $532 billion by 2035, partly helped by improved technology-driven efficiency. “The long-term plan is to consolidate logistics in Africa,” Judd said. “The way to turbo-charge our growth is not necessarily to do it ourselves, but to partner with the entrepreneurs in the market who want to do the same things we want to do,” she said.
Banana deal promises bright future for farmers (The Citizen)
A Kilimanjaro-based Mackjaro yesterday became the first beneficiary of the newfound banana trading partnership between farmers and export-oriented buyers. Kenya-based Twiga Foods, which distributes 100 tonnes of fresh fruits and vegetables across Nairobi, Nakuru, Eldoret and Kisumu daily, has already promised to start buying at least eight tonnes of raw bananas through the Kilimanjaro-based firm. This was revealed here yesterday by Mr Kevin Remen, a business environment manager of the Taha Group. “This is one of the measures taken by the Group to open the export markets for bananas”, he said, noting that Kenya was one of the potential markets for the crop. He said banana growers in the northern zone regions will benefit from the new market for one of their food staple as well as cash crop. The opening of the market follows a recent meeting of banana stakeholders held in Moshi during which the minister for Agriculture, Prof Adolf Mkenda, called for deliberate efforts to market the crop locally, regionally and abroad.
Kenya seeks new aviation routes to the Caribbean (The East African)
Kenya is seeking new aviation partnerships that will see Nairobi reach out to the Caribbean market, as President Uhuru Kenyatta argued for more trade, debt relief and vaccine equity for pandemic recovery. On Wednesday, Kenya inked bilateral deals on aviation cooperation, environmental conservation and trade and investment, on his second day of his visit to the Caribbean island. The arrangements touched on bilateral air services agreement, the first step for the two countries to allow airlines to enter cooperation and connections, and ease travel between the two regions.
Kenyans to participate in virtual China-Africa Expo (The Star)
China Council for the Promotion of International Trade, China International Exhibition Center Group Corporation, and China Association of Trade in Services have jointly organised the 2021 China- Eastern and Southern Africa International Trade Digital Expo to start on October 13. The exhibition is expected to help Chinese foreign trade companies break through the epidemic barriers and quickly match supply and demand with buyers from Eastern and Southern Africa countries, promote Sino-African economic and trade and capacity cooperation.
Competition agency warns professionals against fixing prices (Business Daily)
The competition watchdog has warned professional bodies against colluding to set prices following attempts by engineers and accountants to prescribe client fees. The Treasury is reviewing regulations that will set the minimum fees charged by accountants to curb price under-cutting and boost professionalism. Engineers have also published a notice proposing new rules to set minimum charges and prevent undercutting in the professional body. Competition Authority of Kenya said the moves are akin to fixing prices and will kill competition and make services expensive. “It is important to note that “the envisaged arrangements of setting minimum rates/fees, highlighted in the media recently, are only meant to extinguish competition among members of the professional associations to the detriment of clients/consumers,” said Wang’ombe Kariuki, CAK director-general. “Further, Article 227 of the Constitution of Kenya, 2010 provides that the government should procure goods and services through a system which is, among others, cost-effective.
Agro, manufacturing sectors raise job cuts alert on rising costs (Business Daily)
The prospects of a recovery in employment have dimmed, with agriculture and manufacturing firms expecting to shed more jobs this year due to higher fuel and power costs, drought and shipping delays for industrial goods. The two sectors are the most relied on to generate a high number of jobs due to their long value chains that include input suppliers, producers, transporters and retailers. Respondents from the two sectors told the Central Bank of Kenya (CBK) in a survey ahead of last week’s monetary policy committee meeting that they will also be cutting jobs to control costs, now that demand has gone down due to reduced purchasing power among Kenyans during the Covid-19 period.
“Agricultural sector respondents reported expected decline in the number of employees in 2021 citing reduced production activity and the need to cut production costs,” said the CBK in the market perceptions survey report published yesterday.
“Players in the manufacturing sector expected reduced numbers due to reduced production activity, interruptions due to shipping delays caused by the pandemic, cash flow challenges, unmet revenue targets and stagnation in business activities.”
Rwanda, Mozambique ink trade, investment pact (The New Times)
Rwanda and Mozambique have signed an agreement that will boost their economic development through trade and investment activities. The two countries through their respective institutions in charge of development, Rwanda Development Board (RDB) and APIEX of Mozambique signed a Memorandum of Understanding (MoU) on October 6. According to Zephanie Niyonkuru, Deputy Chief Executive at RDB, the signed MoU is expected to facilitate private sectors to implement different investment projects in both countries. Some of the highlighted potential areas of interest include Agriculture and Agro-processing, infrastructure, energy, and tourism among others.
Revenue allocation review not meant to change Nigeria’s fiscal structure – FG (Nairametrics)
The Nigerian Government has said that its recent move to begin a revenue allocation review between the three tiers of government is not intended to change Nigeria’s fiscal structure through restructuring.
Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Engr. Elias Mbam said: “Whether we are devolving power or going into complete system of federalism or we are restructuring, is not the concern of this review. The review of the mobilisation and revenue allocation is a product of law and an Act provided by the 1999 Constitution as amended,’.’
FG task insurers to leverage AfCFTA, innovation to boost income (Daily Sun)
The Federal Government has urged the Nigerian insurance industry to take advantage of the African Continental Free Trade Area (AfCFTA) and technology to lift millions of Nigerians out of extreme poverty. The move according to the Federal Government will also help to raise the income level
AGI advocates dedicated AfCFTA implementation fund (The Business & Financial Times)
The country needs a dedicated fund to enable it implement the African Continental Free Trade Area (AfCFTA) fully and in a manner that accrues to the benefit of industry, the Association of Ghana Industries (AGI) has advocated. The AfCFTA – the single largest untapped continental market available for trade and immediate investment – commenced in January this year; but the AGI fears the absence of a dedicated fund, given the current economic climate due to the pandemic, might negatively impact its execution.
“We need to have a dedicated fund for AfCFTA implementation to empower industry to take full advantage of the agreement,” AGI’s Vice President Humphrey Dake said.
Liberian Import Taxes (2.5% To 25%) Versus Export Taxes Of 0% (Global News Network)
This is an appeal to the Liberian Government, especially our Liberian Lawmakers to reduce the import tax rate (ranging from 2.5% to 25%) and remove the 0%tax rate and re-institute the 10% tax on goods sold to buyers outside of Liberia. Former President Ellen Johnson Sirleaf replaced the 10% with 0% tax rate on exported goods on December 5, 2016. This is also an appeal to the Liberian Revenue Authority to request ArcelorMittal Steel and Liberian Firestone Rubber Plantation, to file the Withholding Tax Returns to report export taxes that they should have collected based on goods sold to buyers outside of Liberia before December 5, 2016, if there is no Liberian Tax Law that exempts and/or prohibits (for example, Liberian Law on Statute of Limitation) the two Liberian taxpayers.
“Export taxes are taxes on goods or services that become payable when the goods leave the economic territory…the taxes are a credible policy, yielding the government some revenue,” says Mr. Roberta Piemartini, ERSD, World Trade Organization.
Mr. Piemartini added that “…Export taxes are mainly used by developing and least-developed countries (LDCs). Of the 15 LDCs reviewed in the context of the WTO Trade Policy Review Mechanism, 10 impose export duties, while only 3 of 30 OECD countries use them. The research shows that Ghana and Sierra Leone do not impose tax on export, yet Ghana, according to Figure 6 of Natural Resources Revenue (2000-2013 and 2014-2017), percent of Gross National Product, collected more revenue than revenue collected by South Africa, Tanzania, Sierra Leone, or Liberia.
Africa
Experts: Customs procedures must be in place to ensure AfCFTA is operational (The New Times)
Latest assessments show that the African Continental Free Trade Area (AfCFTA) can assist with Covid-19 recovery but expected benefits from the agreement will not be automatic as countries must first put in place relevant customs procedures, a trade expert noted on Monday, October 4. While presenting and discussing current trends of commodity prices and their implications for African economies during a United Nations Economic Commission for Africa (ECA) webinar for the media, Stephen Karingi, ECA’s Director for Regional Integration and Trade, among others, shed light on supporting Africa’s transformative agenda through effective AfCFTA implementation. He explained that member states must first pursue the ratification of the agreement as well as implement the agreement effectively.
Africa’s Free-Trade Area to Get $7 Billion in Support From AfDB (Bloomberg)
Coca-Cola VP calls for the catalysation of women entrepreneurship for AfCFTA success at COMESA Conference (Technology Zimbabwe)
Coca-Cola Vice President for East and Central Africa, Debra Mallowah has emphasised the critical contribution and participation of women in the success of the African Continental Free Trade Area (AfCFTA) and called for the identification of opportunities that will catalyze their entrepreneurship.
“Women will need to be supported to exploit these opportunities in diverse ways, and importantly, they also must be intentional in leveraging opportunities that AfCTA provides” Speaking at the virtual Womens’ Empowerment Conference on AfCFTA organised by the COMESA Business Council (CBC) in partnership with the Center for International Private Enterprise (CIPE), Mallowah lauded the new trade opportunities that the trading area will provide especially in priority economic sectors such as agriculture, manufacturing and services where women can play.
Google to invest $1 bn to lift internet access in Africa (Eyewitness News)
Google on Wednesday said it will invest $1 billion over the next five years to allow for faster and more affordable internet access and support entrepreneurship in Africa. Internet reliability is a problem in Africa where less than a third of the continent’s 1.3 billion people are connected to broadband, according to the World Bank. But the continent, where nearly half the population is under 18, is a promising market. According to Google and Alphabet boss, Sundar Pichai “huge strides” have been made in recent years, but more work is needed to make “internet accessible, affordable and useful for every African”.
Diasporans urged to fully engage with Africa (East African Business Week)
The organisers of the Intra-African Trade Fair (IATF2021) hosted a virtual roadshow event in partnership with the Africa Center for the African diaspora under the theme “Building Bridges between Africa and the Diaspora to realize opportunities under African Continental Free Trade Area”. The objective of the event was to raise awareness of how the Diaspora can connect to markets and businesses across the continent through the IATF 2021.
In her Keynote speech, Mrs. Kanayo Awani, Managing Director, Intra-African Trade Initiative, Afreximbank, said that Afreximbank’s “long-held view is that a diaspora programme must be a two-way street, not so much about what they can do for us but equally importantly, what we can do for them. While the African Diaspora has grown and become a significant source of development finance and skilled human capital, we must, nonetheless, create systems and build institutions that connect in a sustainable manner the Diaspora to the continent of Africa; IATF 2021 offers one such platform.”
African Trade Insurance Agency (ATI) Welcomes Cameroon as its 19th African Member State (Africanews)
Cameroon has joined ATI (www.ATI-aca.org) as the 19th African Member State with a subscribed capital contribution of EUR 11.37 Million, with the financial support of the European Investment Bank (EIB); Cameroon’s membership in ATI will enable the Central African nation benefit from ATI’s Guarantees to support increased exports, attract more foreign direct investments, and boost regional and international trade; ATI’s membership drive is supported by EIB, which to date has provided a combined EUR 94.11 Million (approximately US$110 million) in concessional lending for the membership expansion of ATI in Central and West African States.
Commodity markets to remain volatile: ECA (UNECA)
Commodity markets in Africa are expected to remain volatile in the coming months following the persistence of Covid-19 constrains in the supply chain and other global economic pressures, says Stephen Karingi, Director of Regional Integration and Trade Division at the Economic Commission for Africa (ECA). Mr Karingi was speaking at the ECA Price Watch session with African finance ministers on ‘Commodity prices amid COVID-19: prospects and policy implications for African economies.’ This is the 5th in the series of presentation sessions of price development in a specific sector compiled and disseminated by the ECA Price Watch Centre for Africa. He said that African economies remain largely dependent on primary commodities exports and that although the commodity sector in most African economies is a significant source of national revenues, high dependence on the sector means high vulnerability to the vagaries of international markets and volatile prices passed on to local markets.
Council Post: What Business Leaders And Investors Need To Know About The AfCFTA Treaty (Forbes)
AfCFTA is the single largest untapped continental market available for trade and immediate investment. With 1.3 billion people across Africa and a combined $3.4 trillion GDP, 55 countries in Africa have ratified the African Continental Free Trade Agreement, thus making this treaty the most significant single treaty ever to be solidified by a collective group of countries in the world. This treaty makes Africa, for the very first time, united on one front.
What should the focus be for foreign investors interested in trading within this new African Union Member States?
The immediate economic growth from this treaty is glaring within two specific industrial revolutionary spaces: Infrastructure capital investment development projects and agricultural projects are first on the priority list of the ambassadors of the AfCFTA Treaty. The implementation and adoption of the treaty look to accelerate the establishment of the Continental Customs Union, achieve sustainable and inclusive socio-economic development and transformation of the member countries, improve the competitiveness of member countries and drive industrialization, regional value chain development, agricultural development and food security.
I believe the AfCFTA Treaty must establish a Trade Code of Conduct Policy to help Fast-Track Borders and Custom limitations impeding regional trade, especially for agricultural goods with a short shelf-life. A Fast-Track Permit can increase delivery time and increase demand for products, which would, in turn, increase revenue. A Code of Conduct Fast-Track Permit could include: mandates on gender equality adoption and a maintenance clause for both suppliers and traders to not employ under-aged workers and pay at least the legal minimum wage for their home country. In addition, suppliers and traders should not make employees work excessive overtime and adhere to basic safety standards for staff.
Uhuru feted for promoting global trade, Africa-Carribean ties (The Star)
The president added that the award also signifies the work he and Prime Minister Mia Mottley have been doing to strengthen the ties between Africa and the Caribbean Community and Common Market (CARICOM) region. “Our desire and objective are to see all people of African descent come together, be able to stand together, and be able to fight for our respective rights, freedoms, and our space in global affairs. “This, I believe, is the spirit that has brought me to Barbados, it is the spirit that continues to encourage me to continue with the work that we have started. It is really my hope and prayer that as a result of the engagements we have had, we will see the strengthening and re-establishment of the Pan-Africanism – the spirit that brought us our independence.”
EXPO 2020 DUBAI a chance to explore potential partnerships required for Africa’s socio-economic transformation- AUC Chairperson (African Union)
To mark the official opening of the Expo 2020 Dubai and the African Union Pavilion located in the Opportunity District, the Chairperson of the African Union Commission (AUC), H.E. Moussa Faki Mahamat congratulated the Government of the UAE on the inauguration of the first world expo to be hosted in the MENA region, and added that the African Union welcomes the opportunity to share its vision and the aspirations of the African people on this global platform . “We plan to share not only our dynamic heritage, but give the world an opportunity to engage with Africa as an investment partner” he remarked. The Chairperson also expressed his well wishes to the AU team in the United Arab Emirates, who are assigned to represent the Commission and the continent at the world Expo.
“Africa is ready to do business and we want to position the continent as the place to be for all our international investors as well as those interested in the continent’s future. This is the perfect time for us to not only be a part of the conversations, but lead the conversations, as a continent beaming with a lot of untapped potential and resources” said Dr. Madueke.
President Ramaphosa of South Africa, President Mnangagwa of Zimbabwe, Nigeria’s Trade and Investment minister, Adeniyi Adebayo and the His Excellency Sheikh Tahnoon Al Nahyan have all confirmed attendance for the FIN Africa-UAE Trade and Investment Forum and the Forbes Best of Africa Energy Award sessions that will hold on November 21st, 2021 at the prestigious 7-star Burj AL Arab, Dubai, United Arab Emirates A letter from His Excellency Sheikh Tahnoon Al Nahyan in confirmation of His support as Patron and Chairman of the Organizing Committee, reads “We endeavour to use our esteemed office to Invite UAE Investors and Key speakers to the event, as it will further strengthen the business relationships and UAE”. This move is in continuation of its bid to promote emerging economies in Africa and serve as a platform for Africa’s linkage to the world.
According to Olayinka Fayomi, Chief Executive, Foreign Investment Network (FIN), “it is estimated that the impact of COVID-19 would drag African economies into a fall of about 1.4% in GDP, with smaller economies facing a contraction of up to 7.8%. So, it is time to turn to trade and investments help to build better bilateral trade and investment platforms and boost the economy as well as increasing productivity and export capacity.”
Africa-Turkey economic forum to promote trade, investment: Envoy (Daily Sabah)
The upcoming Africa-Turkey Economic and Business Forum in Istanbul will boost trade and investment between Ethiopia and Turkey, Ankara’s Ambassador to Ethiopia and the African Union (AU) Yaprak Alp said on Tuesday. Alp made the remarks during the signing of a framework agreement between Turkey and the AU to organize and manage the third Turkey-Africa Economic and Business Forum on Oct. 21-22.
During the signing of the agreement at the AU’s headquarters in the Ethiopian capital of Addis Ababa, Alp told Anadolu Agency (AA) that Turkey maintains a variety of long-standing relations with Africa. “But the issue of economy and trade is the most important part of our relationship with Africa,” she said, adding that the meeting will be a huge gathering of more than 30 African ministers and businesspeople from the continent and Turkey.
COP26: African countries stand to gain from climate change conference (Out-Law)
Under the United Nations Framework Convention on Climate Change (UNFCCC), countries are classified as ‘industrialised’, ‘economies in transition’ and least-developed countries (LDC). The 49 LDCs, which include 33 countries in Africa, are given special status under the treaty, given their limited capacity to adapt to the effects of climate change. More developed countries are required under article 9 of the UNFCCC to provide financial and technical support to EITs and LDCs to assist them in climate change mitigation and adaptation efforts. Under article 4, developed countries are expected to take the lead by undertaking economy-wide reduction targets while developing countries should instead continue to enhance their mitigation efforts while being encouraged to move towards economy-wide targets over time. To facilitate the provision of climate finance, the UNFCCC established a financial mechanism to provide financial resources to developing countries. The mechanism is accountable to the parties to the convention which decide on its policies, programme priorities and eligibility criteria for funding. The Global Environment Facility (GEF) has served as an operating entity of the financial mechanism since the entry into force of the UNFCCC in 1994.
African governments want climate finance to hit $1.3tr by 2030 (Engineering News)
African nations believe financing to help developing countries deal with climate change should be scaled up more than tenfold to $1.3-trillion per year by 2030, a key African climate negotiator told Reuters. Such an amount would mark a dramatic increase from the current goal of $100-billion annually that developed nations have struggled to meet.
The Republic of Gabon deposits the instrument of ratification of the African Medicines Agency (AMA) (African Union)
The Republic of Gabon became the fourteenth (14th) member state deposited the instrument of ratification of the African Medicines Agency (AMA) to the AU Commission on 4th October 2021 after ratifying it on the 1st October 2021 in Libreville, Gabon. H.E. Amira Elfadil Mohammed, Commissioner for Health, Humanitarian Affairs and Social Development, at the AU Commission received the instrument from the Ambassador of Gabon to Ethiopia and the African Union Amb. Hermann Imongault. AMA aims to provide support for the improvement of weak regulatory systems. AMA will, among other functions, coordinate and strengthen ongoing initiatives to harmonize medical products regulation and enhance the competence of Good Manufacturing Practices (GMP) inspectors to do so. The Agency will further coordinate the collection, management, storage and sharing of information on all medical products including substandard and falsified medical products, with all its States Parties and globally.
To date, eighteen (18) member states have ratified the AMA Treaty and fourteen (14) of these have deposited the instruments of ratification to the Commission. The AMA Treaty will enter into Force 30 days upon the deposit of the 15th instrument of ratification at the Commission.
International
International trade is back, but not for all (UNCTAD)
International merchandise trade is booming. Exports of many countries are growing at double digit rates and global trade has already surpassed the pre-pandemic levels of 2019. However, the global trade recovery hides an important asymmetry: small economies and the poorest countries are falling behind. Their recovery is not yet in sight.
In April 2020, the COVID-19 pandemic brought the global economy to a standstill. Production and consumption quickly scaled back across the world and international trade appeared to be on its way to a lasting decline. However, by the summer of 2020, global merchandise trade began to recover, fueled by exports of COVID-19 related goods - largely from East Asian economies. By the end of the year trade was strongly rebounding for many countries and sectors. Global trade continued to grow in the first half of 2021, as global value chains recovered and demand in advanced economies increased.
Global trade is expected to continue growing during 2021. Preliminary data for the first half of 2021 indicates an increase in the value of merchandise trade of about 30% compared to 2020 and of about 15% compared to 2019. UNCTAD projects trade to further recover during the second half of 2021. Overall, for 2021 the value of global trade is forecasted to be about 20% and 28% higher than 2019 and 2020, respectively.
The COVID-19 pandemic has produced significant impacts on global trade, driving a c. 10% drop by value in 2020, comprising a c. 8% fall in goods trade and a substantial steeper c. 19% in services trade. Over a year into the COVID-19 pandemic, its sustained consequences are becoming clearer, both from an activity perspective – where we expect trade volumes to reach 2019 levels by 2022 after a constrained recovery in 2021 – as well as from a credit risk performance perspective. The ICC Trade Register continues to be the global authoritative source for default rates in trade and supply chain finance with its exclusive data set representing c. 30% of all global trade finance transactions.
ICC Secretary General John W.H. Denton AO said: “Access to cost-effective trade credit is of vital importance to millions of small businesses across the world. We hope that the continued evolution of the ICC Trade Register will enable a collaborative dialogue with governments to rethink the regulatory treatment of this essential asset class – in a way that unlocks fresh capital for entrepreneurs, without risking the stability of the financial system.”
Regional integration offers path to resilient future, UNCTAD15 hears (UNCTAD)
With the international trading system failing to deliver to developing countries the goods they need to recover from the COVID-19 crisis, regional integration has become more critical than ever, UNCTAD’s 15th quadrennial conference (UNCTAD15) heard on 6 October. The glaring example of this failure has been the shocking asymmetries in vaccine distribution, panellists at a high-level round table said. About 75% of COVID-19 shots have so far gone to high and upper-middle-income countries, with low-income countries receiving less than half of 1%, according to the World Health Organization. “The current international trading system has so far failed to provide many developing economies with the opportunity to build back better,” UNCTAD Secretary-General Rebeca Grynspan said as she opened the discussion. “In this light,” she added, “it is critically important to conceive regional integration and cooperation arrangements as part and parcel of an enabling environment for a more resilient, inclusive and sustainable future.”
In search of resilience (The Economist)
WHEN COVID-19 led to a scramble for face masks, Lloyd Armbrust saw America’s shortage as “a really dumb problem to have”. But after his company’s first face mask came off the production line in Austin, Texas, he faced problems of his own. A small sensor went down, halting operations, and he realised that a replacement would take five days to arrive from Taiwan. He found himself competing for American customers with Chinese companies selling masks for less than they cost to ship. Without government intervention, he warned that America would again face shortages of crucial protective equipment. “We need to make some of this locally,” he says. “We just do.”
Mr Armbrust is not alone in thinking supply chains warrant government intervention. The virus came with a flurry of export restrictions on medical products and a plunge in Chinese exports that raised doubts over whether its production clusters had exposed the world to excessive risk. The private sector promises to adapt. Jacob Wallenberg of the European Round Table for Industry reports more plan Bs in place than two years ago, as well as supply-chain issues appearing on boardroom agendas. But inflation has now popped up as often as logistics, so the emphasis on just-in-case rather than just-in-time may prove fleeting.
The rhetoric around greater resilience is further advanced than any concrete action. And over time, some will turn out to be little more than hype, or window-dressing for policies that were planned already. Many poor countries worry that the pandemic has exposed long-standing vulnerabilities that are hard to fix, most obviously their dependence on tourism. But in richer places the policy responses will involve a grab for three things: facts, friends and fortification.
Mr Evenett worries that these behind-the-border measures will further distort trade. Places already comfortable with the idea of localising production may be emboldened. Trudi Hartzenberg of the Trade Law Centre, a South African think-tank, says the pandemic has bolstered the resolve to develop productive capacity in South Africa, which is linked to the government’s push to waive intellectual-property provisions in WTO rules. In April 2020, as part of its resilience drive, India introduced “production-linked incentives”, first for large-scale electronics manufacturing and pharmaceutical ingredients, and from November for ten other industries, including textiles, car parts and solar modules. If qualifying companies increase sales by a certain amount, they receive cash equal to 4-6% of the gain.
If governments successfully foster critical industries, their alliances will go from nice to necessary. For when supply shoots up, prices crash and everyone tries to export the same subsidised products, trade tensions quickly increase. That was the lesson from Mr Armbrust’s complaints about Chinese competitors, and indeed from the fight between America and the EU over aircraft subsidies. And if conflict seems likely over supply-chain reshoring, it is even more inevitable from another source of strain on the trading system: the wish to fight human-rights abuses.
Uhuru: Debt relief and vaccines crucial for recovery of developing countries (The East African)
President Uhuru Kenyatta on Tuesday reiterated his call for supportive debt relief and vaccine access for poor countries, arguing they will be the two most important areas to help the world beat back the Covid-19 pandemic. The President told an audience in a pre-recorded statement that the world must learn from the “flawed” multilateral system that has largely failed to bring on board everyone, but argued developing countries will bank on reduced debt burdens, more vaccines, and easier channels of trade to recover. “As tax revenues have dipped due to the contraction of economic activities, and the increase in the debt burden, the fiscal space to provide a safety net to vulnerable groups in many of our countries has, equally been significantly constrained,” the President said in a pre-recorded statement.
New financing model could help Africa’s COVID-19 recovery and tackle debt (Africa Renewal)
To boost economic growth without hiking the already precarious debt burden, for the first time in history the leaders entertained the possibility of the advanced economies donating their quotas of IMF reserves known as Special Drawing Rights (SDRs) to developing economies, most of which are in Africa.
On 23 August, the IMF announced allocations of SDRs worth about $650 billion—an unprecedented amount almost three times the $250 billion worth of SDRs that were allocated to countries in 2009 following the global financial crisis. “The [latest] allocation will benefit all members [as they] address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” states the IMF on its website. It is “The largest [allocation] in our history”, according to IMF’s Managing Director Kristalina Georgieva. However, of the $650 billion worth of SDRs, only $33.6 billion are assigned to Africa, an amount many believe falls short of what the continent needs, underscoring the need for reliance on the economic powers’ SDRs.
Liberia Participates in First-Ever UN LDC Future Forum: Addresses Panel On Peace And Development (FrontPageAfrica)
The first-ever Least Developed Countries (LDC) Future Forum opened on Wednesday, October 6, 2021, in Helsinki, Finland, with Liberia participating. The forum is being held on the theme: ‘Achieving Sustainable Development in the Least Developed Countries’ and will contribute to the Fifth United Nations
Poverty index reveals stark inequalities among ethnic groups (UNDP)
Disparities in multidimensional poverty among ethnic groups are consistently high across many countries and in nine ethnic groups more than 90 percent of the population is trapped in poverty, according to new analysis on global multidimensional poverty released today. The global Multidimensional Poverty Index (MPI) produced by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative measures poverty by considering various deprivations experienced by people in their daily lives, including poor health, insufficient education and a low standard of living. Today’s report examines the level and composition of multidimensional poverty across 109 countries covering 5.9 billion people and presents an ethnicity/race/caste disaggregation for 41 countries with available information. The report finds that, in some cases, disparities in multidimensional poverty across ethnic and racial groups are greater than disparities across geographical subnational regions. Indeed, when the MPI is disaggregated by ethnic group, the range in values is greater than that across all 109 countries and all other disaggregations tested.
Less Overseas Coal Is Good, But Developing Countries Still Need More Electricity (Inter Press Service)
President Xi announced last month that China is stopping its financing for new coal-fired power plants overseas. With this announcement from Beijing, the governments of the world’s largest economies have now achieved a consensus to halt their overseas funding of coal plants in developing countries, thereby advancing global efforts to reduce future carbon dioxide (CO2) emissions. Energized by this success on climate, these governments should now turn their efforts to mobilizing the massive financing required to build the clean power projects that the developing world still needs to fight poverty. Globally, nearly 30% of the energy sector’s CO2 emissions come from coal-fired power plants. Even as various developed countries moved to reduce their own coal use to lower emissions domestically, new coal power plants were being proposed across the developing world, often with financing from China under its massive Belt and Road Initiative.
