tralac Daily News
IMF revises SA’s growth outlook up to 5% (Engineering News)
The International Monetary Fund (IMF) has upwardly revised South Africa’s growth outlook from 4% to 5%. The multilateral institution on Tuesday released its World Economic Outlook report for October 2021. Economic counsellor and director of research at the IMF, Gita Gopinath, noted that global recovery is continuing but its momentum has weakened - largely due to the pandemic and the rise of the Delta variant, which is delaying the return to normalcy. “Pandemic outbreaks in critical links of global supply chains have resulted in longer-than-expected supply disruptions, further feeding inflation in many countries. Overall, risks to economic prospects have increased, and policy trade-offs have become more complex,” Gopinath said. The outlook for low-income developing countries has also worsened due to the pandemic, and advanced economy groups will also be feeling the impact of supply chain disruptions.
However, the outlook for some commodity producers has been upgraded - mainly due to higher commodity prices.
Manufacturing sector struggling to recover to pre-pandemic output levels (Engineering News)
Manufacturing production increased by 1.8% year-on-year in August, Statistics South Africa (Stats SA) reports. The largest positive contributions were made by food and beverages (9.7% and contributing 2.3 percentage points); motor vehicles, parts and accessories and other transport equipment (17.7% and contributing 1.4 percentage points); basic iron and steel, nonferrous metal products, metal products and machinery (7.6% and contributing 1.4 percentage points); wood and wood products, paper, publishing and printing (12.5% and contributing 1.2 percentage points); and furniture and ‘other’ manufacturing (19.8% and contributing 0.8 of a percentage point).
Zim dry port boon for economic growth (The Herald)
THE Zimbabwe dry port commissioned by President Mnangagwa at Walvis Bay in Namibia in 2019 to provide a strategic and cheaper gateway to the Atlantic Ocean is set to boost the country’s economy through enhanced international trade. The new development signifies the beginning of the Walvis Bay corridor road show, which was expected to have been held from June 18 to July 3 this year but was postponed indefinitely due to Covid-19.
The port allows Zimbabwean traders to be competitive in international markets by importing and exporting directly to Europe, West Africa and America using ocean cargo services. The dry port was built on an estimated 19 000 square metres leased to Zimbabwe by Namibia on a 50-year lease.
Kenya’s trade deal with the US might not be concluded in the next two years, fresh details show. Negotiations for a Free Trade Agreement (FTA) which commenced on July 8, last year, have however stalled according to senior government officials at the Ministry of Industrialisation, Trade and Enterprise Development. It could take up to two years to have a complete FTA, according to trade experts at the ministry. This, as President Uhuru Kenyatta on Monday challenged the American government to be “a reliable and predictable trading partner” for key trade initiatives to succeed.
“Reliability and predictability in a partner is something that is critical. To our American friends, I would like to say that you know you cannot start and stop a discussion with partners on the basis of one administration after another. Relationships are between countries and people not between administrations,” Uhuru said.
Kenyan cement makers suffer clinker shortfall (The East African)
Kenya’s cement manufacturing sector is grappling with a clinker shortage of 3.3 million tonnes, with 59 percent of the deficit being imported into the country duty-free from Egypt, a report by the National Independent Clinker Verification Committee released last week showed.
In a report dated September 2021, the National Independent Clinker Verification Committee noted that an increase in duty on imported clinker is likely to have a trade redirection in favour of Egypt by virtue of the two countries belonging to a common Customs union under the Common Market for Eastern and Southern Africa (Comesa) free trade area arrangement. Of the 40 percent of clinker imported into the country, 60 percent originates from Egypt at zero tariff rate.
Okonjo-Iweala: Nigeria’s Trade Cost Too High to Attract Investments (This Day Newspaper)
The Director-General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, has lamented that cost of Nigeria’s trade is too high to attract foreign investors. Okonjo-Iweala, a former Minister of Finance and Coordinating Minister of Economy under the administration of former President Goodluck Jonathan stated this via a video link Tuesday on day two of the Mid-term Ministerial Performance Review at the State House, Abuja. She also spoke of the need to improve the nation’s security in order to attract foreign and domestic investments. The WTO DG said the country must cut down not only on trade cost but also infrastructure cost, linkage cost, regulatory cost, customs cost, and all costs associated with moving goods from the factory to the final consumer to complement investment facilitation. She pointed out that Nigeria’s trade cost was equivalent of 306 percent tariff, one and half times higher than the cost in high income countries.
Nigerian state woos Chinese investment in agriculture (China,org.cn)
Nigeria’s southern state of Bayelsa has invited Chinese investment in agriculture to assist the state’s development plan. In a statement issued on Monday after a weekend meeting in Abuja with Cui Jianchun, the Chinese ambassador to Nigeria, the Governor of the Bayelsa state Douye Diri said the state had already identified agriculture as the main sector within which it will achieve sustainable development and growth. “We have already identified four areas to substantially invest in, which are fishing farming, rice, cassava, and plantain cultivation,” he said.
‘Nigeria should reconcile discrepancies in productive capacities (The Guardian Nigeria)
For Nigeria to achieve sustainable industrialisation, stakeholders in the productive sector have advocated business remodeling and reconciliation in the discrepancy between the country’s productive capacities and developmental consumerist culture. The Directing Staff, National Institute for Policy and Strategic Studies, Prof. Tunji Olaopa, also stressed the need for Nigeria to creatively confront and resolve the country’s high consumption culture against its minimal production capacity. Olaopa noted that the country’s entire policy architecture must be redirected much more creatively and urgently, to reversing the consumption-production discrepancy. Olaopa called for greater adoption of clean, green and environmentally friendly industrial processes reliant on alternative energy sources to save the planet.
“This means focus on the Local Content Act especially the clauses on value creation, developing of private sector capacity and utilisation of local resources in industrial activities,” he said.
The Ghanaian Factory of the Future? The ‘new normal’ business environment (The Business & Financial Times)
The corporate and business world has experienced several significant events over the years. Ranging from financial crises to political events and health crises, such as the COVID-19 pandemic. In taking steps to resolve the health crisis, many have reimagined the new normal in a world that is now more inward-looking than before.
Consequently, contingency planning and incorporation of the uncertainty around future events has become a core consideration in decisions taken by companies. Productivity and efficiency have also been brought to the fore during this pandemic which presents opportunities for automation and smarter ways of working, which thrive in a virtual society.
African Development Bank: Morocco’s Tangier-Med Port is a model for Nigeria (Morocco World News)
The President of the African Development Bank, Akinwumi Adesina, highlighted Morocco’s maritime infrastructure as an example of excellence in a phone conversation with Nigerian ministerial officials during a two-day performance retreat in Abuja on Monday, October 11. Adesina urged that Nigerian officials “should not be decongesting the seaports,” and suggested that they should be “transforming the seaports,” instead. The African Development Bank President suggested that Nigerian officials should consider looking at Morocco’s Tangier-Med Port as an example.
The African Continental Free Trade Area: An Opportunity for Boosting Women in Trade (Commonwealth iLibrary)
Women play a significant role in trade and economic development. Over the years, their activities in export-oriented sectors have typically centred around producing manufactured goods (i.e., textiles and garments), agricultural products and services (i.e., tourism and data processing) in what has been coined the “global feminisation of labour”
The AfCFTA is expected to boost intra-African trade by between 33 and 52 per cent, depending on the degree of tariff liberalisation. However, these overall figures mask the distributional impact of trade liberalisation in terms of its effect on women traders and women’s businesses in general.
According to Van der Nest (2017), firms managed by women in Africa engage less in export activities compared with similar firms elsewhere. Some of the factors that limit the participation of women in trade include poor quality of infrastructure, inefficient customs processes, harassment, inconsistent regional standards and regulations, and non-tariff barriers such as stringent food safety and traceability requirements in different African countries. While some of these constraints affect both women and men, the impact is more severe for women traders than their male counterparts
The AfCFTA gender provisions are largely limited and general in nature and less ambitious compared to gender provisions in other RTAs. As such, African countries, including those in the Commonwealth, must explore other ways to promote women’s participation in trade and economic development in general. One way of doing this is by incorporating gender perspectives in the design of schedules of concessions
The Ad-hoc Expert Group Meeting (AEGM) of United Nations Economic Commission for Africa (ECA) Sub-Regional Office for Southern Africa (SRO-SA) was held today as a prelude to the 27th Session of the Inter-Governmental Committee of Senior Officials and Experts (ICSOE) of Southern Africa on the theme: “Agriculture value chains, linkages and transformation in Southern Africa: Opportunities from the African Continental Free Trade Area.
The official opening was followed by a presentation of the highlights from the draft study entitled, “agriculture value chains, linkages and transformation in Southern Africa: Opportunities from the African Continental Free Trade Area,” by ECA Consultant, Mr.Seth Akweshie. The report alluded to the services sector being the most dynamic and promising sector in Southern Africa. “Services is constantly gaining further weight as the key engine of any economy. While agriculture’s contribution to GDP has decreased from 17.5 percent in 2000 to 15.3 percent in 2019, the importance of the services sector is expected to continue increasing, leading both to enhanced service sector exports and increasing wealth,” he advised.
The Executive Secretary/CEO of the Nigerian Shippers’ Council (NSC), Emmanuel Jime, has said that members will not continue to remain at the mercy of foreign shipping lines to determine the fate of its trade and transport; through the imposition of unreasonable charges and surcharges on Nigerian economies.
“We cannot continue to remain at the mercy of the foreign shipping lines to determine the fate of our trade and transport through the imposition of unreasonable charges and surcharges on our economies. There is need to scrutinize details involved in determining the cost of services rendered at our ports, make scientific comparisons with other ports of the world and arrive at acceptable rates for mutually beneficial transactions. “It is time for us to rise to the occasion by leveraging on relevant technologies to increase efficiency, advice our various governments on required policies and regulations to boost our trade and transport sector and discourage the continuous implementation of processes that contribute to delays and high cost of doing business at our ports.”
2nd meeting of SACU-MERCOSUR Preferential Trade Agreement meeting concluded (Namibia Economist)
The senior trade officials of the Southern Africa Customs Union (SACU) and the Southern Common Market (MERCOSUR) held their 2nd Meeting of the Joint Administrative Committee (JAC) under the framework of the SACU-MERCOSUR Preferential Trade Agreement (PTA) on 5 October. According to Executive Secretary of SACU, Paulina Elago, the JAC is responsible for overseeing the implementation of the PTA. “The SACU-MERCOSUR PTA is a limited-scope Agreement that aims to promote trade between MERCOSUR and the SACU regions. It offers tariff preferences on approximately 1000 tariff lines from each side with the Margins of Preference ranging between 10% and 100 %,” Elago said. Elago said the parties considered the procedural and customs administrative issues relating to the implementation of the PTA, assessed progress including utilisation of the market preferences, and challenges encountered by the Parties. “The parties agreed on actionable points to facilitate the effective utilisation of the Agreement and to improve trade relations between two regions,” she added.
The 15 members of the Economic Community of West African States (ECOWAS) on Tuesday converged on Abuja for high-level consultations to forge a common ground to ease migration difficulties in the region. The three-day event is intended to find ways to ease migration and trade difficulties among the member states. The high-level consultation meeting was a kicker to the implementation of the Global Impact for Migration for the International Migration Forum 2022.
In an opening remark, the International Organisation for Migration (IOM)’s Senior Regional Advisor for Sub Saharan Africa, Aissata Kane, harped on the need to use a rounded approach to the mobility continuum in West Africa. “A coherent multidimensional approach to human mobility that helps pave the way for inclusive, coherent and intersectional dynamics, where each actor has a key role to play to ensure an integrated and holistic response and sustained opportunities for safe and orderly migration [is key],” the IOM representative said.
The Twenty-Seventh Session of the Intergovernmental Committee of Senior Officials and Experts (ICSOE) for Southern Africa on the theme, “Building back better from COVID-19 in Southern Africa: Fostering commodity-based industrialization, manufacturing and regional value-chains”, begins on Wednesday 13th October 2021
Specifically, the twenty-seventh Session will focus on the reasons behind the persistent reliance on primary commodity exports and lack of manufacturing development in the sub-region; the lack of progress in addressing critical constraints to inclusive industrialization and regional value chains; the implications of Covid-19 on inclusive industrialization, manufacturing and regional value chain development in Southern Africa; emerging opportunities for industrial and private sector development in Southern Africa with attention to the potential to leveraging green, blue and digital economies; the implications of the AfCFTA on regional and national industrialization strategies and cross-border cooperation in industrial and manufacturing development including how to position and market “Made in Africa” and foster regional intra-industry trade; as well as ways of leveraging the opportunities presented by the AfCFTA to boost agricultural value chains and economic transformation in Southern Africa.
Tech majors scramble for Africa’s internet market (The East African)
Africa’s internet market is up for a major scramble as global tech corporations rush to invest hundreds of billions of shillings, in the hunt for millions of Africans expected to join the online community over the next decade. Last week, global internet giants Google and Facebook laid down their infrastructure investment strategies in plans that will see hundreds of billions poured into the continent in the coming years. As Google said it will be investing about Sh110 billion ($1 billion) in Africa over the next five years, Facebook was revealing the different technologies it has created to ensure that it reaches all corners of the continent, through its Inside the Lab programme targeting to get a billion extra users on its platforms. The pair has spent billions to create subsea cables connecting up to three continents, investments that are targeted to boost connectivity in Africa by at least three times internet quality compared to current levels, cut down prices and subsidise prices for devices used to access the web.
COMESA has conducted a study, which reviewed Member States policies related to the formalisation of the informal economy, focusing on informal trade. The study focused on the drivers of informality, the impacts of informality on the economy, including on government revenue and on productivity. It also identified the policies that Member States have instituted to address informality. The study is part of the implementation of the Small-Scale Cross Border Trade Initiative (SSCBTI) funded under the 11th European Development Fund (11th EDF). This project is intended to increase formal small-scale cross-border trade flows in the COMESA/tripartite region, leading to higher revenue collection for governments at the borders as well as increased security and higher incomes for small-scale cross-border traders.
According to the study conducted by a consultant, Dr Evarist Mugisa, all the seven Member States, including Tanzania, have a sizeable informal economy, serving as a source of livelihoods. However, the size of the informal economy was not clear due to the lack of reliable data. Estimates suggest it exceeds the official economic activity. “An important component of the informal economies of these countries is Informal Cross-Border Trade (ICBT), which involves small scale traders who carry goods across borders evading all regulatory requirements,” Dr Mugisa observed. “The immediate impact of this is that governments do not receive the tax revenues on these transactions. ICBT also distorts the trade policy in these countries.”
“Africa must not allow itself to be left behind” as it has during past industrial revolutions, Ethiopian President Sahle-Work Zewde told heads of state and international leaders on the sidelines of the 76th United Nations General Assembly. Zewde was speaking during a virtual Third Industrial Decade for Africa webinar to discuss ways to strengthen Africa’s healthcare systems and the pharmaceutical industry in order to cope with the Covid-19 pandemic. In a panel discussion among African heads of state to share lessons learned from the pandemic, Zewde cited import substitution as a path to increased self-reliance. She said the Ethiopian government had earmarked $15 billion to develop industrial parks for vaccine manufacturers, which would qualify for additional incentives.
“The experience of 2020 has highlighted Africa’s vulnerability to supply shocks and underlined the need for greater self-sufficiency in production of vaccinations, essential medicines, diagnostics and other health products,” said Li Yong, UNIDO’s Director General. Participants noted the importance of scale given Africa’s fragmented markets, and both the supply and demand of medicines. “Producing countries need to have commitments from neighbouring countries to procure medicines, said Martin Friede,” WHO Coordinator for vaccine research.
Slow Covid vaccine roll-out holds back Africa full aviation recovery (Business Daily)
The slow rollout of Covid-19 vaccines is impeding on the recovery of the aviation sector in Africa even as the region is projected to book a $1.5 billion loss in 2022. International Air Travel Association (IATA) says Africa is lagging other regions on vaccines. The projected loss, will however, be narrower than the $1.9 losses that was expected to be made by African carriers at the end of this year. “Africa is lagging other regions in its vaccine roll-out, which will impact international travel recovery. Airlines in the region are expected to post a $1.5 billion net loss in 2022 on top of a $1.9 billion loss in 2021,” said IATA.
“Financial performance in all regions is expected to improve in 2022 compared to 2021. However, at the aggregated level, net losses will extend to 2022 but will be only around one fifth of losses in 2021,” said the airline lobby.
The Free Market Foundation (FMF) and the Initiative for African Trade and Prosperity (IATP) have called on African governments to radically speed up their implementation of pro-trade policy reforms as part of the wider Africa Continental Free Trade Area (AfCFTA) project. The World Trade Organisation (WTO) has indicated that global trade flows will continue their rapid rebound in 2021 and into 2022. According to the WTO, Asia will see the strongest gains in exports. Unfortunately, the trade body foresees that Africa will lose out, and that poorer countries will suffer through the weakest trade recovery. However, there is room to arrest and reverse that prediction – if policymakers implement the necessary, pro-growth, pro-trade and pro-job creation reforms.
“While it is great news that global merchandise trade is above its pre-pandemic peak, once again levels of African trade are suffering,” says Alexander Hammond, director of the Initiative for African Trade and Prosperity. “With the implementation of the AfCFTA at the beginning of this year, African states have a historic opportunity to have a future trading relationship based on free trade, continued trade liberalisation, and greater economic integration. While the AfCFTA could see tens of millions of African lifted from extreme poverty within 14 years, the lengthy timeline for tariff reduction under the agreement is a concern.
CDC and DP World plot billion dollar plus ports partnership (African Business)
UK development finance institution CDC Group and Dubai-based ports operator DP World have signed a partnership agreement worth more than a billion dollars to boost Africa’s ports. The partnership, covering a “long term investment period”, will support the modernisation and expansion of ports and inland logistics across Africa, starting with the ports of Dakar (Senegal), Sokhna (Egypt) and Berbera (Somaliland).
DP World is contributing its stakes in the three existing ports initially and expects to invest a further $1bn through the platform over the next several years. CDC is committing approximately $320m initially and expects to invest up to a further $400m over the next several years. The expansion in Senegal alone is expected to be the country’s largest ever onshore foreign direct investment (FDI) at nearly $1bn,
By 2035, an estimated $51bn in additional trade is forecast to pass through the ports, equivalent to 3% of Senegal’s GDP, 3% of Egypt’s GDP and 6% of Somaliland’s GDP. Ports modernisation is also intended to improve access to critical goods and staples including food; which is expected to have benefit areas further afield including the wider Horn of Africa and parts of the Sahel. The ports will also boost export industries currently stymied by logistics inefficiency.
Small and medium-sized enterprises (SMEs) are crucial to an economy such as SA’s no less so than the rest of Africa’s. The SME sector urgently requires optimal bank funding support to ensure its recovery from the pandemic and to adequately exploit the new growth opportunities presented by the African Continental Free Trade Area (AfCFTA), launched on 1 January 2021. “The AfCFTA is a new frontier and a potential game change for the continent, and one that stands to benefit entrepreneurs as much as the corporate sector,” says Doreen Fick, Head of Funded Wholesale Trade Finance products at Absa. “It is therefore vital that it in practice benefits SMEs and entrepreneurs across the continent and does not simply become the domain of big businesses. This is a massive opportunity for SMEs to grow their intra-Africa trade with the potential only limited by their access to trade finance.”
Benghazi’s Elmreisa Free Zone (EFZ) announced Sunday that it had agreed in principle with the Man-Made River Authority and the Ministry of Transportation to form a joint working team to lay the foundations for the presentation of the Man-Made River Road from Benghazi to Kufra as part of the International Transit Route. The EFZ said the project will be offered up for investment. Rather than construct a brand new road spanning over 1,000 km to Kufra, it was decided best to go into partnership with the Man-Made River. The existing Man-Made River service road along the route is overwhelmingly a dirt track which will need upgrading and improving.
A five-day workshop to consider the Draft Communication and Advocacy Strategy for the EAC Statistics Development And Harmonisation Regional Project (StatDHRP) is currently underway in Dar es Salaam, Tanzania.
The objective of the workshop which is being attended by statisticians and communication officers from the National Statistics Organisations (NSOs) of the six EAC Partner States is for the Technical Working Group (TWG) to review and discuss the draft strategy and provide the inputs to strengthen the document. Speaking during the opening session of the workshop, the StatDHRP Project Manager, Ms. Vivianne Mwitirehe, who represented the EAC Secretary General Hon. (Dr.) Peter Mathuki, said that statistical data could only be used when they are properly communicated using and following good communication standards.
The COVID-19 pandemic has affected many economies worldwide. It had diverse impacts on the African mining sector. This paper documents its impact by focusing on four major mineral-rich African countries: Ghana, Mali, South Africa and Zambia. An assessment of the impact of the pandemic on production, employment and government revenues in the selected countries is analysed in the paper. The effects of the pandemic created both supply and demand shocks, resulting in an overall decrease in most mineral prices (with the exception of precious metals such as gold). The situation persisted for much of 2020, with most prices mostly recovering only in 2021. It is also instructive to note that the pandemic is still on-going, thus the analysis is limited to the first quarter of 2021. In addition to reduced direct, indirect and induced employment in the mining sector, the pandemic shocks resulted in a decline in overall mining output across the four countries. This reduction was despite the positive effect on the price of gold. Mining revenues for the four countries also fell due to falling commodity prices and mining output. The paper provides some policy recommendations to ensure that the sector becomes resilient to possible future shocks of this nature.
Based on an optimal oil exploration-extraction model with public debts and Chinese loans, we examine analytically and empirically two theoretical propositions pertaining to the impacts of public debt and Chinese loan on economic and physical scarcity/abundance in Africa economies. First, despite a baseline independent relationship between public debt level and optimal operations, the level of public debts in an economy can have an adverse effect on the abundance measures if it breached the debt-sustainability threshold. Second, with alternative Chinese loans, the effect on optimal exploration-extraction is analytically ambiguous. To examine both propositions, we estimate endogenous binary-treatment regression models based on a panel data of 18 African economies over 2000-17. We find empirical support with regards to the adverse effect of public debt sustainability. Further, we find positive effect from Chinese loans to both abundance measures, indicating that the combined marginal benefits outweigh the marginal costs associated with the resource collateralized funding nature of these loans.
EU officials believe the Southern African Development Community (SADC) is unhappy with the new deal because SADC will lose its role as the default implementer of a set amount of EU development funds. Instead, it will have to compete with other regional economic organisations and other institutions in sub-Saharan Africa for EU financing. After more than two years of hard bargaining, negotiators from both sides agreed on the Post-Cotonou Agreement between the EU and the Organisation of African, Caribbean and Pacific countries (OACP) in December and initialled it in April this year. It is due to come into effect on 30 November, after postponements caused by Covid-19. The new deal is meant to replace the Cotonou Agreement which has governed relations between the EU and the 79 African, Caribbean and Pacific (ACP) developing countries since 2000.
Why Is China Looking to Establish Banks in Nigeria? (The Diplomat)
During the commemoration of the 2021 Chinese Mid-Autumn Festival in Nigeria’s capital city, Abuja, Chinese Ambassador to Nigeria Cui Jianchun announced that he was in talks with some of China’s big banks to establish operations in Nigeria. Cui talked up Nigeria and China’s growing links and spoke about the importance of banking and banking systems in the development of both countries. He then spoke about potential conversations with Nigeria’s Central Bank and the Nigerian central government in Abuja about establishing a substantial banking presence in Nigeria. This new proposal of deeper financial links is a solidification of China-Nigeria relations.
In 2018, Nigeria and China signed an initial three-year currency swap agreement that saw Nigeria move some of its foreign reserves to China. The size of the swap deal was put at 15 billion renminbi or 720 billion naira.The currency swap deal was the beginning of a change in relations between Nigeria and China, and in fact a change in relations between China and the African continent as a whole, where financial deals had long centered on loans for infrastructure and trade.
On 12 October, the G20 Ministers responsible for international trade met in Sorrento. The meeting was structured in 3 sessions covered six main topics: 1) Link between trade and health; 2) impetus to the negotiations on fisheries subsidies; 3) digital trade; 4) participation of SMEs in world trade; 5) transparency of government support interventions in the economy; 6) WTO reform. At the end of the meeting, Ministers adopted The Sorrento Ministerial Declaration.
China’s subsidies in the spotlight as G20 seeks to ensure fair competition (South China Morning Post)
G20 Trade and Investment Ministers Meeting October 12, 2021 Sorrento, Italy As prepared for delivery The main message I would like to share today is how trade and investment are the means for a greener, more resilient, and inclusive recovery and growth, which is very much in line with the G20 Trade Ministers’ leadership on this objective. Let me start with the context of the current trade recover
UNCTAD’s 15th quadrennial conference (UNCTAD15) held 3 to 7 October adopted an agreement to promote inclusive and resilient economic recovery in developing countries as they grapple with unequal access to COVID-19 vaccines, a debt crisis, the climate emergency and other unprecedented challenges.
Secretary-General Guterres pointed out four glaring challenges, which if not addressed would make any notion of prosperity for all a distant dream. “Debt distress. Systems starved for investment. Unfair trade. And a climate emergency that leaves small island developing states like Barbados perilously vulnerable,” he said.
To tackle the debt crisis, he called for an urgent four-point debt crisis action plan. “We know national budgets are being stretched thin by COVID-19, so we must push for an immediate expansion of liquidity for the countries in greatest need,” he said.
Pharmaceutical companies must relinquish their intellectual property rights over the coronavirus vaccine and expand availability in low-income countries, or they risk being tarred as taking advantage of the pandemic, according to global trade and public health officials. “This is not acceptable,” said World Health Organization Director-General Tedros Adhanom Ghebreyesus on Tuesday during an event broadcast as part of the IMF and World Bank Group annual meetings. “It’s in the interest of each and every country in the world to waive IP and do everything to increase production and end this pandemic as soon as possible.” Vaccine allocations have been driven by contracts between governments and the leading vaccine producers, with citizens of wealthy countries receiving two and sometimes three doses of the vaccination, even as impoverished societies worldwide remain vulnerable to the pandemic. That dynamic has prompted criticism for Western governments contemplating booster shot campaigns and pressure toward the companies at the core of vaccine supply.
The landmark TRIPS waiver proposal was originally put forward by India and South Africa one year ago and is now officially backed by 64 sponsoring governments, with more than 100 countries supporting overall. However, despite dozens of statements by supporting governments emphasizing the waiver’s urgency and importance, the proposal has been effectively stalled by a small number of opposing governments, including many in the European Union—primarily Belgium, Denmark, Finland, Germany, Ireland, the Netherlands, and Sweden—plus Norway, Switzerland, and the UK.
“We have been saying from the start of this pandemic that governments cannot rely on voluntary measures by pharmaceutical corporations, and the molnupiravir example is a case in point,” said Felipe Carvalho, MSF Access Campaign coordinator in Brazil. “We cannot welcome a voluntary license from Merck that deliberately blocks many middle-income countries from producing and supplying this drug on their own. It is crystal clear that unless legal tools like the TRIPS waiver are adopted, many countries will continue to be at the mercy of patent-holding corporations that have the say over who gets to produce, who gets to buy, and at what price, while health ministries are already reeling from the rising costs of tackling COVID-19. We say to the remaining blocking governments: the eyes of the world are really just on you now—so you should think about what side of history you want to be on when the books on this pandemic are written.”
Prior to the COVID 19 pandemic, we saw many challenges. The rules-based trading system was being questioned, protectionism was dampening global trade flows, there were rising geopolitical tensions, all of this combined with the threat of climate change. The COVID-19 pandemic represents an unprecedented disruption to the global economy and world trade, as production and consumption are scaled back across the globe. Trade has been a positive force during the pandemic, indeed the resurgence of global economic activity in the first half of 2021 lifted merchandise trade above its pre-pandemic peak, leading WTO economists to upgrade their forecasts for trade in 2021 and 2022. The WTO is now predicting global merchandise trade volume growth of 10.8% in 2021— up from 8.0% forecasted in March — followed by a 4.7% rise in 2022. Clearly, it is an encouraging sign, but of course there remains a high degree of uncertainty. A successful MC12 — one that delivers concrete results for people is critical for reinvigorating the WTO and demonstrating to the world that we are back in business. MC12 is an opportunity we cannot afford to miss. To deliver results, we need to show realism, pragmatism and above all flexibility.
Deputy Director-General Anabel González hosted the Virtual Information Session on Access to COVID-19 Vaccines, Collaborative Initiatives and Analysis on Supply Chains and Tariffs. She briefed participants on the Secretariat’s contributions to a range of collaborative initiatives, such as the Multilateral Leaders Task Force on COVID-19, the WHO, WIPO, WTO Trilateral Cooperation in support of capacity building, the COVAX Manufacturing Task Force and the Access to COVID-19 Tools (ACT) Accelerator.
The programme included presentations on the most recent information notes prepared by the WTO Secretariat (an update of the Indicative List of Trade-Related Bottlenecks and Trade-Facilitating Measures on Critical Products to Combat COVID-19, a Joint Indicative List of Critical COVID-19 Vaccine Inputs, and a new report on COVID-19 vaccines production and tariffs on vaccine inputs) as well as comments by the Coalition for Epidemic Preparedness Innovations (CEPI) and the World Health Organization (WHO).
The shipping industry is responsible for the movement of 90% of all global trade. Supported by two million seafarers, the industry is the backbone of logistic supply chains, but it’s facing urgent environmental and social pressures. Currently accounting for about 3% of global greenhouse gas (GHG) emissions and emitting around 15% of some of the world’s major air pollutants annually, it is imperative that the shipping industry decarbonizes by 2050 to meet the Paris Agreement’s 1.5°C target and avoid irreversible global warming damage.
The responsibility to decarbonize and meet climate goals spans across the shipping ecosystem, including cargo owners and financiers. Many cargo owners, retailers, brands and cargo owner initiatives are increasingly demanding greener supply chains and making commitments to reduce (scope 3) emissions across their operations. As zero-emission logistics becomes increasingly sought after – and increasingly demanded by consumers – this in turn strengthens the business case for investing in zero-emission shipping.
Technological advancements to decarbonize shipping are also progressing, but must be further financed and brought to scale. BCG and Global Financial Markets Association have estimated that shipping decarbonization will require about $2.4 trillion, indicating a significant magnitude of funding to be mobilized and the critical role shipping financiers play in enabling this economic transition. Both financiers and cargo owners are being encouraged to sign the recent call to action for shipping decarbonization.
Introducing the database, developed by UNCTAD and researchers at the Graduate Institute, Geneva, speakers provided a sample of key findings, highlighting how the database can support efforts by governments, the private sector, and civil society to promote more sustainable trade in plastics and develop policies and regulations to reduce plastic pollution.
The database, derived from the UN International Trade Statistics Database – UN Comtrade – and based on official sources, captures the breadth of trade across the life cycle of plastics by categorizing Harmonized Systems (HS) codes by stage of the plastics life cycle: inputs; primary plastics; intermediate forms of plastic; intermediate manufactured forms; final manufactured products; and waste.
In September 2021, top economists, global thought leaders and former Heads of State and Government came together for the second meeting of the High-level Advisory Board on Economic and Social Affairs to discuss solutions to rampant inequalities, runaway climate change and other pressing challenges facing the world.
The Board examined topics such as financing for development, economic insecurity, a just transition to a carbon-neutral future and resilience-building for future crises, and zeroed in on the latest report of UN Secretary-General António Guterres, “Our Common Agenda.” Released on 10 September 2021, the report lays out the UN vision for the future of global cooperation across 12 areas that will make a tangible difference for people and planet.
“The report is an inspirational and aspirational document, tackling the most pertinent and challenging issues of our time, while providing a clear and concrete roadmap from both a content and a process perspective,” said Elizabeth Sidiropoulos, Chief Executive of the South African Institute of International Affairs.
While policy support continues to be key to sustaining the ongoing recovery, it should be tailored to country circumstances given the mixed pace of the economic recovery across countries. Central banks should provide clear guidance about their future policy stance to prevent an abrupt tightening of financial conditions. If price pressures turn out to be more persistent than currently expected, monetary authorities should act decisively to prevent an unmooring of inflation expectations. Fiscal policy should continue to support vulnerable firms and individuals. Given policy space, fiscal measures should be targeted and tailored to country characteristics and needs. In light of the possible need for prolonged policy support to ensure a sustainable and inclusive recovery, policymakers should act decisively to address the potential unintended consequences of unprecedented measures taken during the pandemic.
Emerging and frontier markets remain exposed to the risk of a sudden tightening in external financing conditions. They should, while leveraging the historic general special drawing rights allocation, rebuild buffers as appropriate and implement structural reforms to insulate themselves from the damage from capital flow reversals and abrupt increases in funding costs. To foster the growth of the sustainable fund sector and mitigate potential financial stability risks stemming from the transition to a green economy, policymakers should urgently strengthen the global climate information architecture (data, disclosures, sustainable finance classifications). Once this architecture is in place, they could also consider tools to channel savings toward transition-enhancing funds (such as financial incentives for investment in climate funds). Finally, they should conduct scenario analysis and stress testing of the investment fund sector to mitigate potential financial stability risks from the transition
Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023. The landmark deal, agreed by 136 countries and jurisdictions representing more than 90% of global GDP, will also reallocate more than USD 125 billion of profits from around 100 of the world’s largest and most profitable MNEs to countries worldwide, ensuring that these firms pay a fair share of tax wherever they operate and generate profits. Following years of intensive negotiations to bring the international tax system into the 21st century, 136 jurisdictions (out of the 140 members of the OECD/G20 Inclusive Framework on BEPS) joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. It updates and finalises a July political agreement by members of the Inclusive Framework to fundamentally reform international tax rules.
Today at their annual meeting, Commonwealth Central Bank Governors explored ‘Financial Technology for Economic Recovery’ and particularly the use of Central Bank Digital Currencies, a new technology that could give the most vulnerable in societies around the world better access to financial services. Speaking at the opening of today’s virtual Commonwealth Central Bank Governors Meeting, Commonwealth Secretary-General, the Rt Hon Patricia Scotland QC said: “As Commonwealth countries strive to rebuild our economies after COVID-19 we have an important opportunity to lay the foundation to create a resilient and inclusive future – one which helps to address the multiple challenges of climate change, poverty and income inequality. Technology has helped us weather these challenging times and equally it can help with recovery. “FinTech can support the inclusion of the most vulnerable, such as those without access to bank accounts and lending. However, for FinTech to adequately support inclusive recovery, there needs to be a regulatory environment that supports its growth and development,”
Addressing members of the Coalition of Finance Ministers for Climate Action, he highlighted their critical role as the conference date fast approaches. “As Ministers of Finance, you hold the key to success for COP26 and beyond,” he said in a video message to their latest meeting, held from Washington, DC. “Your decisions and actions in the coming weeks will determine whether the global economic recovery will be low-carbon, resilient and inclusive or whether it will lock-in fossil fuel-intensive investments with high risks of stranded assets,” he added.
Countries must “swiftly close the emissions gap”, he said. They also must be ready to update climate commitments to get the world back on track to keeping global temperature rise to 1.5 degrees Celsius above pre-industrial levels. Meanwhile, richer countries must also close “the finance gap” by providing, and exceeding, the $100 billion annually promised to support climate action in developing nations.
New and emerging technologies, from electric cars and buses to zero-carbon producing energy sources, as well as policy innovations, are critical for combating climate change, but to be effective, they must ensure that transport strategies benefit everyone, including the poorest, according to a new United Nations multi-agency report launched today that provides a guide to achieving sustainable transport. According to the new report, there is urgent need for transformative action that will accelerate the transition to sustainable transport globally. Transport solutions exist that can help achieve the Sustainable Development Goals and the Paris Agreement, although the report cautions that without the right policies and investments, they will not bring change to where it is needed most, particularly to people in developing countries.
“Innovations, driven by new technologies, evolving consumer preferences and supportive policy making, are changing the transport landscape,” says Liu Zhenmin, Under-Secretary-General, United Nations Department of Economic and Social Affairs in the report’s forward. “While they hold tremendous potential for hastening the transformation to sustainability, they also come with the risk that they could further entrench inequalities, impose constraints on countries in special situations, or present additional challenges for the environment.”