tralac Daily News
Opinion: Breaking the stranglehold on growth and recovery (Engineering News)
In its ’South African Economic Reconstruction and Recovery Plan’, the government speaks about needing to “break the stranglehold” in which the country found itself towards the end of 2020, particularly regarding the “sustained low levels of investment and growth”. The wrestling metaphor is apt. But this challenge is far from the televised showmanship of WWE Smack Down; at its core is the vital struggle to achieve an equitable, inclusive economy that “benefits all South Africans”.
According to a report from the Institute for Economic Justice, total capital investments in the economy – gross fixed capital formation (GFCF) – in 2019, were only 18% of the country’s gross domestic product (GDP) of which the private sector contributed about 13%. The government wants this to be 30% of GDP by 2030, and the private sector “augmenting” that with 20%.
Sanral’s core mission to mobilise South Africa’s economy through the strategic planning, design, construction, operation, rehabilitation and maintenance of the national roads remains unwavering. It manages more than 22 000 km of the national proclaimed road network, about 4% of the entire network. But that 4% segment carries more than 35% of all vehicle kilometres travelled and more than 70% of long-distance road freight. Thus, from the outset, Sanral was identified as playing an integral part in the Sustainable Infrastructure Development System (SIDS) methodology to guide infrastructure development, along with Transnet and the water boards.
By November 2020, Sanral had awarded approximately R14-billion of the R30-billion road construction projects.
The Parliaments of South Africa and China have undertaken to strengthen their oversight role to ensure that democracy works to improve people’s lives in both countries. Addressing the 5th Regular Exchange Mechanism’s virtual session, National Assembly (NA) Speaker, Nosiviwe Mapisa-Nqakula, praised the level of cooperation with which the two countries fought the COVID-19 pandemic.
Mapisa-Nqakula said although trade improved significantly, more needs to be done to improve the balance of trade through heightening South Africa’s capacity for value addition and manufacturing, among others. “Both our countries have already recognised the current balance of trade between our two countries as untenable for the sustenance of mutually beneficial cooperation and agreed to address this,” Mapisa-Nqakula said. Mapisa-Nqakula called for more joint research and development, taking into account opportunities provided by the 4th Industrial Revolution (4IR), as well as greater efforts to address not just the COVID-19 pandemic, but other pandemics that were worsened by the pandemic, including poverty, inequality, and gender-based violence and femicide (GBVF) in South Africa.
South Africa must make solid cases at COP26, BLSA says (Engineering News)
South Africa will be going into COP26, in Glasgow, Scotland, next week with a substantial agenda and both business and government representatives will be going with a view to getting things done, business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso says in her weekly newsletter. “South African business has been working hard on the challenge it faces to transition to a lower-carbon future. The National Business Initiative has worked hard in charting a path for South African business towards net zero and organised business has been very engaged in debating the future.
Mavuso notes that South Africa needs to access finance for the considerable investments that need to be made to transition to lower-carbon energy.
Mega titanium project kicks off (The Herald)
NYANZA Light Metals has started building a US$350 million titanium dioxide plant in Richards Bay, South Africa, chief executive Donovan Chimhandamba said. Nyanza’s world class chemical and mineral beneficiation complex will produce primarily 80 000 tonnes per annum of titanium dioxide mainly used in the manufacturing of industrial coatings, paints, cosmetics, paper, plastics, and other food ingredients.
Nyanza is a private joint venture between investors from Zimbabwe, South Africa and the South African government. Nyanza construction rollout is divided into three phases. Phase 1, which commenced in May 2021 involves the construction of the Technical Services Centre that will produce sufficient titanium pigment used for ongoing customer and product development work. This phase 1 plant is almost complete and will be commissioned by March 2022
The African Continental Free Trade Agreement (AfCFTA) presents an array of opportunities for Africa to reap economic and social benefits on the back of possible future improvements in areas such as – infrastructure, reduction of tariff and non-tariff barriers to cross-border trading, renewed funding and improved liquidity.
Nigeria becomes first African country to roll out digital currency (The East African)
Nigerian President Muhammadu Buhari launched the country’s new digital eNaira currency on Monday as Africa’s largest economy looked to tap into the growing popularity of virtual money and cryptocurrencies.With the eNaira, Nigeria becomes the first in sub-Saharan Africa to fully launch a digital currency and joins China and a few other countries using or piloting central bank-regulated electronic tender.The digital currency aims to foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective.At the launch on Monday in Abuja, President Buhari said the adoption of the Central Bank of Nigeria Digital Currency (CBDC) can increase the nation’s Gross Domestic Product (GDP) by $29 billion over the next 10 years.
Multilateral international agreements, when properly harnessed, can produce significant economic and social benefits. The reverse is however the case when a participating country is unable to be strategic in such multilateral engagements. This, to a large extent, has been the case with Nigeria and the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO). The TFA is designed to improve trade facilitation, and despite trade facilitation having the potential of attracting US$170 billion to Nigeria in new trade flows within 20 years, Nigeria has still not been able to implement the TFA, as well as meet many of her WTO obligations.
Warehousing that’s critical to realising the AfCFTA dream (Business Daily)
Kenya has often been referred to as the “gateway to East Africa” as a result of the strategic importance of the port city of Mombasa, one of the busiest ports on the East African coastline, and the central political and economic roles it plays in the region.Since 2008, the Kenyan government has been pushing for rapid economic growth through social, structural and economic reforms under the Big 4 Agenda, which focuses on food security, affordable housing, universal health care, and manufacturing. This is all aimed at turning Kenya into a middle-income country by 2030. This year’s Africa Green Revolution Forum held in Nairobi, brought stakeholders from all over Africa together to discuss how agriculture and agri-food systems can be transformed to improve food security and reduce poverty across the continent.
The AfCFTA not only considers the value that reduced trade friction will have on agriculture but also on all other sectors of African economies. It is estimated that by 2035, implementing the agreement could lift more than 30 million people from extreme poverty and 68 million more from moderate poverty.
Feed millers push for GMO imports to cut rising costs (Business Daily)
Animal feed manufacturers now want the Agriculture ministry to consider the importation of genetically modified yellow maize and soya beans to address the high production costs that have driven up consumer food prices.Their plea follows a directive President Uhuru Kenyatta issued last week to the ministry to look into possible interventions that will lower the high cost of feed. Agriculture PS Hamadi Boga told the Business Daily in an interview that the best measure to lower the current cost of feeds is to give a waiver on importation of raw material.
Diaspora remittances up 20pc in first nine months (Business Daily)
Kenya’s diaspora remittances rose by 20 percent in the nine months to September compared to the corresponding period of last year, underlining the resilience of these inflows at a time when the global economy is still recovering from the Covid-led contraction of 2020.Data from the Central Bank of Kenya (CBK) shows that the remittances for the period stood at $2.71 billion (Sh301 billion), up from $2.27 billion (Sh252.5 billion) in the nine months to September 2020.Remittances are Kenya’s largest source of foreign exchange ahead of horticulture, tea and tourism earnings. They, therefore, provide crucial backing for the shilling in the forex market in addition to the social benefits for recipients.
Regulators reveal KQ as Africa’s costliest airline (Business Daily)
Kenya Airways has the most expensive tickets among airlines operating in Africa, charging more on average than carriers such as Ethiopian Airlines, South African Airways and Air France.A new study by competition authorities representing a total of 24 African countries found that KQ, as the airline is known by its international code, charges the highest average fares on domestic and international flights.The finding shows the national carrier risks losing market share to cheaper rivals like Ethiopian Airlines and new entrants, including Uganda Airlines.KQ had higher fares on most routes where it has competition, though there are a few instances where its rivals charge more.
In recent years, South Africa and Madagascar faced droughts while a severe cyclone pummeled Mozambique. Along West Africa’s coastline, rising sea levels threaten major cities like Lagos, Accra and Abidjan. Given the climate crisis urgency, countries such as Ghana are turning to solar power to accelerate the energy transition.
While in Africa, no country is better poised to drive the clean energy revolution than Ghana. The medium-sized country with a 31.7-million population (World Bank figures in 2020) has attracted pan-African institutions and multinational corporations alike. Since 2020, the new Africa free trade zone, the AfCFTA, and US social media company Twitter, have moved their head offices to Accra. Global manufacturers have also set up shop in Ghana. In 2020, Volkswagen opened a vehicle manufacturing facility.
While attracting industry and commerce of this level, Ghana can turn to solar energy in growing a thriving renewables sector. Solar can uniquely meet the challenges posed by climate change to Ghana’s energy sector while powering the country’s economy, which the AfDB estimates to grow by 4% this year. Given that solar energy is still in its early stages, there is a unique opportunity to build a more gender-inclusive sector, with women taking up leadership roles.
Algeria, which has cut off diplomatic ties with Morocco, will stop supplying natural gas to the country through the Maghreb-Europe pipeline from Nov. 1, three sources with direct knowledge of the matter said. Analysts say technical issues relating to Algeria’s plans to expand the capacity of the Medgaz pipeline could escalate the energy crisis in Spain at a time of soaring gas bills across Europe. Algeria in August hinted at the possibility of ending natural gas exports in October to Morocco of 1 billion cubic meters (bcm), used to produce around 10% of the kingdom’s electricity.
Zambian President Hakainde Hichilema on Friday called for increased efforts to promote trade among African countries. President Hichilema made the remarks when he received letters of credence from seven new ambassadors, saying it was imperative for African countries to promote intra-trade before turning to other parts of the world and African countries should take advantage of the opportunities provided by the African Continental Free Trade Area to enhance trade within the continent.
More than 100 decision-makers and economic stakeholders will gather in Kigali this week to discuss the road to social and economic recovery and how to attract investments in East Africa. The meeting known as the 25th session of the Intergovernmental Committee of Senior Officials and Experts (ICSOE), will take place from 27 to 29 October 2021. The ICSOE is the annual gathering of the office for Eastern Africa of the UN Economic Commission in Africa (UNECA) organised in collaboration with the Rwanda Ministry of Finance and Economic Planning. The theme of this year’s meeting is: “Strengthening resilience for a strong recovery and attracting investments to foster economic diversification and long-term growth in Eastern Africa”.
Dr Mama Keita, Director of UNECA in Eastern Africa said that the Covid-19 pandemic has weakened the economic conditions of all countries in the region. She stressed that the ICSOE meeting will provide a platform for various stakeholders from governments to have a conversation with experts and private sectors on the needed economic recovery and on how to re-ignite the engines of trade and investment.
Sub-Saharan Africa expected to recover slowest from the pandemic (Quartz Africa)
Just as the covid-19 pandemic had different impact in different places, the recovery process will be unequal. Some countries’ economies will go back to pre-pandemic levels sooner but others will have to wait longer.Sub-Saharan Africa’s economy is projected to grow by 3.7% this year, but this will be the slowest among the world regions, as advanced markets grow by more than 5% and other emerging markets and developing countries grow by more than 6%, according to the International Monetary Fund (IMF.) The lender attributes sub-Saharan Africa’s lagging growth to slow vaccine rollout and differences in policy.The projections are in the IMF’s latest Regional Economic Outlook for Sub-Saharan Africa. The lender has revised up its 2021 growth projection from its April forecast of 3.4%, mainly due to better-than-expected prospects for non-oil resource-intensive countries. In contrast, it has revised down growth for 2022, from the April 2021 forecast, due to worse-than-expected prospects for non-resource-intensive countries.
Africa must address six barriers to unlock greater climate funding (Engineering News)
Africa is not receiving sufficient climate funding from the available pool and there are six key enablers that must be focused on to unlock that funding, GFA Climate and Infrastructure MD Jonathan First said on October 25 during the Africa-Europe Dialogue on African Climate Finance Priorities for COP26. Firstly, he emphasised that everything done in Africa in terms of funding must align to the United Nations Sustainable Development Goals (SDGs) and environmental, social and governance (ESG) impacts.
Enlightened climate policy for Africa (Brookings Institution)
As the world convenes in Glasgow for the 26th United Nations Climate Change Conference of Parties (COP26), it is time to recognize Africa’s role in averting a climate disaster without compromising the continent’s growth and poverty reduction. The world needs to transition away from fossil fuels. But access to electricity is a human right as enshrined in sustainable development goal 7. Electric power is vital for any economy to advance, and relegating African countries to greater poverty is not the solution to the global climate crisis.
In sub-Saharan Africa, 12 million new people enter the workforce every year. They cannot run successful businesses in the dark. Today, nearly 600 million Africans lack access to electric power, a number that the International Energy Agency (IEA) projects will actually increase by 30 million due to the COVID-19 pandemic. To create jobs for Africa’s burgeoning youth population, we need to find ways to power the continent’s industrialization.
Importantly, Africa bears the least responsibility for the world’s climate crisis but faces its most severe consequences. Forty-eight sub-Saharan African countries outside of South Africa are responsible for just 0.55 percent of cumulative CO2 emissions. Yet, 7 of the 10 countries most vulnerable to climate change are in Africa. Still, Africa will play a major role in solving the global crisis.
Ahead of the COP26 climate conference in Glasgow, St. Andrew’s Cathedral, the iconic city landmark, will host an exhibition featuring ChangeMakers, a campaign led by Climate Investment Funds. The African Development Bank is a partner of the campaign and implementing agency of Climate Investment Funds. The Bank nominated several climate champions from the continent who actively work in the field of climate action. Their images will be projected on the façade of St. Andrew’s Cathedral until one week after the end of COP26.
A former Minister of Local Government and Rural Development, Mr Akwasi Opong-Fosu, has urged African countries to leverage their natural resources for infrastructural and technological development. Mr Opong-Fosu, who made the call at the 2021 UK-Africa Trade and Investment Conference in London, said the continent’s annual infrastructure needs of about $108 billion could be addressed if the “natural resources for infrastructure” strategy was adopted alongside tackling illegal financial flows. Speaking on the topic, “Africa Economic Growth Potential: Challenges and Opportunities”, the former minister said for any renewed interest in Africa to be genuine and inure to the benefit of the people, infrastructure was key.
As one of the pioneering pan-African financial institutions, Ecobank should be enjoying its halcyon days with the region’s economies accelerating plans for integrating their markets and using new technologies to bring banking services to a fast-widening customer base. Ecobank’s headquarters in Lomé, Togo, is a short drive from the newly built secretariat of the African Continental Free Trade Area in Accra, Ghana – the nerve centre of the continent’s single market. But history intervened. First, in the shape of the legacy of management ructions a decade ago, which included some bad investment decisions. Then, weaker commodity prices hit the export economies of Ecobank’s key markets in 2016, to be followed by the shock of the Covid-19 pandemic.
The Eastern and Southern African Trade and Development Bank (TDB) and the Islamic Corporation for the Development of the Private Sector (ICD) have signed a Memorandum of Understanding (MoU) with the purpose of advancing cooperation in the provision of finance and investment to private sector in their common Member States in Eastern and Southern Africa.
The agreement establishes a framework for both institutions to collaborate with the aim of financing eligible transactions in targeted countries sponsored by the private sector or non-sovereign backed projects. Possible financing solutions to be considered include syndication and co-financing opportunities, risk sharing, bilateral financing and/or medium term liquidity lines of credit, corporate and project finance, and public-private partnerships.
US Renewed Prosper Africa Trade Initiative (East African Business Week)
The United States (US) administration announced in July 2021 that the Prosper Africa initiative, launched in 2019 under the Trump administration, would be renewed and reinvigorated to increase reciprocal trade.The initiative will focus on improving trade and investment in sectors such as infrastructure, energy and climate solutions, healthcare and technology.An additional USD 80 million will reportedly be requested to support its projects. The 17 US government agencies working as part of this initiative have a mandate to, among other things, empower African businesses, offer deal support and connect investors from the US with those in Africa.
The value of imports and exports between the US and Africa between January and July 2021 outlines the current, non-reciprocal nature of trade between the two regions.Data shows the US imported USD 6.3 billion more goods from Africa than it exported to the continent. The United States Census Bureau (Bureau) revealed that in this timeframe, the US exported goods to the value of USD 14.7 billion to Africa, and it imported goods from Africa to the value of USD 21 billion.
On 26 October, foreign affairs ministers of the European Union and the African Union will gather in Kigali for the first AU-EU ministerial meeting since the onset of the COVID-19 pandemic. This gathering is of particular importance, as it will set the stage for the next AU-EU Summit in 2022.Both events underscore the relevance of the EU-Africa Partnership as a key priority of our foreign policies. It is not only geography that makes Europe and Africa natural allies. Both continents share a deep attachment to the principles of multilateralism, international cooperation and the rules-based international order. Our political, economic and social futures are bound together.
In this synthesis note for the European Think Tanks Group, DIE’s Niels Keijzer, ECDPM’s Kathleen van Hove and ACET’s Freda Yawson discuss the relationship between Africa and Europe and highlight five proposals for strengthening the continent-to-continent dialogue on sustainable development.
African nations’ debt problems are a historical issue, and also the result of rising protectionism and currency factors, Zhou Liujun, vice chairman of China International Development Cooperation Agency told reporters in Beijing on Tuesday. China fully considered the debt condition of African nations and their repayment capabilities when offering loans, Zhou said, adding that it will “strengthen cooperation and communication with different parties to help African countries to face their debt problems.”
In her opening address, WTO Director-General, Dr Ngozi Okonjo-Iweala, reiterated her commitment to working towards a substantive outcome for LDCs at MC12. She updated ministers on the latest progress in the negotiations on trade and health, fisheries subsidies, agriculture and development. She also underlined that trade must play a role in helping LDC economies rebound and urged WTO members to show realism and flexibility to achieve results at MC12 that will strengthen the multilateral trading system. The Director-General also praised members for agreeing, in June 2021, to extend the deadline for LDCs to protect intellectual property under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights.
LDC ministers said at that meeting that MC12 provides an opportunity to lay the groundwork for building a stronger and more inclusive global economy geared towards raising living standards and protecting the environment. LDC ministers commended DG Okonjo-Iweala for her efforts aimed at generating concrete results at MC12.
Developing countries led by India and South Africa are set to clash with developed countries at the World Trade Organization’s (WTO’s) ministerial next month on permanent prohibition of customs duties on electronic transmission, which was being pushed by the Group of Seven (G7). “Electronic transmissions, including the transmitted content, should be free of customs duties, in accordance with the WTO Moratorium on Customs Duties on Electronic Transmissions. We support a permanent prohibition of such duties,” G7 trade ministers, including Canada, France, Germany, Italy, Japan, UK and US said in a joint statement on Friday.
Adopting G7 Digital Trade Principles that will guide the G7’s approach to digital trade, the trade minister said they oppose digital protectionism and authoritarianism. “We are concerned about situations where data localization requirements are being used for protectionist and discriminatory purposes, as well as to undermine open societies and democratic values, including freedom of expression,” they said. India and South Africa have stepped up pressure on WTO ahead of the 12th ministerial meeting (MC-12) to begin on 30 November, urging it to review a moratorium on imposition of customs duty on electronic transmissions so that developing countries can generate more revenues.
The findings update an earlier report which synthesizes plans outlined by countries in their Nationally Determined Contributions (NDCs) under the Paris Agreement on climate change, which aims to limit global temperature rise to 1.5 degrees Celsius. Parties to the accord requested the Synthesis Report, published in September, to help them in assessing progress ahead of the COP26 UN climate change conference, which opens this weekend in Glasgow, Scotland. The update has been provided so that countries will have the latest information to consider at the conference.
The proposed statement reaffirms participants’ commitment to strengthening the trade dimension of efforts to tackle plastics pollution through the IDP. It lists the actions participants would take from MC12 onwards and in the run-up to the 13th Ministerial Conference. These actions include sharing experience on data collection regarding trade flows and supply chains, strengthening cooperation with other international regulatory processes and identifying environmentally sustainable trade policies and mechanisms.
A new UNCTAD report estimates the export value in ocean-based industries at $2.5 trillion, according to the latest available data, covering 2018. The report, entitled “Advancing the Potential of Sustainable Ocean-Based Economies: Trade Trends, Market Drivers And Market Access”, draws on a recently published novel international ocean economy classification. The figure constitutes the first conservative benchmark from which to measure the evolution of trade in ocean-based goods and services.
For goods, the largest sectors were those with higher added value: marine high-technology manufactures, ships, port equipment and parts thereof. The leading exporters of ocean-based goods are developed countries from Europe, developing countries from Asia (even when China is excluded), followed by countries in the Americas (developed and developing). A double-digit average export growth was observed for certain products with high added value, such as frozen finfish parts and fillet in the case of marine fisheries between 2016 and 2018, showing increased consumption trends, particularly in Asia, Europe and North America.
The leading exporters of ocean-based goods and services were developed countries in Europe, followed by developing countries in Asia and countries in the Americas.
The fate of the world’s leading trade institution hangs in the balance. The World Trade Organization (WTO) has been in a state of sustained, low-burning crisis for nearly five years. And in less than two months, trade ministers will gather in Geneva with the hope of reviving it by concluding negotiations on a wide range of issues. Failure to achieve meaningful results could hasten the WTO’s slide toward irrelevance in setting or maintaining the basic rules of international trade.
Supply chain disruptions have become a major challenge for the global economy since the start of the pandemic. Shutdowns of factories in China in early 2020, lockdowns in several countries across the world, labor shortages, robust demand for tradable goods, disruptions to logistics networks, and capacity constraints have resulted in big increases in freight costs and delivery times.
Our chart of the week shows suppliers’ delivery times in the United States and the European Union have hit record highs since late 2020 (the data goes back to 2007). IHS Markit’s suppliers’ delivery times index is constructed from Purchasing Managers Index business surveys and reflects the extent of supply chain delays.