tralac Daily News
Tanzania’s exports to Kenya double to Sh20 billion in six months (Business Daily)
Kenya’s imports from Tanzania doubled to Sh20.5 billion in the first half of the year, on good trade relations between the two neighbouring countries. Data from the Kenya National Bureau of Statistics (KNBS) shows imports from Tanzania grew from Sh10.8 billion in the corresponding period last year. The value of goods exported to Tanzania also grew to Sh17.8 billion from Sh14 billion but the balance of trade remained in favour of Tanzania. Kenya and Tanzania have in recent months mended fences over their differences on trade issues that had previously had a negative impact on the flow of goods.
Improving Tanzania’s infrastructure and business climate: these are the African Development Bank’s priority intervention areas in its Country Strategy Paper 2021-2025 (CSP 2021-2025) published by the Bank on 8 November. Implementing this plan is expected to bolster the East African economy’s competitiveness and develop its human capital. The Bank will support the development of high-quality multimodal transport infrastructure, including roads, waterways, railways and airports. It will also invest in improving networks for producing, transmitting, and distributing clean energy, and upgrading water and sanitation systems. For transport, the focus will be on improving regional, interurban, urban and rural connectivity by road, air and sea to increase access to regional and global markets. In this way, the Bank will play a crucial role by boosting private-sector business activity through reduction in the cost of doing business, and strengthening long-term resilience through social and economic inclusion, particularly by reducing poverty and youth unemployment.
The COVID-19 crisis impacted an already weakened economy following cyclone Idai and a protracted drought. Containment and support measures introduced by the authorities helped in mitigating the adverse effects of the pandemic. Economic activity is recovering, and mass vaccination continues steadily. But downside risks remain, dominated by the pandemic’s evolution, vulnerability to climatic shocks, and the need to further strengthen macroeconomic policies. Key policy areas relate to allowing greater exchange rate flexibility and tackling FX market distortions, accompanied by appropriate macroeconomic policies; creating fiscal space for critical spending; growth-enhancing structural and governance reforms; and data transparency.
The Central Bank of Nigeria (CBN) officially launched the “eNaira”—a central bank digital currency (CBDC)—on October 25, 2021. This is the second CBDC fully open to the public after the Bahamas. Other countries and regions, such as China and the Eastern Caribbean Currency Union, have been conducting CBDC pilots with a subset of their citizens. Given the size and complexity of Nigeria’s economy, this launch is drawing substantial interest from the outside world—including from central banks.
COVID-19 has hit countries with a health and economic shock whose effects will be felt far into the future. In countries, like Nigeria, that already faced complex development challenges, the pandemic continues to affect health outcomes, human-capital accumulation, household poverty and coping strategies, and labor-market dynamics. A new World Bank report shows both the extent of these impacts on Nigerians and promising policy options that could accelerate the nation’s recovery. The report, “COVID-19 in Nigeria: Frontline Data and Pathways for Policy,” draws on innovative sources of high-frequency data, namely, the Nigeria COVID-19 National Longitudinal Phone Survey (NLPS), to inform the choices that Nigeria’s leaders now face. The NLPS represents a successful collaboration between Nigeria’s National Bureau of Statistics (NBS) and the Data Production and Methods team at the World Bank. It was launched in April 2020 – almost immediately after the COVID-19 crisis began – and has since regularly collected information on key social and economic outcomes, up to 12 times, from households across Nigeria.
The Ghana National Chamber of Commerce and Industry (GNCCI), has called for improved infrastructure to ensure smooth implementation of digital currency and free trade in Africa. The Chamber said there was urgent need for governments across the continent to build railways and dual carriageways that would connect the countries for easy transportation of people and goods to make intra Africa trade attractive. It also noted the need for governments on the continent to quickly provide structures and policies that would transform the economy from a primarily informal sector to a formal one. The above, with public education on the implementation and advantages of the African Continental Free Trade Area (AfCFTA) and e-currency would spur economic growth and job creation on the continent, the Chamber said.
The African Development Bank Group has approved a grant of $1.5 million to Mozambique to boost the development of local content. The grant is earmarked for Small and Medium-sized Enterprises ( SME) targeting local content and women-owned business in the natural resources sector of the nation. The new approval brings the Bank’s total commitment to SME Development to $2.5 million
The new financial contribution approval, from two Bank fund sources - the Affirmative Finance Action for Women in Africa (AFAWA), through the Women Entrepreneurs Finance Initiative (WeFi), and Fund for African Private Sector Assistance (FAPA) - will provide technical and institutional assistance to Empresa Nacional de Hidrocarbonetos (ENH), ‘Mozambique’s national oil company under the LinKar Initiative.
This support follows the Board of Directors approval of a $400 million senior loan project in November 2019 to “Mozambique LNG Area 1.” The loan agreement carried a recommendation to build capacity in developing local companies by specific technical assistance programs in order to create decent jobs in the country.
A leading African economist says the continent needs to fast track digital technology if it is to achieve economic development and increase Intra-Africa trade.
Chief Economist at Afreximbank, Hippolyte Fofach says Africa also needs to close its technology gap to reach its Africa Continental Free Trade Agreement goals. Speaking with other panelists including South Africa’s Minister of Trade and Industry Ebrahim Patel, the economist elaborates how embracing digitisation can play an important role in unlocking Intra-Africa trade. “And if you look at genetic engineering and robotics all those are applications of IT at a different level. They will help Africa address its productivity and competitiveness. We see trade increasingly driven by manufactured goods with increased technological content which today accounts for 80% of global trade.”
AfCFTA secretariat charges African governments on value addition, trade deficit (The Guardian Nigeria)
The African Continental Free Trade Area secretariat has admonished African countries to focus on the production of consumer goods to discourage the importation of goods into the continent. According to the Chief Technical Advisor of the Secretariat, Prudence Sebahizi, trade deficit can be resolved when African countries add value to their exported resources. Speaking at the ABSA-UPSA Law School Quarterly Banking Roundtable discussion, he opined that African countries should have a robust economic structure that will facilitate trade finance. “Most African countries are exporting unprocessed products, but import finished products which means they get less in what they are exporting in return. The solution is for us to add value to what we are producing,” he said.
AFRICA is positioning itself as the next hub for the multibillion-dollar automotive industry as a number of countries look to start implementing the continental free-trade agreement. The secretary general of the African Continental Free Trade Area (AfCFTA) Wamkele Mene yesterday urged African countries to show strong political commitment to the agreement.
Speaking during the Automotive Forum at the second day of the Intra-Africa Trade Fair (IATF 2021) yesterday, Mene said the successful implementation of the AfCFTA would significantly reduce costs for business and make continental companies more competitive. Currently, South Africa is host to the largest multinationals assembly plants in the continent. “We should not forget that the automotive industry is a hyper competitive global industry which strives on efficiency and the elimination of waste,” Mene said.
Significant Reforms Made to Improve Ease of Doing Business in SA - Head of Invest SA (The Department of Trade Industry and Competition)
The Acting of Head of Invest South Africa, a branch of the Department of Trade, Industry and Competition (the dtic), Mr Yunus Hoosen says significant reforms have been made to improve the ease of doing business in South Africa. Hoosen was speaking during the South Africa Investment Technical Session at the Intra-African Trade Fair (IATF) currently taking place in Durban, KwaZulu-Natal. The session was aimed at unpacking South Africa’s ease of doing business and investor financial support packages.
South Africa has taken note of the World Bank’s study on the ease of doing business and is currently developing a comprehensive Ease of Doing Business Programme in South Africa. “At the advent of the 6th administration, President Cyril Ramaphosa outlined that South Africa needed to improve ease of doing business and set out the investment improvement programme by which government champions the ease of doing business programme through the Treasury and other government departments and entities,” said Hoosen.
A period of high metal and energy prices is typically good for resource-rich sub-Saharan African (SSA) economies, but that’s not the case for the region now, during a bullish commodity cycle. Instead, SSA economies are expected to limp towards recovery as vaccination rates remain low and many economies have yet to recover from COVID-19. The International Monetary Fund’s latest forecast expects sub-Saharan Africa region to grow by 3.7 percent in 2021 and 3.8 percent in 2022, as rising commodity prices and robust agriculture productions are countered by new waves of the pandemic, structural challenges and high debt levels. “[Sub-Saharan Africa’s] recovery is expected to be slower than in advanced economies, leading to a widening rift in incomes. This divergence is expected to persist through the medium term—partly reflecting different access to vaccines, but also stark differences in the availability of policy support,” the IMF said in its latest report.
Key African exports such as copper, cobalt, lead, manganese, nickel and zinc are enjoying a price boom, and food commodities such as coffee, sugar and wheat have also seen record high prices this year, while crude oil, natural gas and coal prices are resurgent amid a global economic turnaround. But African economies have struggled to ride the commodity wave due to challenges to the boosting of production across much of the commodity complex.
To set Africa firmly on the path towards economic and social transformation, private sector engagement is crucial. The 12th African Private Sector Forum has concluded its three-day meeting in Cairo, Egypt, providing a platform for information exchange, business networking and adopting policy recommendations on Africa’s development priorities, with a focus on Strengthening African private sector’s capacity to respond to disrupted markets and ensure economic resilience in the face of COVID-19 Pandemic. The Forum was strategic to establish and/or expand partnerships with the private sector through Public-Private Partnership (PPP) engagements, particularly underpinned on Africa’s response to the effects of the COVID-19 crisis and to build resilience and help recovery of businesses and economies.
Among the recommendations, is the need to strengthen the capacity of the African Private Sector to have a “Made in Africa” Products that are competitive, Value added, standardized and of high quality, and the promotion of the “Made in Africa” products to increase Intra-Africa Trade and particularly following the start of trading under the African Continental Free Trade Area (AfCFTA). The African Union Commissioner of Economic Development, Trade, Industry and Mining Amb. Albert Muchanga revealed that the AU Commission is currently in the process of establishing a “Made in Africa” standard that will promote quality and productivity in addition to contributing to the elimination of technical barriers to trade.
The East African Community is making strides in conforming to trading requirements under the African Continental Free Trade Area (AfCFTA), with plans underway to finalize the EAC Tariff Offer. The EAC Sectoral Council on Trade, Industry, Finance and Investment (SCTIFI) has directed the EAC Secretariat to convene meetings with experts, by 15th December 2021, to finalize the EAC Tariff Offer. The EAC Tariff Offer currently stands at 85.86% against the AfCFTA modalities of 90%. The Secretariat was also directed to revise the EAC Schedule of Specific Commitments on Trade in Services and review the Trade in services offers made by State and Non-State Parties for the AfCFTA.
The East African Community Sectoral Council on Finance and Economic Affairs (SCFEA) has agreed on a Hybrid Model of financing the EAC budget. A two-day retreat of the SCFEA held in Mombasa, Kenya from 15th to 16th November, 2021 further recommended to the EAC Council of Ministers, the policy making Organ of the Community, to approve the model as the new financing mechanism for the EAC. The new model requires EAC Partner States to contribute equally 65% of the budget while the remaining 35% of the total budget will be contributed based on the assessment of Partner States’ average nominal GDP per capita for the previous five years as assessed by the World Bank. The agreement on the new model came after the findings of a study on the required reforms to align the EAC structure, programmes and activities with the financial resources available from EAC Partner States in order to ensure sustainability of the Community while addressing the dependency syndrome.
The 17th Meeting of the COMESA Ministers of Foreign Affairs (MoFA) took place Tuesday, 16 November 2021, ahead of the 21st COMESA Heads of State and Government Summit set for Tuesday, 23 November 2021 in Sharm El Sheikh, Egypt. The MoFA is part of the ministerial meetings whose priority issues will be presented to the Summit alongside that of the Council of Ministers whose meeting took place on 9 November 2021.
Coming at a time when the aftermath the COVID-19 pandemic is being felt across the region, the leaders are expected to rally towards economic recovery and building country and regional resilience against future shocks. The development and use of digital tools to drive this process has identified during the ministerial meetings as one of the drivers to regional trade which provides the bulwarks towards economic recovery. The adoption of the COMESA Digital Free Trade Area initiative (DFTA) is expected to gain traction after this summit. The DFTA involves use of digital tools as opposed to physical documents mainly used in cross border trade. Under this initiative, COMESA has developed digital tools to enhance digital transformation including e-trade, e-logistics and e-legislation.
ECOWAS Finance Ministers deliberate on Community Levy (Graphic Online)
Finance Ministers in the ECOWAS region last Friday held their Sixth Meeting in Accra, Ghana, to deliberate on the Community Levy. The meeting was also focused on the consolidation of the ECOWAS Customs Union. The Sixth Finance Ministers’ Meeting was intended to help the participants to examine and approve the various community legislation, aimed at enhancing the fluidity of intra-community trade as well as to strengthen the ECOWAS Customs union.
The United Nations Development Programme (UNDP) has published a call to tender for the selection of a firm to conduct a continent-wide study aimed at detecting the priorities of African businesses for cross-border trade on the continent, within the context of the Africa Free Trade Continental Area agreement (AfCFTA). The perspective of African businesses and other stakeholders on digital identity is among the areas the UNDP is requesting analysis in. The study will highlight the priorities, opportunities, and challenges for digital trade in the One African Market. According to the tender notice published by Reliefweb, the project will seek the views and opinions of African businesses and other stakeholders on a broad range of issues such as digitally driven cross-border trade in goods and services, cross-border data flows, digital taxation, digital trade facilitation, digital work, mobility of technology-driven businesses, consumer protection and digital identity.
Exploring Africa’s trade with network advantage (The Nation)
Trade is the lifeline of great economies. For Nigeria and many Africa countries, trade not only cement inter-country relationship, but helps to bring prosperity to the people. Still, businesses that will tap from the opportunities presented by trade, including the $93 billion transactions that happen informally across the African continent, are those that have the identified network and technological backbone to harness such benefits.
Africa Oil Week, Africa’s biggest and most prestigious upstream conference ended on Thursday with high-value deals, and strong intent for future investments in the continent. The event, which was held from 8th to 11th November 2021 at the Madinat Jumeirah in Dubai - making it the first edition in AOW’s 27-year history to be held outside of the continent - was supported by key sponsors including TotalEnergies, Eni, ADNOC, Chevron, Shell and Equinor, among others.
With more than 45 Ministers and Government leaders attending the power packed event, along with two Commissioners from the Africa Union, and several NGOs, AOW 2021 included comprehensive discussions about the future of the continent both in terms of achieving the green agenda, and zero emission targets, but also using the oil and gas revenues to improve healthcare, socio-economic developments, and the standard of living of the African people. Currently home to 1.2 billion people, with an additional estimated population of 600 million below the age of 25 by 2050, the continent relies on the energy sector to power wealth creation, entrepreneurship, private sector expansion and industrialisation. Staying committed to the UN SDGs and the African Union Agenda 2063, the organisers of Africa Oil Week also announced launch of the inaugural Green Energy Africa Summit 2022 (GEA Summit) on the first day of the conference. The GEA Summit will focus on driving investments into low-carbon energy for Africa, by bringing together key stakeholders to facilitate innovation and dialogue, driving capital for the socio-economic development of Africa.
African regions, predominantly the Sahel and southern Africa, are particularly vulnerable, with poverty and food insecurity expected to rise in the wake of a regional slump in food production. While this paints a rather gloomy picture, there’s a bright glimmer on the agricultural horizon. The explosive growth of agriculture technology (AgTech) start-ups is offering opportunities to leapfrog the current agricultural constraints on the continent. Powering a new farming era, global AgTech solutions have seen a 110 percent growth rate over the past two years with little sign of abating. Disruptive technologies in agriculture consist of digital and technical innovations that enable farmers and agribusiness entrepreneurs to circumvent current methods to increase their productivity, efficiency, and competitiveness.
Due to the increasing demand for contextualized agricultural solutions, sub-Saharan Africa has seen a proliferation of these technologies over the last decade.
China, Africa boost trade cooperation despite COVID-19 (China.org.cn)
China and Africa have maintained robust economic and trade cooperation, despite COVID-19, as their bilateral trade has set a record high in the January-September period. Trade between China and Africa rose 38.2 percent year on year to 185.2 billion U.S. dollars in the January-September period, reaching the highest level in history for the same period, Chinese Vice Commerce Minister Qian Keming said Wednesday. China’s direct investment in Africa hit 2.59 billion U.S. dollars in the first nine months, up 9.9 percent, year on year. The growth rate is 3 percentage points higher than China’s overall outbound investment, Qian said, adding that the growth rate outperformed the pre-pandemic level in the same period of 2019.
China-Africa trade has been well-balanced over the long run, and China never aims to pursue a trade surplus with Africa and will take various measures to help expand imports from the continent, a senior official with China’s Ministry of Commerce (MOFCOM) said on Wednesday, as China steps up communication and cooperation with Africa, despite certain foreign interference. ”China will continue to support African countries and Chinese companies to make good use of various measures to further expand the scale of imports from Africa, and promote the high-quality development of China-Africa trade, Qian Keming, vice minister of the MOFCOM, said during a press conference on Wednesday, when responding to a question about concerns among some African countries over their trade deficit with China.
Alarm over funding gap for adaptation (The East African)
Adaptation costs in developing countries due to damages caused by climate change are up to 10 times greater than what these countries receive for the same, warns the Executive Director of United Nations Environment Programme (UNEP), Inger Andersen. And this adaptation finance gap could be worsened by the rising cost of servicing debt among developing countries since the onset of the Covid-19 pandemic. Speaking at the launch of the 2021 Adaptation Gap Report on Thursday at the climate talks in Glasgow, Ms Andersen said there is a critical need to find new ways to finance countries that are no longer eligible to borrow at concessional levels since the Covid-19 recession. The UNEP director put the costs of adaptation for developing countries at between $140 billion to $300 billion per year, expected to rise to $280 billion to $500 billion per year by 2050.
The agriculture and food sectors are critical to achieve net zero emissions, and a series of events on the COP 26 sidelines explored aspects of this transition. The Food and Agriculture Organization of the UN (FAO) convened the following discussions during the second week of the Glasgow Climate Change Conference (UNFCCC COP 26), with one introducing a new private sector facility for climate action in agriculture and land use. An event on 8 November explored the ways in which emissions-intensive sectors, like agriculture and land use, can decarbonize, and how can the private sector help. The event, Engaging the private sector to implement agriculture and land use priorities of NDCs and NAPs, brought together private sector actors in the agriculture and land use sectors to discuss their work in developing public-private partnerships based on Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs). It was organized by the Scaling up Climate Ambition on Land Use and Agriculture (SCALA) programme, which is jointly run through the FAO and the UN Development Programme (UNDP).
The main cause is the emission of greenhouse gases, mostly carbon dioxide (CO2) and methane. Burning fossil fuels for energy use creates most of these emissions. Agriculture, steel making, cement production, and forest loss are also significant sources. Temperature rise is also affected by climate feedbacks such as the loss of sunlight-reflecting snow cover, and the release of carbon dioxide from drought-stricken forests. Collectively, these amplify global warming. The global centre on adaptation says climate change will push 120 million people into extreme poverty by 2030, and a third of them will be Africans if nothing is done to mitigate its effects. The findings are in the center’s report on Africa released recently. Releasing the report looking at present-day and future climate change risks in Africa, the head of the Global Centre on Adaptation, Patrick Verkooijen, says the climate crisis may create millions of poor people on the continent.
Recent trends in trade remedies should be viewed in the broader context of the COVID-19 pandemic, which brought the global economy to a standstill. Across the world, production and consumption scaled back and international trade appeared to be on its way to a persistent decline. However, this past summer, global merchandise trade began to recover, and by the end 2020, it was strongly rebounding in many countries and sectors.
Global trade continued to grow in the first half of 2021, as value chains recovered and demand in advanced economies increased. According to the latest WTO forecast, the volume of global merchandise trade is predicted to grow by 10.8% in 2021, followed by a 4.7% rise in 2022. However, many developing countries are not experiencing this growth, and this trend is deeply concerning. In response to the challenges and pressures created by the COVID-19 pandemic, governments across the world used quite a few trade policy instruments. We’ve seen the application of both tariff and non-tariff measures: some aimed at facilitating trade, and others, such as export restrictions, aimed at limiting it. In an effort to save their economies, some governments have adopted unprecedented state support measures.
The report conveys three main messages: first, today’s hyper-connected global economy, characterized by deep trade links, has made the world more vulnerable to shocks, such as natural and man-made disasters, but also more resilient to them when they strike. Second, policies which aim to increase economic resilience by unwinding trade integration — for example, by re-shoring production and promoting self-sufficiency — can often have the opposite effect, effectively reducing economic resilience. And third, strengthening economic resilience will require more global cooperation, both regionally and multilaterally.
Over the past three decades, global value chains have powered a complete transformation of global trade. A transformation that creates tremendous opportunities for LDCs. In a world of global value chains, LDCs no longer need to build whole industries from scratch to be part of the global economy. They can instead specialize in specific tasks along the global value chain and leave more complex tasks to other countries. LDCs that join global value chains can gain a double dividend. Their most productive firms specialize and expand, lifting overall productivity. And local firms gain access to better and cheaper inputs, and they link with foreign firms, which pass on the best managerial and technological practices. As a result, LDCs that become part of global value chains can see faster income growth and falling poverty.
WTO may propose new agriculture package (Economic Times)
Ahead of a key ministerial conference, the World Trade Organization (WTO) is likely to float a revised draft text for a possible agriculture package to break the deadlock in farm talks at the meeting later this month. Possible immediate deliverables on improved transparency, including on shipments en route or advance notice for
export restrictions, language on a possible exemption from export restrictions for UN World Food Programme, and the possibility of including specific post-ministerial deadlines for some topics, could be part of the package. The revised text will be presented by chair of agriculture negotiations, Costa Rica’s Gloria Abraham Peralta, later this week. The previous text was introduced in July.
The proposed package comes after talks on farm subsidies got stuck as China, India, the African Group, and the Group of African, Caribbean and Pacific countries insisted that trade distorting subsidies given by developed countries be checked first.
Hope for airlines as global travel shows signs of revival (Business Daily)
The global aviation industry is showing signs of recovery as more countries open their borders with an increase in the rate of vaccinations, giving hope to the sector that was hit hard by the Covid-19 pandemic. International Air Travel Association (IATA) says the sector recorded an 18 percent growth in September when compared with the previous month, coming as good news to the sector. Major economies across the world including the US, India, China and a host of European countries have opened up their borders to tourists. Last month, the US announced that it had started allowing fully vaccinated tourists following months of restriction, with India following suit this week.
China’s digital currency: Next stop, Africa? (The Interpreter)
In April 2020, China was the first major economy to pilot a digital currency, the e-yuan or e-CNY.
In offering citizens an alternative to decentralised cryptocurrencies such as Bitcoin (which China has banned) and partnering with the country’s tech giants who currently dominate the electronic payment space, China is neutralising key external and internal threats to its governance and control of monetary policy. A recent Interpreter article notes that China’s immediate focus is domestic. However, earlier this year, Huawei introduced into the African market the Mate 40, a smartphone with a pre-installed e-CNY wallet that uses the DCEP network. It appears that China’s secondary focus may very well be Africa – with an eye towards disrupting the global financial system. In going digital, China retains visibility over financial transactions, even if it loosens capital controls and makes the yuan more easily convertible.