Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Country news

South Africa unlikely to see solid economic growth in near term, says GlobalData (Engineering News)

Against a backdrop of travel bans, higher inflationary pressures, high unemployment figures, lower vaccination rates and electricity supply constraints, analytics company GlobalData believes South Africa’s immediate economic growth prospects are grim. The company has revised its 2022 gross domestic product (GDP) growth rate forecast for South Africa to 2.1%, down from a forecast of 2.5% made in December 2021.

According to Statistics South Africa (Stats SA), real GDP growth contracted by 1.5% quarter-on-quarter in the third quarter of 2021, compared with 1.2% in the second quarter of 2021. This year, the country’s economy is being impacted by tightening restrictions and constraints, GlobalData says.

Stats SA noted a manufacturing activity plunge of 8.9% year-on-year in October 2021, compared with October 2020. Rao comments that input prices for manufacturers rose steeply, versus output prices, which resulted in downward pressure on production.

SA’s wine export volumes rise 22% in 2021 despite booze bans, supply chain issues (Fin24)

Despite a series of alcohol sales bans and supply chain challenges, South Africa’s wine industry still managed to grow its export volumes. Not-for-profit industry organisation Wines of South Africa (WoSA) on Wednesday released export report for 2021. The data covers January to October 2021. WoSA promotes South African wine in key export markets. Total export volumes grew by 22% to 388.1 million litres. The value of wine increased 12.1%, to R10.2 billion. Notably in 2018, export volumes of 420 million litres only fetched R9.1 billion. In 2019, export volumes fell to 320 million litres due to the impact of drought. In 2020 volumes dropped slightly to 319 million litres as the industry battled the impact of the Covid-19 pandemic on restaurant and holiday trade, Fin24 previously reported. The UK was South Africa’s biggest market for wine exports - both in terms of volume (92.5 million litres) and value (R2.5 billion).

Port investments to contribute towards SA economy (SAnews)

Minister of Transport, Fikile Mbalula, has unveiled critical investments that will contribute towards advancing South Africa’s economic interests through Operation Phakisa. Amongst others, these investments include the construction of an onshore Liquid Natural Gas (LNG) regasification facility, liquid bulk operating license to develop and operate a liquid bulk terminal and access rights for the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP). “These ground-breaking investments will also give impetus to growing the oceans economy and the implementation of the Comprehensive Maritime Transport Policy, which seeks to create a nurturing environment for entrepreneurs to develop and grow their businesses,” the Minister said.

Logistics companies ally to enlarge African healthcare network (Engineering News)

Logistics companies Imperial and UbiPharm have joined forces to create an expansive healthcare distribution network across Africa. This strategic alliance is aimed at providing complementary continental route-to-market solutions to healthcare principals and clients, enabling both companies to leverage each other’s operations and commercial services.

Kenya’s trade deficit surges to Sh1.2 trillion on fuel, industrial imports (Business Daily)

Kenya’s trade deficit in the 11 months to November 2021 grew to a record Sh1.24 trillion, widened by a surging fuel and industrial goods import bill. The economic recovery recorded last year as the country came out of the worst of the Covid-19 restrictions boosted demand, allowing factories to resume production that had been stunted in 2020. The movement restrictions imposed by many countries around the world during the peak of the pandemic also disrupted trade and supply chains, resulting in pending supply issues that are now being unwound as international borders fully reopen.

The Kenya National Bureau of Statistics said total imports rose by 29 percent or Sh430 billion to hit Sh1.91 trillion, outperforming exports that rose by a more modest Sh89 billion or 15 percent to Sh672.6 billion. This wider trade deficit is a concern for the country’s forex position, with importers drawing out valuable dollars that would otherwise be providing backing for the under-pressure shilling.

Kenya’s current account deficit drops to 5.2 % in November - CBK (The Star, Kenya)

Kenya’s current account deficit widened to 5.2 per cent in 12 months to November compared to 4.7 per cent the same period last year. The weekly Central Bank of Kenya bulletin has attributed the higher deficit to lower service receipts as well as high imports, which more than offset increased receipts from agricultural exports and remittances. This is the third-highest deficit in two years since 2018 when the country recorded a 5.8 per cent trade shortfall with international partners.

The country has been witnessing shrunk earnings from the export market for the past 15 months on social-economic challenges brought about by the Covid-19 pandemic that saw international borders closed for close to four months last year. This negated gains from the service sector account for almost 45 per cent of the country’s gross domestic product.

Shoprite and Checkers to prioritise locally-produced sugar (Witness)

A groundbreaking partnership between the Shoprite Group and SA Canegrowers will see Africa’s largest retailer prioritising selling only locally-produced sugar in its 1 189 stores across the country. This is part of the Home Sweet Home campaign to encourage South Africans to buy locally-produced sugar at Shoprite, Checkers, Checkers Hyper and Usave supermarkets. The Home Sweet Home campaign was launched by SA Canegrowers in December 2020. The aim is to educate consumers about the threats the local industry faces because of the influx of cheap sugar imports and to encourage people to buy locally-produced sugar to safeguard rural jobs.

Kenya’s envoy to Uganda ‘quits’ amid trade rows (The Citizen)

Kenya’s High Commissioner to Uganda Kiema Kilonzo has quit his office for a political contest even as both countries trail on resolving incessant trade tiffs. Mr Kilonzo’s chief campaigner Chrispus Ileli told Nation. Africa the envoy was no longer returning to Kampala and diplomatic his tour of duty was over. Mr Kilonzo is expected to formally tender his resignation ahead of the February 9 for civil servants intending to join politics to quit.But his actions have lately left no doubt he is no longer a diplomat. Even as the trade row with Uganda over importation of agricultural goods, as well as Covid-19 regulations mismatches simmer, the diplomat has been seen in his native Kitui County.

Scrap metal woes need deeper intervention (Business Daily)

In the year 2018, the Treasury Cabinet Secretary, through the budgetary statement increased duty on imported steel from 25 percent to 35 percent. This, the CS said, was to protect local steel manufacturers against cheap imports and be in tandem with the Jubilee key flagship pillar on manufacturing and affordable housing.

A closer look shows the intervention created a reverse effect. Kenya has no known iron ore deposits sufficient enough to offer 100 percent raw materials for steel manufacturing. Import duty budgetary protectionist measures would only work where, ceteris paribus, raw materials are locally and readily available.

Dar port eyes higher goal, ups efficiency (The Citizen)

Tanzania Ports Authority (TPA) is banking on technology and modern equipment it seeks to up the efficiency of the Port of Dar es Salaam and turn the country into a logistics hub in East and Central Africa. TPA director general, Mr Eric Hamissi, said yesterday that so far the progress has been encouraging as the vessel turnaround improves significantly at the Dar es Salaam port.

According to Mr Hamissi, the target is to handle 18 million tonnes of cargo this financial year, out of which, over 50 percent has already been achieved so far. “We are investing more in new technologies to achieve our goals…in a day we work on up to five vessels,” he said.

Uganda EPZ earnings hit record $1.2b (The East African)

Uganda’s earnings from export processing zones grew to a record high of $1.2 billion in 2020 from $154 million the previous year, a new report has revealed. The report by the Uganda Free Zones Authority shows that for two years in a row, semi-processed gold was the driver of exports, accounting for 93 percent of total export earnings at $1.1 billion. Flower and horticulture exports ranked second, accounting for 3.7 percent of exports at $46 million. Tobacco ranked third, accounting for 3.1 percent of exports at $38 million, the report shows. Wheat flour exports recorded a 65 percent decline to $1 million in 2020 from $4 million registered in 2019.

Uganda Free Zones Authority Executive Director Hez Kimoomi Alinda said the positive performance in 2020 was driven by increased mineral and tobacco processing and export.

Putting economic value into Nigeria’s agro-commodities (BusinessAMLive)

Africa is one of the least industrialised regions of the world with an economy mainly centered on the exportation of agro-commodities, which are in most cases, processed into finished products by foreign industries, according to a report by the African Development Bank Group (AfDB). The report also asserted that most African countries have continually traded their natural resources majorly in raw forms which to a large extent, has limited diversification of value added commodities in global export trade. This, analysts explain, has become a familiar pattern for many African countries, including Nigeria, the continent’s most populous nation and largest economy, making it one of the most persistent challenges facing the country’s agribusiness/export sector.

U.S. Relations With Gabon (United States Department of State)

The United States established diplomatic relations with Gabon in 1960 following Gabon’s independence from France. Relations between the United States and Gabon are excellent. The United States applauds Gabon’s efforts to take bold steps to root out corruption and to reform the judiciary and other key institutions to promote respect for human rights. Gabon and the United States are working to diversify and strengthen Gabon’s economy, expand bilateral trade, increase security in the Gulf of Guinea, and combat wildlife trafficking.

Gabon’s oil-reliant economy shows signs of recovering from its downturn due to COVID-19 and the decline in oil prices and demand. Gabon’s middle-income status limits the amount of U.S. assistance available. The government is focused on economic diversification, most notably by expanding the agribusiness and tourism sectors. Most foreign investment, including U.S. investment, is concentrated in the oil and extractive sectors. Gabon is eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA). U.S. exports to Gabon include machinery, agricultural products, vehicles, and optical and medical instruments. U.S. imports from Gabon include crude oil, manganese ores, agricultural products, and wood. In Fiscal Year 2021, exports from the United States to Gabon totaled $77.3 million.

African trade

Payment in local currencies, real-time transactions... how Afreximbank’s PAPSS will work (TheCable)

On Thursday, the Africa Export-Import Bank (Afreximbank), in collaboration with African Union (AU) and African Continental Free Trade Area (AfCFTA), officially launched the pan-African payment settlement system (PAPSS) for commercial use. PAPSS is a cross-border financial market infrastructure enabling payment transactions across Africa, bridging trade challenges in a continent with over 40 known currencies. According to Afreximbank, participants pay in local currency, while a seller in another country receives payment in their local currency. This means that a buyer in South Africa can pay in rand while the seller from Nigeria receives payment in naira.

Africa urged to tap full gains of trade pact (Chinadaily)

African countries should seize the opportunity to boost the construction of infrastructure and gain the full benefits of the continent’s free-trade agreement, say analysts in encouraging governments to reject protectionism. The African Continental Free Trade Area, or AfCFTA, took effect in January last year, though many African countries have not begun participating in the arrangements, said investment banker Aly Khan Satchu, who cites a lack of infrastructure as a key constraint. Effective implementation of the agreement has been held back by insufficient infrastructure for transport and technological connectivity, among other areas, he said.

Set a date for Free Movement of citizens on the back of AfCFTA – Kojo Yankah (News Ghana)

Founder and President of the Africa University College of Communications (AUCC), Kojo Yankah is calling on African leaders to take advantage of the Africa Continental Free Trade Agreement (AfCFTA) and “set a date for the free movement of citizens” across the borders of the continent. Whereas the building blocks have been established for the realization that [AfCFTA] vision, there still remain some hurdles such as closed borders and several physical barriers and checkpoints on the major roads that connect countries on the continent, and that has been a major frustration tom intra-continent trade and movement of people and goods.

The Collaboration and Partnership Africa Needs and Developments that can Derail Progress - Osinbajo (Proshare Nigeria)

The health and economic crisis caused by the pandemic slowed down progress in many areas but as the world emerges slowly from the health and economic crisis caused by the pandemic, a number of important lessons have been learnt. The most obvious lesson of course is that it has proved impossible for individual countries to contain the virus as long as there are outbreaks in other parts of the world. Similarly, we learnt that disruptions including in supply chains in one part of the world inevitably affect other parts of the world. And though that might sound obvious I think it has driven home very powerfully especially in the last few months.

Indeed, as the last frontier in development, Africa has the potential to become the factory of the world especially given its bold steps to integrate through the African Union Agenda 2063 and the African Continental Free Trade Area agreement. There are several other reasons I think, to be positive about the African growth story given that its large youth population holds the prospect of a demographic dividend. Also, by giving greater space and providing more opportunity to the private sector, the continent is also making giant strides in agriculture, manufacturing and digital technology.

African carriers start intensive scramble for the airfreight business (The East African)

The battle for the air freight market share among African airlines is intensifying, thanks to Covid-19 disruptions that have driven up ocean freight rates. Many airlines are now upgrading their fleets and expanding destinations as shortage of containers in the region continues to bite. In its latest market summary, the International Air Transport Association (IATA) said demand for air freight has stayed above pre-crisis levels. “African airlines saw international cargo volumes increase by 26.7 percent end of last year, which is the largest increase of all regions. International capacity was 9.4 percent higher than pre-crisis levels, Africa is the only region in positive territory, albeit on small volumes,” read part of the IATA market summary.

Shippers Council of East Africa Chief Executive Gilbert Lagat said, apart from cost and efficiency, time to receive consignments has boosted the air freight business considering persistent road and ocean delays.

Foreign aid is not ‘aiding’ the development of Nigeria (Mail & Guardian)

Foreign aid to Africa has been an issue of debate over the past few decades. This is mainly because the economic and development expectations of developing countries have not been met despite increased foreign aid over the years. Hence, the effectiveness of aid is questioned. Economic hardship has made people, particularly from developing countries, migrate to other parts of the world in search of better living conditions. Those without the financial capacity risk their lives to cross the Mediterranean Sea into Europe.

Despite receiving the larger share of foreign aid, Sub-Saharan Africa accounts for seven of the 10 countries with the greatest number of people living in poverty. They account for nearly three-quarters of worldwide rural poverty, or 305 million people. Why then has this aid not yielded satisfactory results in African countries such as Nigeria?

Central African Economic and Monetary Community: Common Policies in Support of Member Countries Reform Programs (IMF)

Despite a more favorable external environment, marked by the rebound in global growth, fast-increasing oil prices, and unprecedented Fund financial support, CEMAC is ending 2021 in a fragile external position. Net external reserves fell throughout 2021 to reach their lowest level in decades, and gross reserves are just above three months of imports of goods and services. The launch of a second phase of the regional strategy at the August 2021 CEMAC Heads of States summit saw renewed commitments to accelerate structural, transparency, and governance reforms. The resumption of program engagements with the Fund, combined with high oil prices and significant fiscal adjustments in 2022, should allow for a turnaround, and the build-up in external reserves is expected to resume in 2022. Risks include possible adverse pandemic developments, oil price volatility, possible fiscal slippages, shortfall in external financing, and security issues.

Regional Action Group for Africa Attracting Investment and Accelerating Fourth Industrial Revolution Adoption in Africa (WEF)

Historically, Africa has lagged behind other regions in employing the full potential of previous industrial revolutions, limiting its ability to become a truly competitive market. The pandemic demonstrated the massive leaps made by business, government and civil society during the crisis – showing that sustaining this level of focus and momentum can boost economic growth. The African Union Fourth Industrial Revolution strategy provides the foundation to ensure the region is able to embrace the opportunities and address the challenges, including inadequate infrastructure and skills. This paper builds on that work, providing direction for policy-makers and investors to consider the mechanisms that can scale up digital transformation. It offers five pathways identified by the World Economic Forum Regional Action group for Africa to drive economic recovery and build resilience, and assesses the role incentives can play in motivating organizations to adopt Fourth Industrial Revolution applications

Ethiopian Coffee Brands Launch on China’s Largest e-Commerce Platform, Alibaba Group, in a Joint Effort with ECA and the Ethiopian Government (UNECA)

Imagine using one second to sell more than 11,200 bags of Ethiopian coffee. That is what happened on January 19, 2022, during the Ethiopian Coffee Brands Launch on China’s Largest E-Commerce Platform, Alibaba (Tmall Global), in a joint effort with the United Nations Economic Commission for Africa (ECA) and the Ethiopian Government. “Success recorded in exporting Ethiopian coffee to China will provide a roadmap in leveraging export potential for other ten African countries, where ECA is working this year, to provide more export potential from Africa to China,” said UN Under-Secretary-General and Executive of the ECA, Secretary Vera Songwe. “This launch demonstrates the benefits that, not only Ethiopia, but Africa can reap in harnessing digitalization,” stated H.E Gebremeskel Chala, Minister of Trade and Regional Integration, Ethiopia.

Agriculture Ministers pledge to focus on innovation, profitability of farmers (The Exchange)

Ministers of Agriculture from Africa and America meet and committed to working together to develop a cooperation agenda and agreed that the two continents face common challenges and opportunities regarding transforming their agri-food systems to make them more sustainable and inclusive. The agreement was reached during the First High-Level Roundtable between Africa and the Americas, convened and organised by the Alliance for a Green Revolution in Africa (AGRA) and the Inter-American Institute for Cooperation on Agriculture (IICA), entitled “Building Bridges for Future Cooperation in Agrifood Systems”.

“African economies have grown in recent decades, as have their agrifood systems, despite catastrophes such as droughts and floods and, most recently, the Covid-19 pandemic. As a region, Africa lacks access to modern technologies and mechanised tools that allow for increasing product variety and quality and expanding the percentage of arable land. Many of our farmers are still subsistence farmers; therefore, cooperating with Latin America and the Caribbean will enable us to improve the lives of our populations,” Former Ethiopian Premier Desalegn said.

The Global Corporate Tax Deal – An African Perspective (IDN InDepthNews)

On October 30, 2021, the leaders of the world’s 20 largest economies, the G20, endorsed a two-pillar blueprint to address the tax challenges arising from the digitalization of the economy. The agreement includes partial reallocation of taxing rights to market jurisdictions and a 15 per cent global minimum tax for multinational enterprises (MNEs).

It is worth noting that only 23 African states are among the 137 countries and jurisdictions set to implement this global deal—less than half of all the countries on the continent. Two of the main issues for African countries as their economies become increasingly digitalized are i) options for better nexus and profit allocation rules mainly as source jurisdictions; and ii) opportunities for policy and administrative support to deal with illicit financial flows (IFF). Assessing the current momentum around the worldwide tax reform deal can improve our understanding of the African context while promoting a more unified African voice on international tax cooperation and tax governance for sustainable development.

Can hybrid finance unburden Africa’s shaky SME sector? (World Finance)

It is tough being a small and medium enterprise (SME) in Africa, a continent where the SMEs sector is quite fragile. Nothing has exposed the apparent quicksand foundations of the sector more than the COVID-19 pandemic. With the crisis dragging the continent into its first economic recession in 25 years, SMEs bore the brunt with a majority sinking into oblivion. For those that have survived the pangs of the pandemic, rebuilding is bound to be torturous. “COVID-19 had a knock-on effect for SMEs, forcing many to close or curtail operations,” says Manuel Reyes-Retana, International Finance Corporation (IFC) director for Africa. He adds that although the sector has demonstrated a zeal for resilience with many SMEs finding ways to stay in business, the damage has been substantial with a majority struggling to regain momentum. For SMEs in Africa, the one challenge that has remained constant, and one that COVID-19 has yet again blatantly exposed, is how lack of access to finance makes the sector vulnerable. In fact, it’s been obvious that SMEs with relatively weak financial muscles have faced the most risk. Experts believe that for the sector to recover and build shock absorbers for long-term survival, adequate access to stress-free financing is paramount.

“Hybrid financing is a more flexible tool for SMEs,” states Conor Savoy, senior fellow, project on prosperity and development at the Centre for Strategic and International Studies. He adds that development financial institutions (DFIs) have the ability to lead the way in creating financial instruments through which SMEs can access hybrid financing, thus giving the sector a more solid backing to pursue growth. DFIs have proved they can be an important source of equity in developing countries. Some are already investing as much as half of their portfolios in equity. “In exchange for a certain degree of ownership, equity investments provide an essential source of capital for firms without burdening them with loan repayments,” he notes.

Africa Investment Conference: Clean Growth (GOV.UK)

Despite Africa’s abundance of renewable energy sources – solar, wind, hydro and geothermal - most countries, businesses and communities still rely on fossil fuels. Given the need for all countries to transition to clean growth, this presents an era-defining opportunity for the private sector. The UK Government is working with African countries to support their pursuit of clean, sustainable, and resilient development.

In 2020, at the UK-Africa Investment Summit, we committed to build a new business support service to expand trade with African countries. It is called the Growth Gateway - a digital portal that offers support on trade, finance, and investment, backed by a team of trade and investment specialists, including experts from Boston Consulting Group and PA Consulting.

A UK-Africa trade deal would create jobs and boost the Commonwealth: Post BREXIT, it is now possible (Daily Trust)

A deal would enable Britain to practice the free trade it has long preached and represent recognition by a G7 economy of the benefits of African unity, writes President Muhammadu Buhari of Nigeria. Two years after the United Kingdom’s departure from the European Union, my country, Nigeria, and her African partners seek a new settlement with Britain: one based on cooperation in fairer – and freer – trade.

Global economy

DG Okonjo-Iweala calls on ministers to step up negotiating efforts, harvest outcomes (WTO)

The informal gathering of around 30 trade ministers is traditionally hosted by the Swiss government in Davos but was held virtually this year in line with the World Economic Forum’s decision to cancel its in-person annual meeting. In her remarks to the event, the Director-General noted that pandemic-related uncertainty would continue to prevail so long as large numbers of people in much of the world remained unvaccinated against COVID-19 – and that the WTO had a contribution to make in ending vaccine inequity.

The Director-General called ministers’ attention to the key sticking points on the WTO’s response to the pandemic, fisheries subsidies and agriculture, while also making the case for moving ahead with WTO reform, including dispute settlement.

The impact of maritime piracy on trade and transport (VOX-EU)

Maritime piracy has long haunted both global shipping and people living near the shore. However, in times of pandemic-induced closures of ports, a blockage of the Suez Canal by the Ever Given and conflicts between rival governments in the Strait for Hormuz and South East Asia (Cosar and Thomas 2021), it does not come to mind as the number one threat to global transport networks. Nevertheless, modern piracy remains a common threat to international merchant shipping. As a result of the 229 incidents in the year 2020, more than a hundred people were held hostage, several of whom were wounded.

Besides the danger to the crew, piracy attacks also lead to delays of ships, as well as damages to the vessel and cargo. Shipping firms adapt by rerouting their ships on costly detours (Bendall 2010) or investing in armed guards, electric fencing, razor wire, water cannons, and other weaponry. Shippers also bear implicit costs of piracy such as wage premia and higher insurance payments. All of these costs have an economic dimension and make it more expensive to ship goods, which ultimately affects the welfare of trading countries.

Davos Agenda Closes with Calls for New Models of Public-Private Cooperation (WEF)

The Davos Agenda closed today following headline-making dialogues with heads of state and government, international organizations, business and civil society. The week-long meeting convened leaders on “The State of the World”. It was the first global platform of the year and focused on driving concerted action among key global stakeholders.

Access to COVID-19 vaccines continues to pose a serious problem for Africa, with fewer than 10% of populations fully vaccinated in most countries, said Yemi Osinbajo, Vice-President of Nigeria. He called for patent waivers to permit African countries to manufacture vaccines locally. “Now is a good time to test global will,” he said, in building international cooperation to prepare for new, possibly worse pandemics to come.


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