tralac Daily News
Mantashe: SA must oppose ‘investment killing’ foreign-funded lobby (Engineering News)
South Africa must oppose a foreign-funded anti-development agenda if it has any chance at growing its extractive industries for the benefit of the economy, Mineral Resources and Energy Minister Gwede Mantashe has said. Speaking at the North West provincial mining and energy investment conference on Tuesday, the minister highlighted the need for exploration for minerals and metals in South Africa, but warned an anti-development lobby is seeking to oppose such projects at every turn. “We must appreciate the fact that there’s an anti-development movement that is emerging, which is very confident, very emboldened. Every time you explore for mining, or even for oil and gas in the ocean, they take you to court. Their aim is to kill investment through the courts,” Mantashe said.
Long road ahead for the retail sector — particularly e-commerce (Daily Maverick)
The nature of household expenditure has assumed a profound change as a result of the unprecedented disruption induced by the pandemic. Although some sectors and firms have actually benefited from the fast-tracking of the digital revolution, prolonged and heightened uncertainty has been a thorn in the flesh of most retailers. The South African economy was very fortunate to have been buffered by a commodity price cycle that benefited the resource sectors, while generally favourable weather conditions and a highly competitive farming community also secured solid growth in the agriculture sector. Unfortunately, however, retail — which is one of the mainstays of the domestic economy — continues to underperform relative to the pre-Covid period. During the first 11 months of 2021, total retail trade sales amounted to marginally more than R1-trillion, which was 3.2% higher than the figure for January to November 2020, but still 4.7% lower than during the corresponding period in 2019 (in real terms). Of even more concern is the fact that 2021’s retail trade sales up to November are also still lagging behind 2017’s record inflation-adjusted figure for January to November, namely by 5.7%.
For the sake of South Africa, reopen business tourism (Daily Maverick)
When nations closed their borders and instituted travel bans and other restrictions on movement, the tourism industry received the world’s attention. But not all tourism received equal consideration. The effect of national lockdowns on business tourism, specifically the meetings, incentives, conferences and exhibitions (Mice) sector, has been woefully neglected in the national conversation.
South Africa is a global leader in business tourism. We have world-class facilities, internationally renowned experts in the field and an illustrious history of successfully hosting best-in-class international events. These achievements are at risk of being squandered. Before Covid-19 the exhibition industry was a vibrant, growing sector. According to Projeni Pather, chairperson of the Association of African Exhibition Organisers, the industry contributed R75-billion to the South African GDP annually before Covid-19.
2030 a scary deadline for SA’s car manufacturing industry (CAR Magazine)
Over the course of 35 years, 1 191 604 BMW 3 Series’ were manufactured and assembled at BMW Plant Rosslyn, North of Pretoria. Now, over 200 G03 X3’s roll off the line per day.The EU has made it explicitly clear that BMWs, Volkswagens, Toyotas, Fords and Mercedes-Benzes that are manufactured South Africa will no longer be accepted as imports. When one considers that 75% of all vehicles produced in South Africa are exported, the prospect of this is frightening for both investors, as well as those who work in the manufacturing plants – decreased demand equals lower production, which equates to fewer hands being needed. The knock-on will be catastrophic.
Zim Set To Export Oranges To China (NewZimbabwe)
ZIMBABWE has signed a deal with China to export fresh citrus fruits to the Asian giant. The Chinese Embassy has confirmed the deal. “The sweet and juicy Zimbabwean citrus will join the Chinese market as the citrus export protocol has just been signed,” it said. “We are implementing President Xi’s pledge that China will open a Green Channel for the export of African agricultural products. It will benefit more Zimbabwean farmers,” wrote the embassy. The agreement between the two countries was signed in 2015 as Zimbabwe looked for a market for Shashi Citrus smallholder farmers.
Kenya’s competitiveness in the export market has eroded in the last decade, stifled by a lack of entry by more productive companies and specialisation in commodities that have low demand growth.
The competitiveness erosion has particularly affected the agriculture and manufacturing sectors, with the latter identified as key in transforming Kenya into an industrialised, middle-income country by 2030. “The lack of dynamism in the exports sector seems to be the main explanatory factor for the loss of competitiveness as well as specialisation in products with low demand growth and subject to competition from producers from relatively low-income countries,” says the IMF.
Seaports register cargo growth despite Covid-19 (The East African)
There was an increase in the cargo volumes handled by the ports of Mombasa and Dar es Salaam in 2021, a rebound at a time when the two countries are investing more on their lakes and sea ports. Mombasa recorded a slight increase in throughput with 34.54 million tonnes against 34.12 million tonnes handled in 2020, representing a growth of 1.2 percent with transshipment contributing to about 25 percent of the total growth. Similarly, container traffic improved, registering 1.43 million twenty foot equivalent units (TEUs) compared with 1.35 million TEUs handled in the same period in 2020 representing an increase of 75,986 TEUs or 5.6 percent. Kenya Ports Authority acting managing director John Mwangemi said the improved performance was mainly attributed to a continued recovery from the Covid-19 pandemic period which in 2020 disrupted the global supply chain, and affecting many ports operations globally, but also, to improved resource planning and efficiency of business processes.
Kenya seeks new date for Uganda trade mission in bid to end milk standoff (The East African)
Kenya has requested Uganda to issue a different date for a trade mission to Kampala after an invitation to attend the talks in the neighbouring country was received late. Kenya’s delegation was supposed to start the trade mission to Uganda on Monday after Kampala finally issued a date. However, the letter which was sent through the ministries of foreign affairs and trade was received late, prompting Kenya to seek an alternative date to give room for preparations. Kenya wants to visit Uganda to ascertain that all the milk that comes from there is produced by local farmers, following allegations that the commodity is imported from third-party countries as powder and reconstituted before it is exported to Kenya as fresh.
Just over three years ago, the berth where these Post-Panamax vessels are now being hosted was but an outlet of a creek flowing into the harbor area. Motor vehicle imports arrived on much smaller ships due to the depth restrictions alongside the berths. Rather than being driven from the vessels, the vehicles on board would need to be offloaded with ships cranes at great risk to both the staff and the cars, and with the exercise requiring no less than three days to accomplish.
Construction of the first dedicated roll-on, roll-off (“RoRo”) infrastructure ramp and terminal in the port began in 2018 and was completed and became operational in March 2021, enabling the port to start hosting Post-Panamax vessels, with the first arriving in August. Motor vehicles are now driven off the ship and straight onto the adjacent spacious berth with a handling capacity of 3,000 vehicles at a time, or over 200,000 per year.
The Rice Millers Association of Ghana (RMAG), Peasant Farmers Association of Ghana (PFAG) and General Agricultural Workers Union (GAWU) have taken on the government for suspending plans to reverse the discounts introduced on benchmark values at the ports. The groups in a joint statement insisted that an estimated number of 100,000 persons who are directly engaged in rice value chain activities stand the risk of losing their livelihoods if the benchmark discount policy reversal is not implemented as planned. “How do we stop the importation of rice into Ghana if the benchmark value policy reversal is not implemented immediately? Such grand targets remain a mirage in the current paradigm where rice imports enjoy a 50% discount on import duties values as granted by this benchmark policy while local rice production faces high input costs and little or no support from government for millers.”
A deputy minister of trade and industry, Herbert Krapa, has said an introduction of a competition policy for trading on the continent will inure to the benefit of industries and enterprises especially at a time the African Continental Free Trade Area is operational. Delivering a speech at the 3rd Africa Trade Roundtable, on the theme “The relevance of AfCFTA’s competition protocols on Ghana’s industrial transformation” at the University of Professional Studies, Accra, Tuesday, Mr. Krapa said the initiative “will guard against anti-competitive conduct” stressing that an “effective competition policy will be critical to ensuring that the gains expected from the AfCFTA trade liberalisation will not be eroded by uncompetitive practices.”
‘NCS must be driven by technology to achieve efficiency’ (The Guardian Nigeria)
As the World Customs Organisation (WCO) marks the International Customs Day today, Tony Nwabunike, the President of the Association of Nigeria Licensed Customs Agents (ANLCA), spoke with ADAKU ONYENUCHEYA on the activities of Nigeria Customs Service (NCS) and other issues that could affect AfCFTA.
What are your thoughts on the Nigeria Customs Service (NCS) operations in trade facilitation?
Given what WCO is about and the fact that the 2022 theme is ‘Scaling up Customs Digital Transformation by Embracing a Data Culture and Building a Data Ecosystem’, I want to see NCS operate at a level where Information Communication Technology (ICT) is integral to the operation. I expect that it evolves further and attains a paperless and more scientific approach to work. NCS should have the examination of cargoes wholly done by scanners and relieve themselves from the burden of physical examination. NCS should be attained with other WCO member nations to combat trade bottlenecks and facilitate trade instead of the emphasis on revenue generation as they are in Nigeria. The Federal Government also has to release Customs from this burden of revenue generation at all times because what it means is that people are to enforce import guidelines and procedures, but they find themselves in a very tight situation because of the revenue targets.
The major bottlenecks with regard to trade facilitation at the ports result from the disparity or discord between Customs and their licensed agents. These are Customs licensed agents that do business with Customs but they are not working in synergy in terms of digital transformation. While Customs has moved up to NICIS II at the moment, so many Customs licensed agents are not up-to-date as they are still struggling with ASCUDA ++. Customs have gone past ASCUDA several years ago, but their crucial partners were not carried along.
The CEO of the Nigeria Economic Summit Group (NESG), Mr. Laoye Jaiyeola, has described saving in Naira as a worthless venture since inflation has completely eroded its value. Jaiyeola made this assertion in Abuja on Tuesday at the launch of the NESG 2022 Macroeconomic Outlook Report. He said; “Why should you tell anybody in Nigeria to store his money in Naira when your interest rate on Naira in some places is even lower than the interest rate of some foreign currency?”
Egypt is working seriously on becoming the re-export hub for Malaysian palm oil in Africa as well as neighbouring Arab countries, said its Ambassador to Malaysia Ragai Tawfik Said Nasr. As the North African country assumed the presidency of the Common Market for Eastern and Southern Africa (Comesa) this year, which comprises 21 member states, he said it is timely for Egypt and Malaysia to accelerate the plan. “There are a lot of incentives under Comesa, so Malaysian palm oil can be exported from Egypt using these incentives to the African countries. “We are working on having the factory or storage facility of palm oil in Egypt in the near future,” he said after his meeting with Bernama’s Editor-in-Chief Khairdzir Md Yunus at the Malaysian National News Agency’s headquarters, here, Monday.
On bilateral trade between both countries this year, he said the total value is expected to exceed the US$1 billion (RM4.19 billion) mark recorded in 2021, which was an increase of 85 per cent from the previous year. “This is significant although there is Covid-19. It means that there is a significant breakthrough and will from both sides to increase the trade as we have a lot of opportunities to be explored.
Morocco set to reduce its industrial trade deficit (The North Africa Post)
Morocco has launched an ambitious plan to cut its trade deficit by $3.7 billion by offering incentives to local investors to produce imported goods locally, Morocco’s trade minister said. So far 731 industrial projects were eligible for state subsidies, of which 90% will be funded by a Moroccan capital, minister Riad Mezzour told MPs. Most of these factories are focused on the agri-good, chemical and textile industries with a potential to create 400,000 jobs, he said. Morocco’s King had urged the government to strive to ensure Morocco’s self-sufficiency in strategic goods. Mezzour said that investors who choose to set up projects in remote areas with an emerging industrial sector will benefit from incentives including affordable real estate.
African trade news
The Technology, media and telecommunications (TMT) sector is transforming businesses in Africa, opening up competition, introducing new services and disrupting incumbent business models. Before Covid-19, businesses in Africa used technology to reduce costs, improve processes, grow customers and enhance innovation. The impact of the pandemic boosted existing trends, especially digitalisation and the remote delivery of services. However, for Africa to implement high end, fourth industrial revolution (4IR) technology and infrastructure, TMT companies require flexible and investment-focused policy and legislative frameworks that cater for the affordable and efficient rollout of telecommunications infrastructure and access to broadband spectrum. The rollout of 5G in Africa will lead to the significant transformation of the manufacturing, health, transport and utilities sectors.
Unfortunately, very few African countries have made significant progress in the roll out of 5G and if this is to be a focus then it will be important to ensure that policy and legislative frameworks are in place to enable the efficient and affordable roll out of telecommunications infrastructure, as well as access to the required broadband spectrum. A further important focus for the success of 5G roll out in Africa will be the ability of consumers to access affordable data services and smart devices.
Despite the global pandemic, the African fintech ecosystem has remained on a steady rise. Increasing access to mobile devices and internet connectivity has accelerated Africa into the second fastest market for global banking and payments businesses. Mobile money and third-party payment systems have been segment leaders, with more than half of the world’s mobile money customers now based in Africa, and the continent accounting for three quarters of the world’s mobile money and peer-to-peer (P2P) transactions by volume.
There have also been significant movements in digital currency trends. The Central Bank of Nigeria became the second central bank in the world to issue a Central Bank Digital Currency (CBDC) with its launch of the eNaira in October 2021. African CBDCs hold significant potential for the movement of money on the continent, especially in light of broadening trade corridors as a consequence of AfCFTA. Many other countries, such as South Africa, are also piloting similar projects and feasibility studies.
2022 – SADC aims for deeper integration (sardc.net)
The year 2022 promises to be an eventful period for southern Africa, with hopes that the region could begin to see a return to normalcy after the global community was hard hit by the COVID-19 pandemic. “Our task in 2022 is simple, but not easy,” the current SADC chair, President Lazarus Chakwera of Malawi said during a recent visit to the SADC Secretariat headquarters in Botswana. “Our task is to increase regional integration and development.”
On the economic front, SADC wants to continue to improve its manufacturing capacity as well as promoting industrialization to ensure that the abundant natural resources in the region benefit the people of the region through beneficiation instead of being shipped out as raw material. The manufacturing sector’s share of Gross Domestic Product (GDP) in the region has increased from an average of 10.3 percent in 2013 to about 11.9 percent in 2018, and the region now targets to more than double that share to 30 percent by 2030 and 40 percent by 2050.
An increase in the manufacturing sector’s share of GDP has ripple effects on the economy including an increase in production, employment and foreign currency generation from the export of value-added products.
CPI 2021 for Sub-Saharan Africa: Amid democratic turbulence, deep-seated corruption exacerbates threats to freedoms (Transparency International)
Senegal’s (43) performance on the CPI has significantly improved (from 36) in the last decade, gaining 9 points from 2012 to 2016. Advancements during this period include the creation of the Office for the Fight against Fraud and Corruption (OFNAC) and passage of the asset declaration law, among other reforms. But progress halted there, with Senegal’s 2021 score dropping 2 points compared to last year. In 2020, a national anti-corruption strategy was adopted, but its prospects are unclear, as resourcing and implementation remain a challenge. In recent years, the work of anti-corruption institutions – such as OFNAC – has lacked rigour, and numerous denunciations by the public about mismanagement of public funds and natural resources have not been adequately investigated. Patchy enforcement of anti-corruption legislation is also a major concern.
How gold worth billions of dollars is smuggled out of Africa (The East African)
Every year, billions of dollars’ worth of gold is smuggled out of Africa through Kenya into the United Arab Emirates (UAE) in the Middle East. According to an analysis by Reuters, the Middle East is a gateway to markets in Europe, the United States, and beyond. Customs data shows that the UAE imported $15.1 billion worth of gold from Africa in 2016, more than any other country and up from $1.3 billion in 2006. The total weight was 446 tonnes, in varying degrees of purity – up from 67 tonnes in 2006. Just recently, the special forces of Uganda have seized, an important cargo ship of two tons of gold belonging to a rebel group led by a certain Mulum Jean. The cargo was reportedly meant to have passed through Kenya for onward transmission to a group of European businessmen known as Olivier and Sasha. Much of the gold was not recorded in the exports of African states. Five trade economists interviewed said this indicates large amounts of gold are leaving Africa with no taxes being paid to the states that produce them.
Africa faces shortage of goods as China ports shut on Omicron surge (Business Daily)
The partial closure of a number of ports in China as a result of the rising cases of Omicron variant is expected to cause a serious shortage of commodities globally in the next few weeks with Africa expected to be the most affected region.
China-Africa trade reached $185.2 billion between January and September of this year, up 38.2 percent year on year. Different shipping lines have suspended operations in different Chinese ports with at least three ports partially closing its operations. Shipping companies said they are re-assessing the situation before the resumption of operations in different Chinese ports.
Ahead of the EU-African Union Summit scheduled for 17-18 February 2022, African thought leaders stressed the importance of trade agreements and regional integration as keys to drive investment into the continent in a discussion organised by the European parliament to discuss Africa’s partnership and cooperation with the EU. Chinelo Anohu, Senior Director of the Africa Investment Forum, joined Secretary General of the African Continental Free Trade Area (AfCFTA) Wamkele Mene and others, to reflect on deepening Africa’s relationship during the public hearing on African trade and finance held Monday. In a keynote address, Mene cited the EU as a model for African integration. He described a strong Africa-Europe partnership as a “win-win.” Africa’s youthful population and middle class presented significant opportunities for European businesses, he said, stressing the pharmaceutical, automobile and agro-processing sectors as hungry for investment.
UK Export Finance has released new data today showing it provided over £500 million worth of support for projects in West Africa throughout 2021, the most in over two decades. At last week’s Africa Investment Conference (20 January), the Prime Minister said the UK is already one of Africa’s biggest commercial partners but we are “determined to do much more - our shared task must be to ensure that Africa prospers from the green industrial revolution.” The government is also mobilising support from its export credit agency, UKEF, to boost exports to Africa – it provided support worth £2.3 billion in the past year, more than trebling the amount provided in 2018-19.
In West Africa this has been deployed to a range of vital infrastructure projects, helping to build major roads and bridges as well as providing medical and IT equipment, design services and environmental and social work.
Despite the profound disruptive impact of the pandemic on supply chains, demand for consumer goods rose strongly last year. We expect merchandise world trade volumes to have increased by 10.6% in 2021 compared to the previous year, surpassing its pre-pandemic level by 4.3%. The growth rates of global merchandise trade should return to pre-pandemic levels this year, supported by industrial growth, global demand for goods remaining elevated, and only a limited shift of consumption back to services. And that double-digit expected increase comes in spite of massive supply chain disruptions and soaring transport costs. It reflects strong demand for goods during the pandemic with China being one of the main drivers of the trade surge.
Going into 2022, we expect trade growth rates to return to their pre-pandemic levels in line with a continued but weakened global economic recovery. For this year, we pencil in a growth rate in merchandise world trade of 4.1% compared to 10.6% the year before, while we expect world GDP growth to come in at 4.4% from 6.1% in 2021. 2021 was an exceptional year driven by pandemic-related catch-up effects. Despite ongoing supply chain frictions and average containerised transport costs expected to remain high, we still expect to see a decent growth rate.
Entitled “The Role of Trade in Developing Countries’ Road to Recovery”, the study looks into how international trade can help developing countries recover from the COVID-19 pandemic, strengthen economic resilience to future global shocks, reduce poverty, mitigate carbon emissions and adapt to climate change. An estimated 100 million people have been pushed into extreme poverty because of the COVID-19 pandemic, note World Bank Group President David Malpass and WTO DG Okonjo-Iweala, in a joint foreword to the study. The current growth of trade is uneven, with women and other vulnerable groups lagging behind. While keeping trade open and global value chains functioning is helping to drive economic recovery, boosting developing countries’ capacity to trade will be essential to distribute the gains from trade more widely and to support a transition to a green economy, the study stresses.
Why Trade finance matters to unlock LDCs’ trade potential (Trade for Development News)
Trade finance is vital to facilitate trade. The WTO estimates that between 80 and 90 percent of world trade relies on trade finance in the form of trade credit or insurance. A better access to trade finance in least developed countries (LDCs) could allow businesses to have the financial tools to participate in national, regional or global trade. Trade finance not only reduces the risks associated with trade for companies but also improve their cash flow, allowing them to access new markets. According to research by the World Economic Forum (WEF), lack of access to trade finance was found to be one of the top domestic barriers to a country’s trading capacity, alongside transportation and logistics. Without trade finance, many small businesses cannot trade and compete.
In recent decades, Ethiopia has experienced rapid economic growth and considerable expansion of its trade flows. An important component of this growth is the promotion of export development, and the need to increase the access of Ethiopian businesses to the international trading system. This economic expansion has been accompanied by a strong demand from businesses for trade finance, with only limited capacity to respond to such demand.
India has said that the WTO’s draft negotiating text on agriculture was a ‘mistake’ and demanded its withdrawal as it did not include key proposals made by developing nations, including those on public stockholding and special safeguard mechanism, vital for a more balanced agreement. “At the WTO Committee on Agriculture meeting on Monday, a number of developing and least-developed countries and groups, including the African Group, the African, Caribbean and Pacific Group (the ACP Group) and the G33 group, continued to oppose the draft text and sought a review,” a Geneva-based trade official told BusinessLine. Attempts are on at the WTO to push forward negotiations in areas such as agriculture, fisheries subsidies and a proposed temporary waiver of intellectual property norms on vaccines and medications that were on top of the agenda of the 12th Ministerial Conference (MC12) scheduled late last year. The Ministerial was indefinitely postponed due to the Covid-19 situation but the WTO is attempting to conclude negotiations in the identified areas nonetheless.
The draft text on agriculture was circulated by the chair of the CoA prior to the scheduled MC12 with proposed deliverables on 7 negotiation topics including domestic support, market access, export competition, export restriction, cotton, public stockholding for food security purposes and a special safeguard mechanism. India had clearly stated at the WTO even before the MC12 was postponed that the draft negotiating text on agriculture was unacceptable as it ignored the primary demands of developing nations. These include provisions to ensure that countries can continue with their minimum support price and public stockholding programmes for food without worrying about caps and adequate safeguards to check escalation in imports of items.
General Council Chair Ambassador Dacio Castillo (Honduras) convened a meeting of members on 25 January to report on his recent consultations regarding the convening of the 12th Ministerial Conference (MC12), how to proceed on substantive issues, and the WTO response to the COVID-19 pandemic. Director-General Ngozi Okonjo-Iweala said while members’ views on these issues were still in the process of converging, there was a willingness to keep working on all negotiating fronts and maintain the momentum built up late last year.
The number and frequency of natural disasters have markedly increased in recent decades, with climate change being one of the factors affecting this trend, especially in terms of hydro-meteorological disasters such as floods and droughts. The figure is close to 12,000 disasters in the period 1980-2018, and the economic cost of these disasters exceeds three trillion dollars, according to the International Disaster Database (EM-DAT).
Trade enters into this puzzle on the supply as well as the demand side of the economy. Clearly, reduced production means that exports fall, not only due to the damage suffered by exporting firms, but also to the destruction of transportation infrastructure. In terms of demand, imports can temporarily act as a buffer, replacing domestic production and facilitating recovery. However, falling exports and rising imports would imply a deterioration of the trade balance. Moreover, if the economy that suffers the disaster is integrated into global value chains, indirect effects are generated for the members of these chains, the intensity of which depends on the position in the chain and the productive specialization of the affected country. For example, small and medium-sized enterprises in developing countries that specialize in intermediate inputs can create bottlenecks in value chains.
According to a recent study commissioned by the World Trade Organisation, such disasters interact with international trade in a very complex way. From a macroeconomic perspective, a natural disaster triggers resource destruction and a supply shock, leading to a reduction in output and employment. From the micro perspective, it affects all economic agents: companies have to face the destruction of their physical and human capital, workers face health problems and job losses, and finally, the state has to contribute to financing the losses suffered by both parties.
The continuing global recovery faces multiple challenges as the pandemic enters its third year. The rapid spread of the Omicron variant has led to renewed mobility restrictions in many countries and increased labor shortages. Supply disruptions still weigh on activity and are contributing to higher inflation, adding to pressures from strong demand and elevated food and energy prices. Moreover, record debt and rising inflation constrain the ability of many countries to address renewed disruptions.
Some challenges, however, could be shorter lived than others. The new variant appears to be associated with less severe illness than the Delta variant, and the record surge in infections is expected to decline relatively quickly. The IMF’s latest World Economic Outlook therefore anticipates that while Omicron will weigh on activity in the first quarter of 2022, this effect will fade starting in the second quarter.