tralac Daily News
Trade Statistics for December 2021 (South African Revenue Service)
SARS has released trade statistics for December 2021 recording a preliminary trade balance surplus of R30.14 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 31 December 2021) preliminary trade balance surplus of R440.75 billion is an improvement from the R271.57 billion trade balance surplus for the comparable period in 2020. Exports increased by 22.9% year-on-year whilst imports increased by 34.2% over the same period.
The R30.14 billion preliminary trade balance surplus for December 2021 is attributable to exports of R156.30 billion and imports of R126.16 billion. Exports decreased by R6.49 billion (4.0%) between November and December 2021 and imports decreased by R0.79 billion (0.6%) over the same period.
SA needs new agricultural export markets urgently (Food for Mzansi)
When it comes to South Africa’s agricultural sector, the focus for a long period of time was on land reform as an essential policy for enhancing black South African participation in this sector. However, according to Agbiz chief economist Wandile Sihlobo, land reform is not the only issue that deserves our attention.
“The export drive deserves attention too, as do the network industries that enable export activity. The government should take the lead in all these areas but encourage partnerships with agribusinesses and various private sector role-players where business conditions permit,” he writes in a Sunday Times article.
Mineral Resources and Energy Minister, Gwede Mantashe, says while coal production remains a strategic sector for the country, it must innovate and commit to “moving from high carbon to low carbon emissions” as part of the country’s just energy transition.
“Domestically, the commodity will continue to play a role in developing economic energy mix, steel and cement industries but its use will eventually decline as nations and businesses strive to reduce their environmental impact and abide by climate policies. “We must as a sector map out clearly an engagement strategy on the national interests with regards coal. “Coal remains an important commodity as highlighted by the massive reserves. It is upon the coal industry to help map out its future,” Mantashe said.
The Minister said despite challenges rising from the need to reduce carbon emissions, the sector remains an “essential component” in South Africa’s energy mix.
Kenya pumps Sh4.5bn to revive rail lines, eyes more transit trade (Business Daily)
The government will spend Sh4.5 billion to rehabilitate old railway lines in a bid to improve transit of goods to the neighbouring countries. The proposal by the Kenya Railways targets to revitilise 217km Nakuru-Kisumu metre gauge railway (MGR), 77.8km Gilgil-Nyahururu MGR branch line and the 69.05 Kisumu-Butere section which are currently in “dilapidated, vandalised or overgrown with vegetation”.
According to a draft seen by Shipping & Logistics, the parastatal has set aside Sh3 billion for the Nakuru-Kisumu line, Sh537 million for Kisumu- Butere and Sh1 billion for Gilgil- Nyahururu branch line. The three lines will act as main trans-shipment points between the standard gauge railway and road for freight traffic destined for areas beyond Naivasha inland container depot.
The shipping business in Africa has for years been inefficient and costly due to the traditional ways of managing operations – traditional in the sense that a shipper has to physically look for a transporter, sometimes through a middle-man, and often, once goods are delivered, the trucks almost always make the return trip empty. For a continent like Africa, where roads are heavily used to ferry goods, any inefficiencies encountered translate into higher prices of goods for the end-customer. However, over the last one decade, tech solutions are emerging to bring efficiency into the sector and make shipping cheaper, while increasing the availability of options for shippers. Amitruck, a Kenyan tech-enabled logistics platform, is one such provider of solutions that streamline the shipping market. The startup, which has achieved a great take-off in Kenya, is set to strengthen its technical, operations and sales team to lay ground for its entry into Tanzania and Uganda markets, after raising $4 million in seed funding bringing the total funds raised to date to $5 million. The expansion plans come as it looks to be the regional go-to platform for shippers and transporters doing in-country and cross-border business.
Truckers to save millions as Rwanda opens border (Business Daily)
Truck owners are set to save millions of shillings in operation costs following Rwanda’s move to reopen its border with Uganda point closed three years ago. However, passengers will still have to content with longer route to Kigali.
The move comes as a major reprieve because truckers will no longer have to cover long distances in order to reach Rwanda. The border was closed in 2019 following a dispute between Kigali and Kampala. However, Rwanda has restricted the move of passengers saying that they will only allow truckers and not the passage of people at the border point.
Kenyans travelling to Kigali have had to go through Tanzania as the Uganda-Rwanda border at the Gatuna post was closed, adding more pain to passengers who have to pay more because of long distance to be covered.
The project is set to bring to life a 1443km-long heated oil pipeline from Hoima in Uganda to Tanga port, the biggest joint investment in the East African Community (EAC) area so far. The Vice President’s Office said in a statement yesterday that signing the FID will be held at Kololo Stadium in Kampala, with VP Dr Philip Mpango having arrived in Uganda for the ceremony, in place of President Samia Suluhu Hassan.
In April 2021, the two countries signed the host government agreement, shareholder agreement (for the pipeline company) and tariff agreements. The crude oil project is expected to help increase employment for thousands of youths and stimulate joint oil exploration in the region.
Mombasa port to reap from Uganda’s mega projects (Business Daily)
Port of Mombasa is set to benefit from heavy infrastructure investment in Uganda to increase its cargo throughout this year. One of the main developments which will see more Uganda cargo passing through the port is the ongoing oil projects with investors giving a green light to use the Port of Mombasa to ferry all the cargo needed for the projects.
Last week, officials from Total Energy Uganda visited the Mombasa port to familiarise themselves with the facility’s operations and assess its readiness for the clearing of the cargo. In the statement to road users and to the public, Kenya Ports Authority (KPA) said the first consignment is expected to land at the port in March this year.
The perennial transit truck congestion at the Elubo border and the haphazard parking of cargo trucks in the Jomoro Municipal Assembly has become a thing of the past with the construction of the Elubo Freight Park. The project which was initiated and funded by the Ghana Shippers’ Authority (GSA) with support from the Jomoro Municipal Assembly was commissioned on Friday, January 28, 2022. The ultra-modern facility aims to make the nation’s western transit corridor attractive to businesses and individuals who haul goods between Ghana and La Cote d’Ivoire and beyond in a bid to boost transit trade volumes. Ghana’s transit trade is estimated to generate GH₵ 134 million annually and the GSA is working hard to meet and even surpass the target in its effort to contribute to the economic growth of the country.
Each day approximately 100 trucks from Tanzania enter Burundi and 50 trucks from Burundi enter Tanzania via Kabanga / Kabero One-Stop Border Post (OSBP). In 2020, Burundi exports to Tanzania hit $8.5million while Tanzania exports to Burundi reached $77.9 million. Top Burundi exports are Beverages & spirits and fruits. Kalisa said improving infrastructure, promoting consumption made in East Africa goods & services, boosting trade facilitation and product diversification is key to transformation, resilience and growth of the EAC bloc into a middle status economy amid the COVID -19 pandemic. EABC Board Director Amelie Ninganza urged for trade facilitation agencies to permit cross-border traders located near Kabanga / Kabero border to trade without the COVID-19 mandatory testing.
Principal Economist Charles Omusana from the EAC Secretariat said business should be facilitated as EAC integration is people-centered and private sector-led.
Tanzania opens grain stores in DRC, South Sudan to sell surplus harvest (The East African)
Tanzania has opened grain storage facilities in Lubumbashi, DR Congo, and Juba in South Sudan to facilitate the sale of surplus food crops. Agriculture Minister Hussein Bashe on social media last week said that the country also plans to open another facility in Kenya’s coastal city of Mombasa. The Agriculture ministry will not directly involve itself with the business of selling the exported grain but it will assume the role of an initiator, he added. “We have opened grain centres in Juba, South Sudan, and Lubumbashi in the DRC and already delivered 800 tonnes of grains to the two centres. This is all in efforts to enable Tanzanian farmers and traders get good markets for their products,” Bashe tweeted.
Rwandans and Ugandans intending to travel to either country using the just re-opened Gatuna/Katuna border will have to wait longer as officials of both countries work out modalities of managing travel in the context of Covid-19. The border, which had been closed since February 2019 amid a diplomatic impasse, reopened Monday, but many who intended to travel could not do so as only cargo, returning Rwandan citizens, and a few Ugandans traveling for essential purposes were cleared to cross into Rwanda. Immigration and customs officials of both countries held a closed-door meeting on the Rwandan side Monday morning, which is understood to have deliberated on necessary measures to facilitate movements in the context of Covid-19.
“Trucks, Rwandan citizens and returning residents are crossing to Rwanda at Gatuna like at other border points, as per EAC Covid-19 protocols. As noted in the communiqué, Rwandan and Ugandan health officials are working on joint Covid-19 protocols, which will enable all to cross on both sides,” Rwanda government Spokesperson Yolande Makolo said in a tweet Monday.
Diversify into oil and gas - Osafo-Maafo (Ghanaian Times)
The Senior Presidential Advisor, Yaw Osafo-Marfo, has urged Republic Bank to diversify its banking services and venture into oil and gas. He said Republic Financial Holdings Limited of Trinidad and Tobago, the mother bank, of Republic Bank, had been instrumental in the development of the oil and gas industry in the Caribbean.
“I urge Republic Bank to consider venturing into this area of operations so that you can leverage your expertise and competencies to further enhance current dynamics in that sector here in Ghana,” he said during the inauguration of the Headoffice annex of Republic Bank in Accra on Friday.
The West African Association for Cross-Border Trade in Agro-forestry-pastoral and Fisheries products and Food (WACTAF) has opened a Trade Information and Border Assistance Desk (TIBAD) at the Aflao border. The trade and information desk among other things seeks to address the issue of inadequate and inaccurate capturing of data, serve as language barrier needs and assist traders, especially women who ply their trade between Ghana, Togo, and other ECOWAS Communities.
The Federal Government warned that too much regulatory requirement hurts Nigeria’s export potential and has called for a rehabilitation of Nigeria’s economic regulatory agencies, to boost investment and economic growth. This was disclosed by Vice President, Yemi Osinbajo on Tuesday after he received a report of an ad hoc committee of the Presidential Enabling Business Environment Council (PEBEC) on agro-export at the Presidential Villa, Abuja. He warned that the over regulatory process leads to slower certification process compared to Nigeria’s neighbours and is leaving Nigerian producers behind.
A former New Patriotic Party (NPP) Member of Parliament (MP) for New Juaben South, Dr. Mark Assibey-Yeboah, has urged the government to go back to the International Monetary Fund (IMF) for financial support due to the economic challenges the country is experiencing. He was commenting on the E-levy proposal in the 2022 budget statement and the difficulties being encountered by the government in getting it passed by Parliament.
The Minority MPs have rejected the proposal despite the decision by the Finance Minister Ken Ofori-Atta to reduce the initial rate of 1.75 per cent to 1.5 per cent. They hold the view that the policy proposal is a disincentive to the growth of digital economy. To that end, their Leader, Haruna Iddrisu said, they would not support it.
Global energy giants were quick to halt their Mozambican gas projects when jihadist violence erupted on their doorsteps. After months of calm, reviving those multi-billion-dollar projects is a much slower job. Total Energies CEO Patrick Pouyanne visited Maputo on Monday, saying he was optimistic about the $20 billion (R305 billion) project. “A lot of progress has been done, let me be clear,” Pouyanne said, but added more work was needed to ensure lasting peace. “Security is not only a matter of armed forces,” he said. “It’s also a question to work together with the population. “Vast natural gas deposits were discovered in the northern province of Cabo Delgado in 2010, the largest ever found south of the Sahara. Once tapped, Mozambique could become one of the world’s 10 biggest exporters.
Morocco’s trade deficit increased by 25 percent to 22.1 billion U.S. dollars in 2021, the foreign exchange regulator reported on Tuesday. In 2021, Morocco’s imports increased by 24.5 percent year-on-year to 57.9 billion dollars, while its exports reached 35.8 billion dollars, up by 24.3 percent, the report said. Energy imports rose sharply by 51 percent to 8.2 billion dollars, it added. The report also said that the net inflow of foreign direct investments to Morocco recorded an increase of 20.5 percent to 2.19 billion dollars in 2021.
African trade news
The African Continental Free Trade Area (AfCFTA) has agreed to allow the trading of 850 new products pending approval by the heads of state of the African Union. Trading of the products will commence under AfCFTA’s Rule of Origin protocol. Rules of origin are the criteria needed to determine the national origin of a product. Their importance is derived from the fact that duties and restrictions in several cases depend on the source of imports. Before the identification of the 850 new products, AfCFTA had already agreed on 3,800, accounting for 88% of the number of targeted products to be traded among member countries on the continent.
“I am happy to say that this two-year period of work that we had undertaken in 2020 and 2021 identified more than 850 additional products for which rules of origin have been agreed. This package now goes to the heads of states, and if they endorse it, the package becomes the basis for trade to commence,” said Ebrahim Patel, South Africa’s trade minister and chair of the Council of Ministers responsible for trade among African Union member states.
Export potential under the African Continental Free Trade Area is heavily concentrated in three major exporters: Egypt, Morocco and South Africa. The 33 least developed countries in Africa account for only 16 per cent of the export potential.
The least developed countries have comparably greater export potential in agricultural products. Food processing industries also provide an opportunity for value addition and commodity-based export growth among these countries.
Periodic reviews of tariff concessions should allow for policy space for addressing weak productive capacities among the least developed countries and diversifying their imports.
The scramble to accelerate economic growth in Africa following the pandemic-induced slump will be swift if countries in the continent utilise local resources, trade, and technological advancement. Top industry experts unanimously agreed Tuesday at the ongoing Africa Business Convention 2022 organised by BusinessDay that the African continent needs to explore emerging opportunities and be updated with global trends and developments to abate the impact of the pandemic, leveraging trade and technology.
Shadrack Kubyane, co-founder, Coronet Blockchain, SA: “It is a lot easier to move things from China and Europe into Africa than it is to move things within Africa, and we need to repair that,” he said. To solve the problem, the blockchain expert said the solution does not revolve around infrastructure rather government policies to probe innovation. “We need a mindset shift for a successful free trade. Africa cannot continue to maintain the ideology that the winner takes all to repair trade in the continent. Countries need a mindset shift; also, blockchain is creating a level playing ground for all players in African trade, especially MSMEs.”
On 27 January 2022, representatives of the WCO, the AfCFTA Secretariat and the European Commission held a virtual meeting to review the state of play in the implementation of the African Continental Free Trade Area (AfCFTA). The meeting focused on the trade liberalization mechanism envisaged by the AfCFTA Agreement, the management of tariff offers and a possibility of setting up a continental digital platform to handle information on applicable tariff rates covering all African countries.
In opening the meeting, Mrs. Demitta Chinwude Gyang, Head of Customs at the AfCFTA Secretariat, expressed her appreciation for the support provided by the WCO and the EU on the implementation of the Harmonized System (HS) under the EU-WCO Programme for HS in Africa (HS-Africa Programme), funded by the EU. She emphasised that the trade under the AfCFTA had already started from January 2021, and 44 tariff offers had been submitted by AfCFTA signatories already. She explained that the AfCFTA Secretariat intended to create a web-based ‘tariff book’ whereby all the necessary information on tariff offers and applicable tariff rates would be made available in a user-friendly and easily accessible manner.
COMESA Secretariat has conducted a study to review the suitability of the current Simplified Trade Regime (STR) threshold which stands at US$2, 000 per consignment, per crossing. Specifically, the study was commissioned to review the current STR threshold value with a view to establishing a suitable level that is capable of effectively facilitating intra-regional trade in Member States already implementing the STR and those that will implement it in future. Director of Trade and Customs at COMESA Secretariat Dr Christopher Onyango stated that the review will also benefit countries that are not yet participating in the STR but intend to do so. This is part of COMESA’s strategies to boost cross-border trade. He added that apart from enabling small scale cross border traders to benefit from the tariff preferences available under regional integration the STR has the ingredients to stimulate domestic production and cross-border trade.
The Southern African Development Community (SADC) is improving private sector participation in the medical value chains, thanks to the Support towards the Industrialisation and Productive Sectors (SIPS), a joint action aimed at assisting the Region’s industrialisation and integration agenda. Under SIPS Joint Action, 14 companies in the SADC Region have received support to strengthen the development of regional value chains in the COVID-19 related medical and pharmaceutical products (CMPP). The €18 million Joint Action SIPS is co-funded by the European Union and the German Federal Ministry for Economic Cooperation and Development.
The Board of the African Development Bank (AfDB) has approved a grant of US$1.5m to advance intra-regional harmonization of electricity regulations and drive cross-border power trading in the COMESA region. This will be implemented through COMESA’s energy regulatory arm -the Regional Association of Energy Regulators for Eastern and Southern Africa (RAERESA). The two-year project seeks to provide tools for harmonizing regulatory frameworks to facilitate the smooth and timely completion, utilization and operation of regional energy infrastructure-a move that is expected to further enhance regional electricity trade, which is critical to COMESA noted RAERESA Chief Executive Officer Dr Mohamedain El-Seif.
A coalition of climate change-focused NGOs across Africa has called on the African Development Bank (AfDB) to stop providing financial and technical support for fossil fuel energy in Africa. “Establish an immediate ban on any new fossil fuel projects and publish a roadmap for phasing out all fossil fuel development financing to advance the just transition in line with the Paris Agreement” it stated in a document sighted by Citi News. The group charged the development finance institution to “prioritize the development and implementation of a fossil fuel finance exclusion policy that states that the bank will not fund, provide financial services, or capacity support to any coal, gas, or oil project or related infrastructure project that is carbon-intensive on the African continent after 2022.” The proposal focusing on energy; agriculture, forestry, land and ecosystems; and climate finance is an outcome of consultative processes with CSOs across Africa that seeks to promote human rights, sustainable development, and effective partnership.
Putting Africa on the path to universal electricity access (World Bank Blog)
As commodity prices soar and leaders around the world worry about energy shortages and prices of gasoline at the pump, millions of people in Africa still lack access to electricity. One-half of the people on the continent cannot turn on a fan when temperatures go up, can’t keep food cool, or simply turn the lights on. This energy access crisis must be addressed urgently.
In West and Central Africa, only three countries are on track to give every one of their people access to electricity by 2030. At this slow pace, 263 million people in the region will be left without electricity in ten years. West Africa has one of the lowest rates of electricity access in the world; only about 42% of the total population, and 8% of rural residents, have access to electricity.
As the African continent recovers from COVID-19, now is the critical time to accelerate progress towards universal energy access to drive the region’s economic transformation, promote socio-economic inclusion, and unlock human capital growth. Without reliable access to electricity, the holes in a country’s social fabric can grow bigger, those without access growing disenchanted with inequality.
Tackling the Africa region’s energy access crisis requires four bold approaches.
The private sector must do its part on data governance in Africa (Brookings Institution)
The last decade has seen an acceleration in the digitization of many aspects of our lives including financial services, commerce, education, and healthcare. Data gathering and exchange have accelerated alongside this swift uptake of digital engagement, and data has become the new essential commodity—with Africa as the next frontier. However, this rapid change brings along questions of data governance and privacy, especially as the implementation of the African Continental Free Trade Area (AfCFTA) moves forward. As the tech sector waits for regulators to catch up, individual companies can do more to protect consumers on their own.
Observing the commoditization of data as well as its attendant opportunities and challenges in Africa, it is hard to ignore that the analogy of data as the “new oil” is a powerful and prescient one. The commercialization of this resource can unlock considerable value for the continent in sectors critical for the development of thriving and connected economies. However, commercialization must be approached responsibly, as we have seen in the case of oil: If the exploitation of a resource is not well planned, unintended consequences—typically burdening the most vulnerable in our societies—arise.
Global economy news
DDG González highlighted the importance of supporting least developed countries (LDCs) in implementing the WTO’s Trade Facilitation Agreement. She said that national trade facilitation committees could bring creative and strategic thinking to help governments, traders and development partners reap the economic benefits from full participation in the global trading system.
The Global Forum brings together members of national trade facilitation committees, policymakers and other relevant stakeholders to discuss the latest trends regarding implementation of trade facilitation reforms, including the implementation of the WTO Trade Facilitation Agreement.
Global services trade regulations showed signs of liberalisation in 2021, slowing the steady build-up of trade barriers identified in previous years, according to a new OECD report. OECD Services Trade Restrictiveness Index (STRI): Policy trends up to 2022 shows that liberalisation outpaced new restrictions during the past year, as the erection of new barriers to services trade slowed across almost all major sectors covered. The average cumulative increase in barriers across sectors covered by the Index (STRI) was six times lower in 2021 than in 2020, indicating a significant decrease both in the volume and effect of new trade restrictions.
The third quarter services trade growth has kept pace with growth in trade in goods (24%) in the same period. World transport services, in particular, rose 45% year-on-year in the third quarter of 2021, and by 12% compared with the same period of 2019. Recovery was boosted by soaring consumers’ demand for goods due to lockdowns, the shift from services requiring physical proximity, and fiscal stimulus measures in advanced economies. The surge in demand coupled with pandemic-related restrictions resulted in port bottlenecks, misallocation of containers worldwide, and delays, which led to a strong increase in shipping rates. In the third quarter of 2021, Asia’s transport exports rose by 71% year-on-year, and by 46% compared with the third quarter of 2019.
Heightened reliance on exports of primary commodities has been a long-standing concern for policymakers in least developed countries (LDCs), because of the limited developmental benefits associated with this lopsided export specialization pattern, as well as the macroeconomic challenges it entails. Accordingly, the Istanbul Programme of Action (IPoA) envisaged the goal of broadening LDCs’ economic base to reduce commodity dependence.
However, the overall reduction in the weight of primary commodities is partly due to swings in international commodity prices, notably for fuels, which account for a significant share of LDCs’ export revenues.
Furthermore, the expansion of LDC manufactures exports is mainly accounted for by labour- or resource-intensive products. Moreover, the overall number of commodity-dependent LDCs has slightly increased over the period considered, from 34 to 37 (out of 46 LDCs!). This was mainly the case among African LDCs, 90% of which (29 out of 32 countries) can be classified as commodity dependent, and Island LDCs 67% (four out of six countries).
The information meeting consisted of three sessions, each starting with presentations by staff of the Economic Research and Statistics Division (ERSD) and the Market Access Division, followed by questions and answers. The first presentation focused on the latest trends in medical goods trade in relation to the COVID-19 pandemic. This presentation was based on the information note on Trade in medical goods in the context of tackling the COVID-19 pandemic, which was last updated on 14 December 2021. The Secretariat also explained some of the difficulties in measuring trade in essential products to tackle the pandemic, as explained in the information note Improving trade data for products essential to fight COVID-19: A possible way forward, published in July 2021.
The second session looked more specifically at trade in COVID-19 vaccines. Members also looked at how critical vaccine ingredients and the COVID-19 vaccines themselves are affected by tariffs, based on the information note COVID-19 vaccine production and tariffs on vaccine inputs of 8 October 2021.