tralac Daily News
Poultry industry winning battle against unfair trade (Farmer’s Weekly)
The fight against unfair competition and illegal imports is starting to reap benefits for the broiler industry. Izaak Breitenbach, general manager of the South African Poultry Association’s Broiler Organisation, said at the recent online Poultry Market Information Day that the industry had been in distress for at least 10 years because of low profitability.
This had resulted in poor re-investment and South Africa losing 30% of its market to imports. Over the past three years, however, steps taken in accordance with the Poultry Sector Master Plan to grow the industry and address illegal and unfair trade practices, in particular, had resulted in 9,8% growth in production capacity, and a 22,2% decline in poultry imports in general and a 51% decline in bone-in chicken imports.
Agbiz says exports, imports will suffer knock-on impacts from Ukraine war (Engineering News)
Industry body the Agricultural Business Chamber (Agbiz) has voiced concern about the human loss and disruptions being experienced in the global supply chain, owing to the conflict prevailing in Ukraine. Both Russia and Ukraine are notable players in the global agricultural product and agricultural input markets.
If SA is taking sides in an economic war, it has chosen R16 billion over R1.131 trillion in trade (Business Insider South Africa)
France came out and called it an “economic and financial war”, and sanctions against Russia’s central bank seem, if not designed to then still destined to collapse the ruble, taking with it Russia’s ability to wage war as a byproduct of collapsing its economy.
South Africa’s formal position has gone from demanding the withdrawal of Russian troops to calling for mediation, while pre-empting anything that could be seen as criticism of Russia from even government-adjacent organisations. If that signals the way SA is leaning in the economic war, then its choice is not grounded in economic self-interest.
In 2021, South Africa’s exports totalled R1.819 trillion, and imports were R1.380 trillion, trade statistics maintained by the SA Revenue Service show. Ukraine represents a fraction of a percent of that, 0.2% of total exports (mostly machinery, vegetables, and steel products) and 0.05% of total imports (mostly machinery and vegetables). Russia is the far more important trade partner, with trade better measured in billions rather than in the hundreds of millions for Ukraine. South Africa’s exports to Russia were about 14 times bigger than those to Ukraine, and imports from Russia were about 13 times bigger. SA’s exports of vegetables to Russia alone were worth R3.3 billion – or about three years of total trade with Ukraine. But trade with Russia, and its allies as reflected in the UN vote, is all but meaningless compared to the business South Africa does with NATO countries.
Trade relations between the US and South Africa is unlikely to be affected despite the country’s decision to abstain from the UN General Assembly vote to denounce Russia’s invasion of Ukraine. More than 140 countries of the 193-member body of the UN General Assembly including the US voted to rebuke Russia for its invasion of Ukraine, in a historic vote aimed at isolating Russia politically. Thirty-five members, including SA and China, abstained and five countries – including Russia, Syria and Belarus – voted against the resolution. Despite the decision to abstain from the vote, the International Relations Department (Dirco) said South Africa remains deeply concerned by the escalation of the conflict in Ukraine and the regional and international socio-economic implications.
“Unfortunately, the text before us does not do that. South Africa would have also preferred an open and transparent process to negotiate the resolution.” Business Day reports that despite South Africa’s abstention, a US top diplomat said trade relations will continue as ultimately both countries want peace in the Ukraine. South Africa’s abstention will also not affect the African Growth and Opportunity Act also known as the Agoa agreement, a trade program meant to establish stronger commercial ties between the United States and sub-Saharan Africa.
A group of the world’s richest nations that pledged $8.5 billion in climate finance to South Africa wants the money to be used to retire coal-fired power plants, according to a senior US official involved in the talks, damping suggestions some could be channeled to producing electric vehicles and green hydrogen. The funds pledged by the US, UK, France, Germany and the European Union and announced at the COP26 climate summit in Glasgow in November, can also be utilized to construct renewable energy facilities, the official said, asking not to be identified as the talks are private.
The aim is to conclude a deal, complete with investment plans, by the COP27 climate summit in Egypt in November at the latest, the official said.
Oil discoveries made by TotalEnergies and Shell off the arid coastline of Namibia could be among the biggest in Africa. But the companies may have to hurry to develop the giant deposits, known in the industry as “elephants.” As the global climate warms and opposition to greenhouse gas-emitting fossil fuels grows, activists are increasingly targeting oil and gas exploration with campaigns and litigation. In neighboring South Africa, lawsuits blocked recent plans to conduct seismic searches for hydrocarbons.
Yet from Senegal in the west to Uganda and Mozambique in the east, African nations are pressing their case to develop their reserves. They say the world’s richest countries are responsible for global warming, meaning Africa should be allowed to exploit its natural resources. Namibia’s government is enthusiastic over the potential budget boost after such a long wait — explorers have been studying data and drilling failed wells for more than a decade. The deposits could hold over 3 billion barrels of recoverable oil, worth more than $300 billion at current prices. If the nation and other African countries want to benefit, they need to move fast. Some are, with ENI fast-tracking a well off Ivory Coast. It’s a race against time. Export markets will gradually dry up as the world switches to renewables and clean fuels such as hydrogen. Already some international oil companies are exiting African fields.
Increase local cargo capacity to widen market access (The Standard)
There is a saying that goes, “the past is where you learned the lesson. The future is where you apply the lesson”. Kenya has been lauded as one of the best-performing economies in sub-Saharan Africa. Horticulture has taken the lead as a top GDP contributor to the country’s economy. Some of the top exports from Kenya include, cut flowers, tea and coffee to countries like Uganda, US, the Netherlands, Pakistan and the UK. Kenya is one of the only five African countries that handles 60 per cent of the intercontinental air cargo traffic to and from the continent, thanks to Jomo Kenyatta International Airport (JKIA). The strong horticultural exports from Kenya are key drivers to the growth of JKIA as Africa’s “Giant Hub”. In 2020, the airport was ranked as one of the top in handling more than 330 thousand tonnes of freight. Kenya is therefore the commercial hub for East African.
A 2020 valuation report by the Ministry of Lands showed that the airport’s market value stands at Sh1.1 trillion, which accounts for close to 10 per cent of Kenya’s GDP. The government, in its Vision 2030, recognises that an improved and expanded airport infrastructure is critical towards enhancing economic efficiency, regional integration, and facilitating international trade.
US flags Kenya for relaxing dirty cash reporting rule (Business Daily)
Kenyan officials handling money-laundering investigation files are tipping account holders of suspicious transactions to move their assets before raids, hampering the fight against money launderers. A new US report tracking the global money-laundering hotspots also says Kenya appears to have taken a step back in the fight after last year it lifted the threshold of reporting cash transactions above Sh1 million. Before 2021, the Central Bank of Kenya (CBK) required commercial banks to record and report all transactions above Sh1 million (approximately $10,000).However, in October 2021, President Uhuru Kenyatta ordered the lifting of the reporting requirement. He noted that a higher cash transaction limit “will facilitate easy transactions for micro, small and medium enterprises and help the economy respond to Covid shocks”.
Sanctions block Sh10bn Kenya exports to Russia (Business Daily)
Kenya’s exports of tea, flowers, coffee and fruits to Russia have been derailed in the wake of sanctions imposed on Moscow by Western nations after its invasion of Ukraine, hurting local smallholder farmers. The blockade of the exports, estimated at nearly Sh10 billion annually, came after major container and shipping lines temporarily suspended cargo shipments to and from Russia in response to the sanctions. Excluding Russian banks from SWIFT, the international payment system, and its central bank from international operations has made it harder for the country to pay for imports and receive cash for exports.
Russia is largely seen as a growth market for Kenya’s sluggishly growing exports. Tea is the leading export while Kenya’s coffee enters the country as re-exports from other countries.
The Nigeria Customs Service (NCS) yesterday assured members of the Senate that it would generate N3.019trn into the Federation Account this year. This is just as the House of Representatives yesterday directed the Central Bank of Nigeria (CBN) and the NCS to harmonise their positions on the electronic invoice policy and report back to it on March 17, 2022, for further action.
Comptroller General of the NCS, Colonel Hameed Ali said the NCS targets included N2.019 trillion from the Federation; N253.23 billion from non- federation and N746.96 billion from import Value Added Tax (VAT). The National Assembly had this year set a revenue target of N1.465 trillion for the revenue generating agencies of the federal government.
TradeDepot, the leading B2B eCommerce and embedded finance platform in Africa, has announced the acquisition of Green Lion, the biggest and fastest-growing B2B eCommerce platform in Ghana, to accelerate the delivery of its services across the country. Founded in 2018, Green Lion has been committed to revolutionising access to essential goods and services and enabling digital commerce for neighbourhood retailers in Ghana. Building on this work, TradeDepot will leverage its data, technology and robust logistics operations to connect more neighbourhood retailers in more Ghanaian cities to suppliers and make financing more accessible and affordable. Ghana’s retail sector is valued at $24.4 billion and is expected to reach $33.16 billion by 2024, with SME retailers accounting for about 90 percent of the market. TradeDepot already has active operations in Ghana, as well as its operations in Nigeria and South Africa, and this acquisition will expedite the delivery of its game-changing services to more cities to enable increased sales, higher margins and other value-added services for all parties across the retail value chain.
Commenting on the acquisition, Onyekachi Izukanne, CEO and co-founder of TradeDepot, said “Ghana represents a significant market for consumer goods in Africa and we are excited to bring the Green Lion team onboard to drive growth and prosperity for more retailers and distributors in the country. We look forward to deepening our relationship with the market and working with more partners to maximise the opportunities that abound in Ghana and beyond.”
The Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, Professor Peter Quartey, has noted that the downgrade of Ghana’s economy by credit rating agencies brought panic into the system. This, he said, led to speculations and also the refusal of investors to buy bonds, a situation that affected the strength of the cedi.
As a remedy, the government has proposed sharp fiscal consolidation and a switch to borrowings from external partners on more favourable terms. However, the strategy comes with sizeable implementation risks, especially in a still-fragile post-pandemic environment and while international market creditors price in very wide risk premia. While Ghana’s external buffers and moderate external debt amortization schedule in the next few years afford the government a window of opportunity to deliver on its strategy, balance of payments pressures will build up the longer government’s large financing requirements have to rely on domestic sources.
An amendment of the Customs Bill 2020 will result in a huge loss of revenue of approximately GH¢802, 251,785 for the first three years of implementation. This was revealed after a Joint Committee on Finance and Trade, Industry and Tourism met to deliberate on the Customs (Amendment) Bill 2020 proposal presented before Parliament by Deputy Finance Minister, Abena Osei Asare. According to stakeholders, the Bill seeks to amend the Customs Act, 2015 (Act 891) to provide incentives for automotive manufacturers and assemblers registered under the Ghana Automotive Development Policy (GADP), prohibit the importation of salvaged motor vehicles and specified motor vehicles over ten years of age into the country, increase the import duty on specific motor vehicles and provide import duty exemptions for the security agencies and officers of the security agencies.
“As to how much revenue will be impacted by the passage of the Bill, the Committee was informed that the review in policy as contained in the Bill would lead to an estimated loss of approximately Eight Hundred and Two Million, Two Hundred and Fifty-One Thousand, Seven Hundred and Eighty-Five Ghana Cedis (GH¢802, 251,785) for the first three years,” the statement by the Committee read. “This is, however, expected to be partially offset by the additional revenue from customs duties on vehicles not covered by the programme.”
The Ghana International Trade and Conference (GITFiC) has called for sanity within Ghana’s trading space and urged the business community to be accommodative and adjust to government’s policies in the face of the effects of the coronavirus pandemic. “Considering the current global economic downturn as a result of the pandemic, economies around the world are critically revising and adjusting policies to keep governance afloat,” GITFiC said in a statement issued by Chief Executive Officer Selasi Koffi Ackom on Thursday, March 3. “Any proper, prudent, and competent manager of any economy will now appear to be uncaring and insensitive to its citizens.”
Ghana’s economy is heavily import-driven. This is a known fact. Until recent times, Ghana had always recorded a trade deficit. A 30% reduction for all goods and a 10% reduction on vehicles is a decisive and satisfactory move to please all stakeholders. Such a pivotal decision by the Government should be considered by the General Trading Community (GTC) as an interim measure and subject to review in the soon future, depending on Economic-Trade Indicators within the Import and Logistics Sectors of Ghana’s Economy.
Preparations under way for AfCFTA’s long implementation voyage (Engineering News)
The processes meant to facilitate the implementation of the African Continental Free Trade Area (AfCFTA) Agreement are gaining momentum, with African countries hoping to leverage the opportunities created by the emerging single market to drive their pandemic recoveries and enhance their growth. Fifty-four of the 55 African countries have signed the agreement, with 41 countries having ratified the agreement. Nonprofit company Trade Law Centre executive director Trudi Hartzenberg notes that progress has been made on negotiations for the Rules of Origin (RoO) as agreement on 87.7% of tariff lines has been achieved.
This could open the door for “commercially meaningful trade” to begin, in terms of a decision by the African Union (AU) Summit last month. However, full details of the summit decisions are not yet available to the public domain. She explains that, while the Heads of State at the AU’s thirteenth Extraordinary Summit on December 5, 2020, decided to start trade on January 1, 2021, “this did not happen”. Hartzenberg tells Engineering News & Mining Weekly that, by January 1, 2021, RoO for 90% of tariff lines had not been agreed to, and as a result, member States were reluctant to make tariff offers for tariff lines without agreed RoO. Consequently “there hasn’t been any trade under the AfCFTA, but intra-Africa trade continues under existing tariff regimes”. However, during their January meeting, AfCFTA’s Council of Ministers agreed that trade should begin on the basis of the 87.7% agreed tariff lines. The expectation is that last month’s summit confirmed this decision.
Hartzenberg cautions that, as lengthy as the process has been, full implementation is still some ways away. “Progress will be incremental; liberalisation will take place over time. Implementing the Annexes that deal with, for example, customs and border management and eliminating nontariff barriers, will take time since this requires domestic governance improvements.”
The 8th African Regional Forum for Sustainable Development (ARFSD) opened with a reminder for Africa to acknowledge the progress the continent has made towards targets in 2030 and 2063 and to improve upon them. The forum is an annual event to review and catalyze actions to achieve the Sustainable Development Goals (SDGs) by 2030 and goals of the African Union Agenda 2063. President Paul Kagame of Rwanda shared his hope that Africa will use the pandemic as a “springboard to speed up progress and innovate smarter ways to invest in human capital development.” He also commended the ECA on its advocacy on the AfCFTA as “a mutually beneficial partnership to strengthen Africa’s capacity to manufacture vaccines and pharmaceuticals” during this pandemic.
UN Under-Secretary-General and Executive Secretary of the ECA, Vera Songwe, explained that “progress achieved by Africa in the areas of climate change, the African Continental Free Trade Area (AfCFTA), the management of COVID-19, and education must be applauded.” She added, “We are in Rwanda where more than 70% of the population has been vaccinated.” Ms. Songwe said despite the tendency for the AfCFTA to be perceived as far-fetched, the fact that African countries have traded more among themselves during the pandemic than the five years before that period is a testament to the potential of the partnership. In other instances, Africa has led the way on the global stage, such as Rwanda’s decision to ban plastic, which is now a commitment made by some 200 countries despite the objections of the petrochemical industry.
March 8 is marked around the world as International Women’s Day. For many women in Africa, including those in the agriculture sector, it will be just another day where invisible barriers hold them back from their true potential.
At the United Nations Food and Agriculture Organization, we believe that inclusivity and fairness are key to achieving sustainable development in agriculture, and that this objective cannot be obtained without accounting for the central role played by women in the sector, including in agriculture markets, trade and value-chain development.
The agricultural and agribusiness market in Africa is undergoing rapid expansion, with its value estimated to reach USD 1 trillion by 2030, according to the World Bank. This represents an immense potential for Africa to boost food and non-food trade within the continent and enhance food security and resilience for all.
According to the director-general of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, the removal of trade barriers worldwide will help tackle the climate crisis. She said developing countries need assistance from developed countries in the form of climate finance to cope with the effects of extreme weather. Okonjo-Iweala’s stance shows that removing trade barriers would help tame climate change. However, tackling the adverse effects of climate change and ensuring Africa has food security should come first instead of trade policies. Food security would position Africa for the effective implementation of free trade. Many African nations have witnessed extreme weather effects such as drought and flooding, which affect food security. Climate disasters cause reduced crop yield and also raise the cost of trading.
African countries need to partner with developed nations to combat the adverse effects of climate change.
The starting point should be for governments to commit to the Paris Agreement, a binding international treaty on climate change. Countries party to this agreement agreed to put in measures to limit global warming to below 2 degrees Celsius above pre-industrial levels. Each country should adhere to its submitted plans. Developed nations should honour their pledge as outlined in the Paris Agreement to support developing nations to mitigate and adapt to adverse effects of climate change.
The High-Level Panel (HLP) on IFFs from Africa held its first meeting since the pandemic began in 2019 in Johannesburg, South Africa, from 21-25 February 2022. H.E. Mr Thabo Mbeki, Former President of the Republic of South Africa and Chair of HLP presided over the meeting.
The meeting discussed the outcomes of the 4th meeting of the Consortium to Stem IFFs from Africa, the progress on national level responses to illicit flows in response to the 2015 AU Assembly Declaration, and the outcome of the 1st African Fiscal Policy Forum on inequalities in taxing rights, jointly organized by CoDA and South Centre. The meeting underscored the importance of the work of the HLP, welcomed the coherent African response to the challenges of IFFs, and the need for AU Member States to actively participate in the ongoing national assessment processes. Regarding the 1st African Fiscal Policy Forum, the Panel shared the concerns of African and other developing countries with respect to the challenges of the international tax reform processes. Accordingly, the HLP encouraged the CoDA Technical Committee on Domestic Resource Mobilization to continue the dialogue series to enable African Countries to make informed decisions.
The ECOWAS Commission, in collaboration with the United Nations Conference on Trade and Development (UNCTAD), organized seven (7) virtual national workshops within the context of the ongoing regional eTrade readiness assessment for ECOWAS from 8 – 24 February 2022. The regional eTrade readiness assessment is conducted by UNCTAD in close collaboration with the ECOWAS Commission and Member State Ministries responsible for Trade and Information Communication Technology. This is the first step towards the development of an ECOWAS E-commerce Strategy.
Digital Tools for Fiscal Governance in Africa (Bloomberg Tax)
Africa is becoming more and more connected through globalization. Ports and highways are being built and capitals are slowly industrializing their suburbs. Trade in Africa was booming until Covid-19, with North Africa reaching 78% of GDP volume, South Africa 55% and Sub-Saharan Africa 48%. At the same time, transactions are more complex, business more structured and information increasingly detailed. To contend with the coming wave of investors, African tax and customs authorities have to improve their operational performance—this is a fact.
Multinational companies have reimagined their operating models and digital tools have allowed an unprecedented wave of profits that governments could capture, but tax and customs authorities still need to achieve optimal taxpayer service and operational excellence.
The fourth industrial revolution, “Industry 4.0”, is centered around the manufacturing industry with connected machines, optimized supply chains, autonomous equipment and connected devices, known as the Internet of Things or IoT. Whenever Industry 4.0 is applied to manufactured goods in cross-border trade exchanged through the connected supply chain, it transforms into Trade 4.0. Trade 4.0 brings an additional challenge to governmental institutions, namely the customs administration, in charge of securing and facilitating trade. The role of the customs administration is to manage the movement of merchandise with the objective of securing the flow from terrorist attacks and guaranteeing the safety of the population, supporting socioeconomic development through revenue collection and eliminating the risks of tax and duty evasion. The core system used by customs to collaborate with other governmental institutions, including the tax administration authority, is the electronic single window.
The objective of the new model is to move from the siloed and paper-based approach towards a more effective and efficient tax administration to eliminate “persistent tax gaps, large amounts of uncollected tax debt and continuing, and in some areas growing compliance burdens.”
COOK: US seeks two-way trade with Africa (The East African)
We are rolling out the Prosper Africa initiative and talking to entrepreneurs, investors and policy makers to understand how we can better engage with African businesses to draw US investments into the continent. We also want to make sure that our companies in the private sector are able to take full advantage of the opportunities that the African market offers and also with the introduction of the AfCFTA, this is going to be one of the largest trading blocs in the world with 1.3 billion consumers.
Global economy news
DDG Ellard briefed participants on the WTO’s efforts to support the global recovery from COVID-19 and to address vaccine inequity. She also outlined the progress the WTO has made on environmental issues, including fisheries subsidies. In addition, she highlighted ongoing efforts to reform the organization, including the dispute settlement system, and outlined possible elements of a reform agenda.
Effective cooperation between countries in the Global South and other development partners is critical in reversing the impact of the global COVID-19 pandemic which is pushing more people into poverty and hunger. This was one of the main messages that resonated today from an international high-level event on South-South and Triangular Cooperation co-organized by the Food and Agriculture Organization of the United Nations (FAO) and the Ministry of Agriculture and Rural Affairs of the People’s Republic of China. Titled “Strengthening South-South and Triangular Cooperation for Global Agricultural Development”, the hybrid high-level event was held in the context of the recent launch of Phase III of the FAO-China South-South Cooperation Programme, which supports countries’ national development goals, including by helping to solve constraints that farmers face. It achieves this by providing technical cooperation among countries in the Global South, including the sharing of knowledge, skills and successful initiatives in specific areas, such as agricultural development and addressing the impacts of the climate crisis, that contribute to food security, poverty reduction and the sustainable management of natural resources.
The New Development Bank (NDB) of the BRICS bloc has put all new transactions in Russia on hold citing the “unfolding uncertainties and restrictions”, amidst the Ukraine crisis. The NDB’s move came a day after the Asian Infrastructure Investment Bank (AIIB) put on hold all its projects in Russia and its ally Belarus. “The New Development Bank (NDB) applies sound banking principles in all its operations, as stated in its Articles of Agreement”, a statement by the bank posted on its website on Thursday said.
“NDB will continue to conduct business in full conformity with the highest compliance standards as an international institution”, it said.
Explaining its decision to put the projects in Russia on hold, the AIIB said it is a multilateral organisation created by an international treaty, and adherence to international law lies at the very core of our institution”.
Digital inclusion unlocks a more resilient recovery for all (World Bank Blog)
The COVID-19 pandemic has hit developing countries the hardest and recovery is continuing to accentuate this growing divide. As advanced economies are expected to bounce back by 2023, developing economies could lag for years. Digital usage during the pandemic reflected a similar divide with a surge to 5 billion users worldwide, while 3 billion still remain offline, 96 per cent of whom live in developing countries. We must urgently counteract this growing global inequality. When populations have affordable access to the internet and the skills to use it, digital adoption opens endless possibilities for a more resilient recovery.
Digital technologies have helped bridge divides that were insurmountable with brick-and-mortar development solutions and reach vulnerable populations that are often excluded.
Digital inclusion opens endless opportunities, but the divides are still stark as the poor, rural populations and women fall behind. Even when vulnerable populations achieve connectivity, lack of digital literacy and affordability still can pose insurmountable challenges to use the technologies. Digital technologies can supercharge inclusive growth but we must accelerate investment, so they reach their full potential.