tralac Daily News
‘Raw material export detrimental to growth’ (The Herald)
PRESIDENT Mnangagwa has challenged industrialists to enhance value addition and diversify exports to help end Africa’s unsustainable reliance on primarily exporting raw materials much to the detriment of the continent’s growth prospects. Officially opening the Zimbabwe-Rwanda Trade and Investment Conference at a Harare hotel yesterday, the President said the four-day indaba between the two countries should result in the crafting of models that grow businesses.
“The outcomes and recommendations of the conference deliberations must continue to inculcate a culture of progressive collaboration, production, and productivity. “In this regard, I call upon our industrialists to enhance value addition and diversify our export mix through competitive and efficient value chains. In doing so, Africa will put to an end the perennial and unfortunate challenge of exporting primarily raw commodities from its sectors of the economy.
Flower exporters eye rosier times with new markets (The Standard)
Kenya’s flower industry is eyeing an expanded export market as it seeks to grow revenues and shake off the Covid-19 pandemic shocks. The Kenyan Flower Council (KFC) said it had identified several new markets for local flowers and other fresh produce. The industry lobby said while the need to diversify has always been there, the pandemic made it more urgent. With Kenya’s produce largely dependent on the European market, it meant that business was largely dictated by the closure and reopening of economies in the region. About 70 per cent of Kenyan flowers are sold in Europe, with most of them going through the flower auction in the Netherlands.
Kenya’s Indian Ocean oil dream fades as test drilling gives negative results (The East African)
Mlima-1, the well in the Lamu Basin, off Kenya’s Indian Ocean coast recently touted as the country’s first offshore oil strike, is commercially unviable. Results of the exploration released by Italian energy group Eni, show that the well proved nonviable and was to be “plugged” and “abandoned,” after it failed to hit commercial oil reserves. The result has dealt a blow to Kenya’s hopes of being a commercial offshore oil-producing country. While production was years off even in the event of a big oil discovery, the latest results have killed Kenya’s dreams of exploiting what is believed to be huge offshore oil and gas deposits for now.
Car importers lose in pushing KRA to harmonise eight-year age limit (Business Daily)
The High Court has dismissed a case by car importers seeking to compel Kenya Revenue Authority (KRA) and Kenya Bureau of Standards to harmonise the computation of eight-year age limit rule used for the importation of second hand vehicles. Car Importers Association of Kenya, which brings together 73 car dealers, had protested that there was disharmony in the method used by Kebs and that of KRA, causing its members to incur huge economic losses while paying duty and in other instances, rejection of some vehicles into the Kenyan market. The court heard that there was disparity given that KRA starts counting the eight years at the beginning of the year when the car was registered, disadvantaging cars listed in months after January. But Kebs hinged its count on the month when the car was registered.
Tanzanian authorities on Monday urged African countries to join forces toward the management of sustainable fisheries in the wake of impacts caused by climate change. Abdallah Ulega, the deputy minister for Livestock and Fisheries, said there was a need for African countries to collaborate in brainstorming strategies for sustainable fisheries in the wake of climate change that is posing a threat to the fisheries industry. “By joining forces, African countries will be able to fight illegal fishing and overfishing and combat pollution that is taking a heavy toll on the fisheries industry,” Ulega told an African Union consultative meeting on fisheries management in the commercial capital of Dar es Salaam. He told the fisheries experts to share knowledge on how best to sustainably manage the fisheries industry.
Egypt, the hosts of COP27 (United Nations Climate Change Conference), will launch an initiative to develop the energy transition in Africa at the yearly gathering. Petroleum Minister Tareq el Mulla said the initiative is being prepared in cooperation with the African Union (AU) and African energy ministers. This was announced at a ministerial discussion session held under the theme “The International Energy Agency Community”, attended by energy ministers from 44 countries. The session was held on the sidelines of the International Energy Agency’s (IEA) 2022 Ministerial Meeting. In a statement, the Petroleum Ministry said that Mulla, in his word at the meeting, stressed the necessity of cooperation and integration to create the appropriate conditions for the African continent to achieve the energy transition in a balanced way that takes into consideration the continent’s requirements and its economic and living conditions.
Mulla also underlined the rest of the world’s role in providing the necessary financing and technologies to the African continent in order to support it in obtaining clean energy with low carbon emissions.
The Russian Ambassador to Kenya, Dmitry Maksimychev, has denied reports Ruassia’s invasion of Ukraine is to blame for rising food prices in Africa blaming sanction imposed by western nations for the rise in commodity prices.
Speaking to Capital in the Morning on Monday, Amb. Maksimychev pointed out that the sanctions are preventing Russia from selling food products to African countries including Kenya. The Russian envoy to Kenya said that the sanctions had dealt a big blow to the financial system that made it possible for the two countries to trade. He added that the system was affecting both countries pointing out that the system recently shut down making it impossible for the two countries to make payments for products.
The Mano River Union Secretariat will receive a $4.2 million grant from the African Development Bank through the Transition Support Facility, to boost the Union’s commitment to support and empower women traders via the Bank’s Building Inclusive Business Ecosystems for Stabilization and Transformation in the Mano River Union project. “This project is an innovation that delivers upon the Bank’s gender mainstreaming commitments and aligns with our Gender Strategy – specifically on enhancing access to finance and technical assistance to women entrepreneurs,” said Amel Hamza, the Bank’s Acting Director for Gender, Women and Civil Society. The grant from the African Development Bank will boost business formalization among women traders and fuel new programs designed for gender-responsive, climate-resilient, and low-carbon cross-border value chains.
Logistical Improvements: the Backbone of Angolan Trade (Energy Capital & Power)
Demand for oil and gas is rapidly increasing, largely due to supply disruptions in international markets owing to the Russia-Ukraine conflict. Meanwhile, Africa’s domestic demand also continues to increase as the wider population and economies grow. Angola, as the second largest oil producer in sub-Saharan Africa, producing approximately 1.1 million barrels of oil in 2021, stands to benefit from this heightened regional and international demand. However, in order to capitalize on demand increases and enhance intra- and inter-African exports, improvements across the logistics and infrastructure sectors are required. Representing all aspects of the Angolan supply chain, the logistics industry is not only a vital but sector-advancing industry in resource rich countries such as Angola. While the country’s resources offer the potential to meet both domestic and international demand, without adequate logistical improvements and infrastructure across the energy sector, this potential will remain untapped. Accordingly, the government has prioritized logistics improvement across its port, transportation networks, and internal procedures.
African trade news
The Democratic Republic of the Congo (DRC) has today joined the East African Community (EAC) becoming its 7th Partner State. The Summit of EAC Heads of State at their 19th Ordinary Summit held on Tuesday, 29th March, 2022 admitted DRC following recommendation by the Council of Ministers. The Chairperson of the Summit, H.E Uhuru Kenyatta, who is also Kenya’s President, informed the meeting that DRC had met all the set criteria for admission as provided for in the Treaty for the establishment of the EAC.
“Admitting DRC into EAC is historic for our Community and the African continent at large. It demonstrates the agility of the Community to expand beyond its socio-cultural boundaries to new people and trade-centered partnerships and collaboration, thus increasing trade and investment opportunities for the citizens,” added the Chair.
Regional presidents welcome DR Congo into EAC (The New Times)
“The EAC now spans from the Indian Ocean to the Atlantic Ocean making the region competitive and easy to access the larger African Continental Free Trade Area (AfCFTA).” With lower tariffs on goods and the removal of trading restrictions among partner states, he added, we anticipate that goods and services will move more freely.
The Chief Chancellor of the Indian Africa Trade Council (IATC) in charge of West Africa, Dr. James Rajamani has praised the government for opening the country’s land borders.
The closure of Ghana’s borders on Saturday 21 March 2020 by Akufo-Addo affected trading between Ghana and her three closest neighbours – Togo (to the east), Burkina Faso (to the north) and Côte d’Ivoire (to the west of the country), and the other countries in the region.”As from tomorrow, Monday, 28th March, all land and sea borders will be opened. Fully vaccinated travelers will be allowed entry through the land and sea borders without a negative PCR test result from the country of origin. Citizens and foreign residents in Ghana, who are not fully vaccinated, will have to produce a negative 48-hour PCR test result, and will be offered vaccination on arrival,” he said.
Financial inclusion of women key to building economic resilience (The Star, Kenya)
The devastating impact of the Covid-19 pandemic on global supply chains and business, in general, has pushed both the private and public sectors back to the drawing board to fix the broken links. While issues around the shortage of manufacturing components, systems, lack of skills, affordability of labor and transport costs as well as access to finance and security could be among key topics to prop up in closed-door meetings, sadly gender inclusivity will most unlikely feature. The inclusion of women in building resilience to future shocks only features widely in research papers as a game-changing strategy, but implementation is yet to be realised in earnest.
Africa needs to accelerate the commitments of the Nairobi Declaration to enhance disaster risk management in the Continent. This was the key rhetoric coming from the just concluded 17th Session of the Africa Working Group for Disaster Risk Reduction (AWG-DRR). The three day event took place in Maputo, Mozambique 16-18 March 2022. Delegates discussed ways to accelerate action towards implementing the Africa Programme of Action for the implementation of Sendai Framework for Disaster Risk Reduction 2015-2030 in Africa (PoA). With 2030 fast approaching, the Matrix for the PoA’s implementation was also critically discussed, to enhance traction of actions by member states and regional economic communities (RECs). The Nairobi Declaration was adopted at the last Africa Regional Platform for Disaster Risk Reduction (AfRP) held in Kenya in November 2021.
Competition watchdog mulls investigating rising prices of goods (Business Daily)
The competition watchdog says it may conduct a survey to ascertain the current increase in the price of basic commodities as consumers grapple with the high cost of goods. The rising prices of a wide range of goods including eggs, milk, cooking oil, fuel, and cooking gas has been blamed on several factors including shortages, high production costs, and supply chain disruption in the wake of Russia’s invasion of Ukraine. The Competition Authority of Kenya (CAK) director for policy Adano Wario said the regulator will seek to find if there are any unjustified price increases that could be hurting consumers.
The official said in spite of the global shocks that have seen prices of most commodities surge, the possibility of some players engaging in price gouging to cash in on the prevailing economic situations in the country could not be ruled out.
Improving employment opportunities in Africa is already a major development policy issue, and given the number of young Africans expected to enter the job market over the next two decades, it will undoubtedly remain a concern. Academic research and think tank reports tend to herald the technologies emerging in the Fourth Industrial Revolution (4IR; Schwab 2016) as game changers that can accelerate the economic transformation of developing countries, leading to the creation of wage jobs in expanding, higher-productivity sectors. African governments are being advised to organize and invest for this revolution by building labor force skills. Yet how realistic are these predictions for Africa? And what might be the consequences for inclusive development if Africans follow this advice?
Moreover, one central question has so far been ignored in the literature: Just how likely are African producers to adopt the new technology? Although economic theory has long argued that if they adopt the technology of developed countries, less developed countries can grow faster and expedite income convergence across countries. Yet in Africa adoption of productive technology has been slow, because the costs can be high and because many technologies do not sufficiently address the current barriers to increasing productivity and profitability that confront African producers. This is especially true in the informal sector (household farms and firms), where the majority of Africans work today, and are likely to continue to do so.
Over the past few years, both domestic and foreign direct investment (FDI) have come to play an increasingly important role in the economic development of many countries. Moreover, it is now widely recognized that FDI can offer important advantages for the recipient economies. In addition to capital inflows, FDI can lead to transfer of technology and know-how, improve access to international markets, and spur competition. The African Union Commission, Department of Economic Development, Trade, Industry, Mining (ETIM) organized a Technical Workshop to develop a Comprehensive Strategy for the Mobilization Quality and sustainable Investment into Africa from 22 to 25 March 2022 in Cairo, Egypt. The workshop was organized with the aim of developing a comprehensive Strategy for the Mobilization of quality and sustainable Investment in Africa which will then be used by the AU Member States to attract both Domestic and FDIs into their respective countries.
On behalf of H.E Albert Muchanga, Commissioner for ETIM, Mr. Hussein Hassan, Head of Industry and Mining division, conveyed a welcoming statement to participants and highlighted the impact of domestic investment and FDI in African economies. He said “Many countries are stepping up their efforts to attract FDI flows in their countries through, liberalization of FDI entry requirements such as improving policy credibility, transparency of the legal and regulatory framework, property rights, transaction costs, risks and removing other impediments to attracting investments. He added that the African Union Commission, in close collaboration with the African Governments, the African Investment Promotion Agencies, and other relevant stakeholders has embarked on developing a continental Strategy to mobilize Quality and Sustainable Investment in Africa.
International Trade Secretary Anne-Marie Trevelyan has announced a new UK programme to support the implementation of the African Continental Free Trade Area (AfCFTA) trading bloc. Through the AfCFTA Support Programme, the Foreign Commonwealth and Development Office (FCDO) will provide up to £35m to provide trade facilitation and trade policy support to the AfCFTA Secretariat and Member States through TradeMark East Africa (TMEA), Overseas Development Institute (ODI) and other regional partners. Announcement of the programme comes as AfCFTA Secretariat Secretary General Wamkele Mene visits London to discuss how the UK can continue its work as a strategic partner to the AfCFTA.
International Trade Secretary Anne-Marie Trevelyan said: As an independent free trading nation, the UK strongly supports the AfCFTA – the largest free trade area in the world. We’re keen to see continued momentum on outstanding negotiations, and on practical implementation of the
Global economy news
The leaders of the world’s 46 least developed countries (LDCs) are meeting at the United Nations Headquarters in New York on March 17th, 2022 to adopt the Doha Programme of Action (DPoA), setting a renewed agenda for development in LDCs. Practical and innovative ways to accelerate inclusive economic transformation should be at the forefront of this agenda.
Despite progressively greater emphasis on building productive capacity and enabling economic diversification in the DPoA’s immediate predecessors, most LDCs made only limited headway in transforming the structure of their economies. The devastating impacts of COVID-19 on production, trade and investment in LDCs, and its wider economic and social effects, have stalled progress even further. (The two most recent programmes of action for LDCs preceding the DPoA were the Brussels Programme of Action (2000-2010) and the Istanbul Programme of Action (2011-2020).)
Suspending Russia and Belarus as members of the World Bank and European Bank for Reconstruction and Development would be misguided for developmental, political and legal reasons. The Ukraine crisis will tighten lending headroom of EBRD and the World Bank, accentuating the call to strengthen MDB capital, but it poses no danger to the long-term financial stability of either bank. New Development Bank will face severe impacts from the crisis due to its exposure to Russia as a shareholder and borrower, while Asian Infrastructure Investment Bank will be much less impacted. The Black Sea Trade and Development Bank and the Russia-led International Investment Bank will also face considerable difficulties due to the conflict.
Decarbonizing the world’s energy systems is an essential pillar of the global response to climate change. At present, gas flaring, the 160-year-old practice of burning the natural gas associated with oil extraction, and the related methane emissions represent as much as 12 percent of the greenhouse gases released by the global energy sector. With the share of energy produced by oil and gas projected to increase until 2040, urgent action must be taken to accelerate the transition to net-zero. Ending routine gas flaring and curtailing methane emissions is an achievable way to significantly reduce emissions. This would not only help address climate change, it could also provide millions of people with an energy source. For instance, if all the associated gas flared across the world were put to productive purposes, it could power the entire Sub-Saharan Africa. This Financing Solutions to Reduce Natural Gas Flaring and Methane Emissions report provides a systematic framework for evaluating the feasibility of flare reduction projects at medium-sized flaring sites. The approaches and tools developed will help policymakers and operators analyze investment barriers, identify key variables and success factors, and model financial options for those medium-sized flares that have historically been overlooked.
DDG González observed that the world needs trade diversification, not decoupling. The WTO Trade Facilitation Agreement offers powerful tools to expedite trade and lower costs, which helps to build deeper and more diversified global markets. WTO members have made enormous progress in implementing the Agreement, she added, but more efforts are needed to fully enjoy its benefits. DDG González emphasized that global digital rules on electronic commerce are needed to accelerate the transition towards paperless trade, facilitate real-time data sharing between supply chain actors, and create opportunities for new players - especially small businesses - to participate in supply chains. Modernizing the infrastructure that keeps every link of the chain together is another important building block for more resilient supply chains, she said.
“Global carbon standards are essential for credible and comparable emissions reductions,” Deputy Director-General Jean-Marie Paugam said to mark the launch of the sixth information note in the trade and climate change series, titled “What Yardstick for net-zero? How WTO TBT (Technical Barriers to Trade) disciplines can contribute to effective policies on carbon emission standards and climate change mitigation.” “The WTO and its TBT Agreement play a crucial role in facilitating the transition towards a low-carbon world by enabling WTO members to cooperate and converge on common standards to measure and verify the carbon content of products,” he said. “Trade is about people and there are few 21st century challenges that threaten the livelihoods of those most in need more than climate change. Trade can and must be part of the solution.”
“Trade has been and will remain a critical means of adaptation to the mounting global shocks that the world is currently experiencing,” the DG declared. “This is not the time to retreat inward … This is the time to stress the importance of multilateralism, global solidarity and cooperation.” The COVID-19 crisis and the war in Ukraine have raised concerns about the vulnerability of global supply chains and led to calls in some quarters to re-locate production and sourcing locally in order to ensure stable supplies of critical goods and staples. The Director-General however underlined that supply resilience “will ultimately be best served by deeper and more diverse international markets.”
The publication outlines the results of a 2021 survey of customs authorities’ use of advanced technologies such as blockchain, the internet of things, data analytics and artificial intelligence to facilitate trade and enhance safety, security and fair revenue collection. The joint publication highlights the benefits that can result from the adoption of these advanced technologies - such as enhanced transparency of procedures, better risk management, and improved data quality - leading to greater efficiency in customs clearance processes and greater revenue collection.
In her opening remarks, WTO Deputy Director-General Anabel González said: “Advanced technologies offer customs an opportunity to take a big leap forward on trade facilitation. Take blockchain. Its widespread application could help us make trade both more transparent and less paper intensive. That would reduce trade costs, which is good news for everyone, especially small businesses, which are disproportionately affected by red tape at the border.”
The Impact of COVID-19 on Global Poverty (International Banker)
When it comes to COVID-19’s influence on global poverty, the numbers are sobering, to say the least. According to World Bank estimates, a massive 97 million people fell into poverty in 2020 due to the pandemic, such that their daily incomes dropped below $1.90 and remained there throughout much of 2021. “Globally, the increase in poverty that occurred in 2020 due to Covid still lingers, and the Covid-induced poor in 2021 continues to be 97 million people,” the World Bank stated in June. As such, the global poverty rate rose from 7.8 percent to 9.1 percent, according to the World Bank’s October 2021 findings, which concluded that globally, “three to four years of progress toward ending extreme poverty are estimated to have been lost”.
“The increase in inequality reflects the fact that the COVID-19 crisis worsened an already weak growth environment for the poorest countries,” according to the World Bank, which attributed the widening disparity to the fact that incomes of the lowest-income group have failed to significantly recover—and, indeed, deteriorated further for the very poorest in 2021
The evidence they gathered also showed that even prior to the outbreak of COVID-19, more than half a billion people were pushed into—or further pushed toward—extreme poverty because they have had to pay for health services out of their own pockets, with the pandemic now likely to have exacerbated the situation. “The pandemic also triggered the worst economic crisis since the 1930s, making it increasingly difficult for people to pay for care,” the WHO added. “Even before the pandemic, half a billion people were being pushed (or pushed still further) into extreme poverty because of payments they made for health care. The organizations expect that that number is now considerably higher.”