tralac Daily News
SA Canegrowers welcomes delay in sugar tax increase (Engineering News)
Industry organisation SA Canegrowers has welcomed the announcement by Finance Minister Enoch Godongwana of a 12-month delay in the implementation of the planned increase of the Health Promotion Levy (HPL), which is also known as the sugar tax. An increase in the sugar tax from 2.21c/g to 2.31c/g had been announced in the Minister’s Budget Speech in February and was expected to come into effect on April 4.
Consistency in policy is key for industrialising renewables – SAWEA (Engineering News)
The South African Wind Energy Association (SAWEA) and its sector stakeholders have reiterated that the industrialisation of the renewable energy sector holds enormous potential across the value chain, including economic power and societal benefits. The association, in a media release issued on April 4, stressed the importance of managing the industrialisation of the renewables sector responsibly, by ensuring components were localised on the basis of their competitiveness and value-add. SAWEA noted that predictable and continued procurement was needed to underpin any industrialisation policy, while incentives were needed to build more and better local capabilities, if the wind industry was to compete with international markets, while supporting local manufacturers to become competitive for export markets.
“Transformation goes hand-in-hand with the industrialisation of the wind power sector. And market certainty is the most important aspect to building a local manufacturing industry.
There are currently no plans to discontinue the use of coal as part of the country’s energy mix, says Deputy President David Mabuza. He said the country’s energy generation is guided by the Integrated Resource Plan (IRP) 2019, which provides for the use of all energy resources available, including, among others, coal, gas and renewable energy sources.
“Coal remains one of our largest natural endowments that will continue to form part of our energy mix in terms of the IRP 2019,” he said. He said, however, that despite this, the country is committed to forging a low-carbon growth path that prioritises environmental sustainability.
As part of its multi-year and strategic Mercator collaboration with the Zambia Revenue Authority (ZRA) towards comprehensive implementation of the WTO’s Trade Facilitation Agreement (TFA), the WCO conducted a mission to take stock of and monitor activities rendered under the framework of by the United Kingdom’s Her Majesty’s Revenue & Customs (HMRC) supported Trade Facilitation Capacity Building Programme. The mission, which took place from 11 to 18 March 2022 and was also supported by a Mercator Programme Advisor of the Lesotho Revenue Authority, served to identify progress achieved in the past years, while also discussing challenges faced related to the COVID pandemic. Moreover, the deliberations also focused on identifying opportunities for further collaboration and capacity building under the next phase of the HMRC Pogramme ‘Accelerate Trade Facilitation’ which kicks-off in April 2022.
Zim reaps huge benefits from re-engagement (The Herald)
A COCKTAIL of policies epitomised by President Mnangagwa’s ‘Zimbabwe is Open for Business’ mantra and the engagement and re-engagement drive have seen the country ascending to the summit of global bodies such as the Kimberly Process Certification Scheme (KPCS). Presently, Zimbabwe is the vice chair of KP — a global body of diamond-producing nations which has 52 participants, representing 82 countries, with the European Union and its member states counting as a single participant.
“The mining sector should also strive for greater sustainability, competitiveness and modernisation as we grow the economy. With enhanced investment within the sector, we should continue to see increased production, productivity, employment creation and exports of processed goods as we march towards attaining our vision of a prosperous and empowered upper middle-income economy by 2030,” said President Mnangagwa. Once characterised unfairly as an outcast due to negative portrayal from some Western countries, especially the United Kingdom, Zimbabwe has, however, under President Mnangagwa’s policies, flourished, earning plaudits both regionally and globally.
CBK sees current account deficit rising to 5.9 percent (Business Daily)
The Central Bank of Kenya (CBK) has revised its projection of this year’s current account deficit to 5.9 percent of GDP from 5.2 percent previously, citing the higher price of crude which has raised Kenya’s petroleum import bill.
This points to a tighter dollar supply in the market as the gap between outflows and inflows widens, which will put the shilling under further pressure and raise the cost of living for Kenyans. The prevailing cost of crude is a major factor in determining the directing of the current account, given that petroleum products account for 17.5 percent of the country’s total import bill.
Large-scale farmers locked out of cheap fertiliser deal (Business Daily)
Large-scale farmers have been locked out of the Sh5.7 billion fertiliser subsidy after the Ministry of Agriculture limited the number of bags to 10 per grower. Agriculture Cabinet Secretary Peter Munya said farmers will be allowed to buy five bags of planting and top dressing fertilisers each to benefit large number of growers following a cost reduction that will see a single bag drop by 56 percent.
Millers seek lifting of India wheat importation ban (Business Daily)
Kenya may run out of options in the importation of wheat to cover for the local deficit if it fails to lift the current restrictions on imports from India, large-scale millers have warned. Nairobi has restricted imports of wheat from India because of a fungal disease that the country is worried would affect local crops if it is allowed. Currently, local millers are hardly accessing wheat from the Black Sea following the closure of ports along this shipping corridor as a result of the ongoing war between Russia and Ukraine. Kenya gets nearly 66 percent of its supplies from the two warring nations.
No reduction in duty for imported vehicles – Customs (The Guardian Nigeria)
The Nigeria Customs Service (NCS) has debunked claims that it has reduced duty on vehicles from the current 35 per cent to 20 per cent. Deputy Comptroller of Customs and the National Public Relations Officer of the service, Timi Bomodi, yesterday, confirmed to The Guardian that the alleged 20 per cent duty rate was “just a mix-up,” stressing that the 35 per cent duty subsists. Some clearing agents had earlier raised concerns that the duty rate applicable on Common External Tariff (CET) trade portal on vehicles under HS Code 8703 was last Friday reduced to 20 per cent, a development, which created confusion among their colleagues and other stakeholders.
Owners of the Lagos Free Zone (LFZ) have stated that its investment in the LFZ is expected to hit over $3.5 billion in 2024. According to them, the move is a clear demonstration of its commitment to the Nigerian economy, adding that over $2 billion has been expended so far in the LFZ project. The Managing Director and Chief Executive Officer, LFZ, Mr. Dinesh Rathi, at a media parley to hint newsmen over the level of progress made so far said over 30 per cent of the zone has been developed so far with plans to take the development to 35 per cent by the end of 2024. He said the LFZ is Nigeria’s first private owned free zone that aims to be the most preferred industrial hub in West Africa with world class-infrastructure, facilities and services.
Importers exporters against no duty no exit policy (The Business & Financial Times)
The Importers and Exporters Association of Ghana is one of the organisations in disapproval of the “no duty no exit policy at the MPS Terminal 3” that the finance minister announced on Thursday, March 24, 2022. The finance minister, Ken Ofori-Atta, in his press conference, listed this policy as one of initiatives government will embark on imminently to plug revenue leakages as it seeks to boost the economic fortunes of the nation.
The Executive Secretary of the Importers and Exporters explained that “when MPS was set up we did not give MPS the power to do intrusive examination of things like spare parts, second-hand clothing, second-hand cars. Such cargoes are supposed to go to the Golden Jubilee Terminal. We should know that, in case of cars, they are further transferred to Safe Bond Car Terminal.
Customs to leverage ICUMS in the attainment of revenue target (The Business & Financial Times)
The Ghana Revenue Authority has been tasked by government to raise revenue of GHC 80.3 billion for the year 2022. The System Administrator at the Tema Collection of the Customs Division of the GRA, Esther Amekudzi expressed that “unlike previously where you had different platforms to use in one clearance process, now, with ICUMS it is seamless.”
She also indicated that the Pre-Arrival and Assessment and Reporting System has been enhanced with the introduction of ICUMS.
The Ghana International Trade and Finance Conference (GITFIC) has recommended plausible ways to West African leaders to improve on activities that attract Foreign Direct Investment (FDI) while limiting the activities that bring about bottlenecks to host countries. They said international trade was the source of FDI and ECOWAS must uphold the AfCFTA agenda in high esteem to promote FDI to the sub-region. “Various governments through their national investment agencies should work towards a conducive political and business climate to improve FDI inflow to the sub-region and tern scrutiny, in terms of documentation and the type of FDI to be allowed to the sub-region, should be checked rigorously before its establishment.” This was part of the recommendations of the GITFIC on the monthly research focused on FDI and its benefits and demerits in the West African sub-region and copied to the Ghana News Agency in Accra on Monday.
Recent cost-cutting measures inadequate, structural changes needed – Prof. Bokpin (The Business & Financial Times)
Recent fiscal and monetary measures announced by managers of the economy to rein-in the downturn are far from adequate long-term solutions, as structural inefficiencies remain across the ‘value-chain’ of the economy.
This is according to economist and professor of Finance at the University of Ghana Business School (UGBS), Prof. Godfred Bokpin, who argues that the cyclical nature of Ghana’s visits to the International Monetary Fund (IMF) for a bailout – 16 times since 1965, translating to an average of once every 3.5 years – highlights deep-rooted problems that must be addressed urgently. Failure to do so, he added, will make the periodic trip to the Bretton Woods institution inevitable, as the “economic realities will always prove stronger than any political resistance”.
Ghana, the European Union (EU) and AFD have signed a 44.7 million euros Agricultural Water Management Project (AWMP) Financing Agreements to augment agriculture activities in the country. The project will support the expansion of irrigated agriculture lands in the Northern Regions.
EU Commissioner for International Partnerships Jutta Urpilainen reaffirmed the EU’s commitment to support the Agricultural sector in Ghana in order to improve the quality of life of communities, especially in the North of the country. Adding that Irrigation is a crucial factor in providing a reliable, climate-resilient source of income for smallholder farmers.
Commodities imports deepen Morocco’s trade deficit up to Feb 2022 (The North Africa Post)
Morocco’s trade deficit rose 57% up to February this year, due to a surge of commodities prices in the international market. Tensions in the black sea and the loss of Ukrainian and Russian commodities and wheat exports sent prices skyrocketing hitting the finances of import-reliant states. For example, Morocco’s ammonia imports, used in the production of fertilizers, rose from 693 million dirhams in February to 2.92 billion dirhams, while wheat imports jumped 96% to 4.1 billion dirhams.
Despite having vast energy resources, Guinea-Bissau has one of the least developed economies in the world. Due to the west African country’s slow progress regarding the exploitation of its energy resources, due to limited investments in infrastructure development and political instability, little progress has also been made in expanding other sectors such as manufacturing and mining.
However, recent increases in capital expenditure are set to revitalize the economy during 2022. In addition, for the near-term, addressing corruption and boosting infrastructure rollout will enable Guinea-Bissau to grow its economy by 3.9% in 2022 and ensure that inflation remains stable at 1.9%, according to development finance institution, the African Development Bank (AfDB).
African trade news
The East African Business council is calling upon the business community especially manufacturers to emphasize quality and value addition if they are to achieve their dream of competing under the Africa Continental Free Trade Area This follows a recent engagement of CEOS from various companies across the country. The meeting organised by the Uganda Manufacturers association aimed at deliberating on the readiness as East African companies to compete with other African countries under the Africa Continental Free Trade Area.
Uganda looks to open new markets as Congo’s enters EAC (The East African)
After the Democratic Republic of Congo was officially admitted to the EAC, businessmen and traders in Uganda are excited about the potential it brings. Congo adds more than 90 million people to 177 million East Africans. In the region, Uganda is the second largest exporter to Congo, after Rwanda. East Africans can now freely go to Congo if the trade and movement barriers such as the $50 visa fee are removed. The DRC shares borders with all the East African countries except Kenya.
East African lawyers eye oil pipeline rewards (The Citizen)
The East Africa Law Society (EALS) yesterday said it is high time lawyers in the bloc formed a large firm that will enable members of the regional bar to have opportunities that will be brought by the East African Crude Oil Pipeline (Eacop).The regional body says the project is huge for lawyers in the bloc to benefit individually, hinting that the law practitioners will only benefit by working through a single body or by joint ventures with other international firms. The EALS president, Mr Bernard Ound, made the remarks yesterday when addressing members of the Tanzania bar association during a conference to underscore means of enjoying the opportunities to be brought by the 1,443km pipeline from Hoima in Uganda to the Indian Ocean port of Tanga in Tanzania. “We need to work together even if under a joint venture with foreign firms. Skills transferred will be useful to bloc members of the regional bar in tapping future opportunities,” said Mr Ound.
The 1 000km road that will reshape the African economy (Mail & Guardian)
Africa is ramping up efforts to upgrade connections between its main cities and hubs, through ambitious infrastructure projects led by regional blocs, with the latest project due to reach completion in 2025. The African Development Bank (AfDB) recently announced it had secured the 15.6 billion US dollars necessary to fund a “game-changing” West African highway. The East African community has 6 cross-border road projects, totaling 1504 km, while Cemac – which groups central African nations – and SADC (Southern African states) also have similar programs. Meanwhile, West Africa is gaining momentum thanks to the 1,081km highway that will soon link Abidjan and Lagos.
The five countries that the highway passes through have a combined GDP of 589 billion US dollars and a population of 284 million, according to World Bank figures.
West African nations are expected to ink agreements that will ease cross-border trade and transit, which will allow the emergence of new markets, industrial parks and logistic hubs along the highway. The Abidjan-Lagos coastline is an area that aggregates nearly 75% of West Africa’s commercial activities, according to the AfDB. The transport sector accounts for 5% to 8% of the region’s gross domestic product and plays a key role in economic development and job creation, particularly for women and young people.
Access to deepen Africa trade finance, diaspora remittances (The guardian Nigeria)
The Group Managing Director/Chief Executive Officer, Access Holdings Plc, Dr. Herbert Wigwe, has said that the bank, in its move to become one of the top five in Africa by 2027, plans to deepen its trade finance capacity to support intra-African trade, enhance payments and diaspora remittances. According to Wigwe, the bank had never failed to meet its aspirations in terms of growth in its 20-year history, adding that the bank’s projection for 2027 would be pursued aggressively and be met.
“Banking is changing at a faster pace than we can imagine,” Wigwe, who has transitioned to Group Managing Director/Chief Executive Officer of Access Holdings Plc, said. According to him, technology is changing all things. He said that anyone that failed to change with the trends would suddenly wake up one day to find out he had no business anymore.
On 2-3 February 2022, the 40th Session of the African Union Executive Council formally adopted the ‘Strategic, Business and Operational Framework for an African Diaspora Finance Corporation (ADFC)’ as the framework for the African Union legacy project on diaspora investment. This came after the endorsement by the African Ministers of Finance on 17 December 2021, and consideration by the relevant sub-committee of the AU’s Permanent Representatives Committee (PRC). The AU Commission shall undertake a further feasibility study, covering business operations, investment planning and criteria, and the application of ADFC funds.
ADFC will be set up as an independent, non-AU continental finance institution, operating as a social enterprise and working together with other African and global finance, development, and diaspora institutions. The first phase of the ADFC implementation involves the initiation of an innovative finance scheme through the RemitAid™ Remittance Match Funding mechanism.
The ADFC Framework Report is titled: ‘Strategic, Business and Operational Framework for an African Diaspora Finance Corporation: African Union Legacy Project on Diaspora Investment, Innovative Finance and Social Enterprise in Africa’.
SADC Ministers of Employment and Labour and Social Partners convened a meeting to deliberate and make decisions to strengthen labour administration systems and enhance the prospects of decent work for people in the Region (SADC)
Ministers of Employment and Labour and Social Partners from the Southern African Development Community (SADC) met on 30 March 2022 at the Bingu International Conference Centre (BICC) in Lilongwe, Malawi, to deliberate and make decisions to strengthen the Region’s labour administration systems and enhance the prospects of decent work for people in the Region.
Honourable Nancy Tembo (MP), the Minister of Foreign Affairs of Malawi and current Chairperson of the SADC Council of Ministers highlighted the need for Member States to continue responding to the pandemic by investing in economic stimulus packages, adopting pro-employment budgeting, extending social protection coverage and enhancing occupational safety and health, among other measures. In addition, she called upon the SADC Employment and Labour Sector to come up with strategies to deal with the transformative changes in the world of work, including those related to climate change and demographic transitions.
Ministers responsible for EAC Affairs, Labour/Home Affairs and Directorates of Immigration from the EAC Partner States have endorsed the establishment of the EAC Regional Consultative Process (EAC-RCP) on Migration in the region and recommended the same to the Sectoral Council of Ministers responsible for EAC Affairs and Planning for approval.
In addition, the EAC-RCP is expected to enhance networking relations amongst relevant governments’ ministries, departments and agencies with migration-related mandates; establish a platform for stakeholders for setting agenda as well as priorities and niches in migration in the region; enhance linkages and partnerships with the national, other regional, continental and global platforms among others.
The Inter-Governmental Panel on Climate Change (IPCC) issued the second part of its 6th Assessment Report, focusing on Impacts, Adaptation and Vulnerability. This timely report warns of multiple climate change-induced disasters in the next two decades, even if strong action is taken to reduce greenhouse gas emissions, and further notes that the ability of human beings and natural systems to cope with the changing climate is reaching its limits. It warns that further rise in global warming would make it even more difficult to adapt. The report has, for the first time, made an assessment of regional and sectoral impacts of climate change. Across sectors and regions, the most vulnerable people and systems are disproportionately affected. The report notes that over 3.5 billion people (over 45% of the global population), live in areas highly vulnerable to climate change. Africa is identified as one of the vulnerable hotspots, with several regions, towns and cities facing very high risk of climate disasters such as flooding, sea-level rise, heat-waves, and water stress.
UNECA is working with African member states to address the underlying causes of vulnerability; build the resilience of economies, ecosystems and communities; enhance early warning and weather observation capacities, and enhance the integration of climate information services into development programmes. Through initiatives such as the SDG 7 initiative, ECA is supporting climate informed investment in renewable energy in order to increase access to energy for citizens. We also recognize the importance of regional ecosystems for carbon sequestration, and have been rolling out programmes to support nature based solutions and to build the resilience of livelihoods and ecosystems in Ethiopia.
Last month the UN General Assembly voted on a resolution demanding Russia immediately stop its military operations in Ukraine. Out of 193 member states, 141 voted in support of the resolution, five voted against, 35 abstained and 12 didn’t vote at all. Of the 54 African member states, Eritrea voted against the resolution, 16 African countries including South Africa abstained, while nine other countries did not vote at all. In all about half, 26, of the 54 member states in Africa chose the path of neutrality in some form. So why did African countries not vote overwhelmingly to support the resolution?
I believe that the decision of several African countries to stay neutral and avoid condemning Russia for its invasion of Ukraine was made on issues relating directly to the conflict as well as broader security, economic and political considerations.
There are five key reasons: these include scepticism towards the North Atlantic Treaty Organisation (Nato), and its motives; growing reliance among some countries on Moscow for military support for the past decade; growing dependence on wheat and fertiliser imports; and a sense that this is a return of the Cold War.
Global economy news
A new paper from the ICC World Chambers Federation Certificate of Origin Council calls on all economies negotiating Preferential Free Trade Agreements (FTAs) to ensure that the Rules of Origin Chapter provisions include an equivalent multi system. The measure would allow traders to choose between third party certified origin and self-declared origin statement methods when satisfying their preferential origin data. The ICC WCF CO Council Recommendation – Dual system paper, noted and reviewed by the ICC Global Customs and Trade Facilitation Commission, recommends dual systems to ensure legal security for business, safeguard data quality, and promote harmonisation which reduces costs for traders and governments.
“The proliferation of different origin rules in bilateral trade agreements creates an enormous challenge for small businesses looking to tap new market opportunities. We hope this new paper will help stimulate debate on how the use of common-sense systems could help more SMEs take advantage of preferential trade agreements” said Andrew Wilson, ICC Global Policy Director.
The negotiations for a waiver on intellectual property (IP) rights in the World Trade Organisation (WTO) are still ongoing, but a final agreement would not immediately loosen up access to COVID-19 vaccines and treatments, according to a WTO official. There is an established principle to override intellectual property rights “baked” into the WTO TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), said Antony Taubman, director of the intellectual property, government procurement and competition division in the WTO. Speaking at a conference on Health challenges in the EU in the pandemic context at the European Economic and Social Committee (EESC) on 31 March, he stressed, however, that he cannot speak on behalf of the WTO or its members.
One overriding theme was the ongoing negotiations amongst the Quad – the EU, USA, India and South Africa – in the WTO, who are working to reach an agreement on waiving intellectual property rights on vaccines and treatments against COVID-19. A leak reported by EURACTIV in March revealed a provisional compromise.
Support towards women’s participation in international trade has increased significantly in the past few years. Data and research both indicate a potential positive relationship between women’s economic opportunities at the international level and their competitiveness and productivity. By providing employment opportunities and enhancing consumer choice, trade can expand women’s role in the economy, thus driving their economic empowerment (World Bank, 2020). However, research indicates that the involvement of women in trade continues to be low. While trade can substantially improve economic outcomes for women, these positive effects can materialize only if the barriers that limit their participation in trade are minimized (ibid). Often, women face disproportionately higher barriers of entry to trade than men. Resource, information, time, and mobility constraints are just a few examples of the impediments women encounter in actively participate in international trade.
Women contribute to international trade as producers, entrepreneurs, workers, and consumers. Amongst the many barriers they face, limited attention has been paid to regulatory factors which can have important bearing on access to international markets, value chain upgrading, and women’s health and safety. These challenges are mostly concerned with the incidence of non-tariff measures (NTMs). NTMs are policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods by changing quantities traded, or prices, or both. Their primary objective is to protect public health, the environment, or national security, among others. However, they also substantially affect trade through information, compliance, and procedural costs.
Following reports that the World Trade Organization is to cut the outlook for trade growth in 2022 by half, ICC has issued the following statement.
“The WTO’s anticipated projections are very much in line with the systemic disruption to trade that we’re seeing throughout our global business network. At a micro-level this means yet more production outages, fewer jobs created and a worrying increase in consumer prices. “As we’ve said consistently in recent weeks, governments and development banks need to take a far more proactive stance to cushion the real economy from the spillover effects on the sanctions imposed on Russia. The WTO’s downgraded forecast must act as a wakeup call in this regard.
International shipping moves the world’s clothes, electronics, and food from factories and farms to shops and households. It plays a key role in global trade and in economic development—maritime transport accounts for about 70% of global trade by value and about 80% by volume. It is also a significant source of greenhouse gas emissions (GHG), accounting for around three percent of global GHG emissions annually. If nothing changes, GHG emissions from the maritime sector will continue to grow rapidly, in direct opposition to the goals of the Paris agreement.
International shipping has pledged to at least halve its GHG emissions by 2050 (from 2008 levels), with many stakeholders pushing for full decarbonization by that date. These are ambitious but necessary goals that will require a broad range of innovative policy measures in the short, medium, and long term.
This new World Bank report looks at various options for implementing carbon pricing in the shipping industry and explores how carbon revenues could strategically be used to enable an effective and equitable energy transition in and beyond the sector.
In his remarks delivered to OECD environment ministers and other stakeholders, DDG Paugam said plastics pollution and plastics trade “is one of the most pressing environmental issues that the WTO is currently working on, alongside ongoing global negotiations on fisheries subsidies.” “Seventy WTO members are co-sponsors to the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade (IDP), of which 50 per cent come from developing countries,” he told a ministerial plenary session on addressing the global plastics challenge. Welcoming the OECD’s Global Plastics Outlook report as an important contribution to inform the WTO’s work going forward, DDG Paugam said the WTO is trying to understand how trade policy can play a role in tackling the global plastics challenge.
“Trade flows in plastics pollution, whether it is trade in plastic itself, or trade in goods incorporating plastic, such as cars, are made of 50 per cent plastic,” he noted. “So we face a major challenge to monitor exact trade flows from plastics.”
The three co-coordinators of the IDP - Ecuador, China and Australia - drew attention to the IDP Ministerial Statement announced in December 2021 and the launch of three workstreams in March 2022 as a first step towards implementing the Statement. The co-coordinators reiterated the severity and urgency of the global plastics pollution problem and highlighted recent major developments, notably the launch of negotiations on a global agreement on plastics pollution, which sets an ambitious goal of reaching a binding agreement by 2024. They emphasised the need for WTO members to consider the IDP’s role in global actions and how trade tools can unlock barriers, facilitate trade in environmental goods and services and promote technology transfer.
Will the EU’s carbon import tax hurt poor nations? (Thomson Reuters Foundation)
Battling to halve its planet-warming emissions by 2030, the European Union plans to impose the world’s first carbon border tax on companies that import carbon-intensive products such as cement, steel and fertiliser. The border levy would protect EU companies that produce greener products from their competitors abroad whose manufacturers can produce at a lower cost in part because they are not charged for their carbon emissions. But critics say putting a carbon price on imports could have unintended consequences, such as crippling trade with less-developed economies in Africa and in turn stifling their own ability to cut emissions.
new OECD report, “Financing SMEs and Entrepreneurs 2022: An OECD Scoreboard” shows that outstanding SME loans increased significantly during the first year of the pandemic. The median stock of SME loans increased by 4.9%, the highest upturn registered since the OECD Scoreboard was created 10 years ago1. This was underpinned by a strong increase in government-provided loan guarantees (up 110% y-o-y in 2020), debt moratoria, as well as direct lending to SMEs (up by 17% y-o-y in 2020).
The report says it is vital that government recovery packages continue to provide targeted support to viable SMEs and entrepreneurs in need. The war in Ukraine, and the resulting humanitarian and economic crisis, reinforce the importance of support and access to financing for SMEs and entrepreneurs.
SMEs make a major contribution to the labour market and have the potential to play a key role in driving the green transition and in ensuring energy security. The report says they need access to a broader range of financial tools and instruments to strengthen their resilience.