tralac Daily News
Newly proposed European Union (EU) regulations threaten the export of oranges from the Southern African region to Europe, according to Citrus Growers’ Association (CGA) of South Africa special envoy to market access and EU matter representative Deon Joubert. Earlier in April, the EU’s Standing Committee on Plant, Animal, Food and Feed (Scopaff) was set to discuss and possibly vote on new and “arguably misinformed” regulations on False Coddling Moth (FCM), which poses a major threat to Southern African orange exports, he says. “If agreed to by member countries, the new regulations will have a devastating impact on orange exports from South Africa to the region,” says Joubert. An imposition of such regulations could result in large gaps in the supply chain and higher prices of oranges for European consumers, at a time when the region faces the real risk of food insecurity owing to the ongoing war in Ukraine.
Industry association the Citrus Growers’ Association of Southern Africa (CGA) says it is encouraged by the work done by the Department of Public Enterprises (DPE), Transnet and the eThekwini municipality to reopen the Durban port. The arterial Bayhead road has been partially reopened ahead of schedule, while work on the ingoing lanes is proceeding well and is expected to take a few weeks, not months, to complete.
Task force calls for coffee subsidies (Business Daily)
A coffee task force committee has recommended subsidies of farming inputs to farmers to address the high cost of production and increase growers’ earnings. In a report, the committee noted that there is a need to address the high cost of production that has eaten into farmers’ margins. The committee has also recommended improvement of the quality of coffee at the farm level by adopting good agricultural practices and modern coffee processing technologies and promoting efficiency in the management of the crop through co-operative societies. “There is [a] need to address a reduction in the cost of production through appropriate support of growers with quality and affordable farm inputs and planting materials,” said a report of the task force. The task force also wants farmers to be involved directly in coffee marketing to enhance transparency. Currently, growers sell through marketing agencies.
Expensive fertiliser pushes farmers to organic farming (Business Daily)
The sustainability of crop farming has increasingly come into question in the past few weeks as fertiliser prices skyrocket. Supply chain disruptions caused by the Covid-19 pandemic as well as Russia’s invasion of Ukraine in late February have curtailed shipments of key fertiliser components such as Nitrogen, phosphorus, and potassium from the two countries, which are among the world’s biggest suppliers. In face of the global shortages, the price been rising with every passing day, jumping as high as Sh6,000 per 50-kilogramme bag, nearly double the price a year ago. Farmers have been forced to make tough choices — either dig deeper into their pockets to access this indispensable farm input that is crucial for better yields and pest management, or minimise on their costs by cutting on the acreage they put under production.
But for small-scale farmers, the choice is not so black-and-white. Being more dependent on the farming ventures for family sustenance, they need to put every bit of the small acreage they have under production and all the input they can get to guarantee better yields.
Kenya moves to reduce interest on foreign debt (The East African)
Kenya is reviewing the currency composition of its external debt in order to reduce currency volatility that has seen the cost of its dollar-denominated loans increase by two percent in four months. Haron Sirma, director-in-charge of Debt Management at the Treasury, said the proposal is aimed at reducing foreign exchange costs. “On the external debt stock, we seek to match the currency composition with the country’s foreign exchange holdings,” said Mr Sirma. “The characteristics of a country’s external debt by currency should mirror the foreign currency inflows through exports and remittances. This minimises forex costs through exchange rate movement.” Kenya borrows externally in five major currencies — 67 percent in dollars, 19 percent in euros, six percent in Japanese yen, six percent in Chinese yuan and two percent in pound sterling. Last year, Kenya’s external debt was $36.9 billion, of which dollar-denominated loans stood at $24.72 billion, according to the Treasury.
Kagame, Museveni hold bilateral talks in Kampala (The East African)
Rwandan President Paul Kagame and his Ugandan counterpart Yoweri Museveni on Sunday held bilateral talks in Kampala. The two leaders agreed to push for regional peace and stability by jointly addressing the security situation in the Democratic Republic of Congo, as part of the East African Community. The talks came on the backdrop of last week’s meeting in Nairobi by the bloc’s Heads of State in which they agreed to set up a regional military force bent on ending decades of insecurity in eastern DRC, caused by militia groups. DR Congo in early April signed the treaty of accession into the EAC, becoming the seventh member of the bloc. President Kagame did not attend the Nairobi meeting last week where leaders discussed regional security, but was represented by Rwanda’s Foreign Affairs Minister Vincent Biruta.
Malawi, Mozambique sign trade pacts (Nyasa Times)
Malawi and Mozambique have signed two important trade pacts aimed at unlocking and boosting trade of the two countries.
The agreements have been signed between the Agency of Promotion and Investments and Appiex IP of Mozambique and the Malawi Investment and Trade Centre as well as the Mozambique Cereals Institute ICM and the Agricultural Development and Marketing Corporation (ADMARC). Chakwera said Malawi imports goods worth US$300 million annually and many of them are handled at Nacala and Beira ports but not much has been done to enhance bilateral trade between the two countries.
Ghana Export Promotion Authority in efforts to increase earnings from the Non-Traditional Exports (NTEs) is setting up various sector working groups under the auspices of the Ministry of Trade and Industry (MOTI). The move is in line with the implementation of the National Export Development Strategy, which identifies various interventions and structures for successful operation of the strategy. One of the structures to be established is the sector groups which would take care of the priority sectors that have been outlined.
“GEPA’s role is to coordinate the implementation of the activities and actions of the Strategy and for this reason ware happy to inform you that the NEDS Coordination Secretariat has been set up at GEPA and implementation of the NEDS has effectively commenced,” he said.
Effective implementation of the interventions for the 17 prioritized NTE products identified in the Strategy will require collaboration of key implementing partners centred around the product sector groups, he said.
African trade news
Intra-African trade remains low despite efforts from the African government to improve continental trading capacity. In the recent decade, intra-African trade accounted for about 12 percent of Africa’s total trade. One of the leading causes of low continental trade is the absence of a strong and efficient private sector. While the current trade framework focuses on lowering trade barriers, increasing the efficiency of the private sector’s productivity can improve Africa’s trading performance. The current framework necessitates a need to shift toward integrative private sector participation. The private sector bears the main brunt of the trade constraints. While the public sector, through the government, negotiates and signs trade agreements, the consequences of the private sector play an integral part in African trade. It is why African governments must operate systems viable for private sector participation. Poor infrastructure reduces by 40 percent in Africa, and per capita output grew by 2 percent. This lack of infrastructure capacity means that the private sector cannot compete at the highest level in terms of productivity. Governments in Africa must seek new ways to attract funding for infrastructure projects. For example, infrastructure bonds have been successfully utilised to fund South Africa and Kenya road renovations. These funds might be used to help finance infrastructure projects all over Africa.
Dr. Chris Kpodar, President of Solomon Investment Ghana Limited, has called on the African Union (AU), to champion the adoption of an African Continental Common Currency (ACCC) agenda, saying, a common currency depicts ones’ economic power. Speaking on the topic: “The justification for African Continental Common Currency backed by resources, not by dollar,” at the Ghana News Agency-Tema Industrial News Hub Boardroom Dialogue, Dr. Kpodar noted that African countries must start setting the pillars for the ACCC Agenda. Dr. Kpodar said the use of Dollars, Euro, Pounds, and CFA respectively by African Anglophones and Francophones was an indication of their strings attached to their former colonial masters who were still controlling their affairs through their currencies. He said, “it is time to achieve economic independence”.
Are events overtaking the long-delayed Eco in West Africa? (African Business)
With the latest 2020 launch deadline postponed because of the onset of the Covid-19 pandemic, and no new timetable in place, there are concerns about whether the eco continues to be a viable proposition. This is despite the many advantages a common currency offers the 15 members of the Ecowas trading bloc. Removing trade and monetary barriers and meeting these targets across the region would have significant benefits for the countries involved. Meeting the convergence requirements would instil greater fiscal discipline in the region and provide a mechanism for unlocking improved transactional efficiencies and ensuring more predictable monetary policy and inflation management as well as reduced risk. Having a common currency would remove trade and monetary barriers, boosting economic activity and economic upliftment in this region of approximately 385 million people. This, in turn, would be a catalyst for new investment in the region. But with no new date set for the launch, there are concerns the project may be drifting.
Africa faces hard knocks as rich countries take manufacturing back home (The Conversation Africa)
The global economic crisis triggered by the outbreak of the COVID pandemic in 2020 and Russia’s invasion of Ukraine in February this year has intensified the risk of declining trade integration between countries. A process referred to as the deglobalisation of trade. The pandemic sent shocks through supply chains across the world. As a result, companies in some advanced economies have started to prioritise bringing production that was previously outsourced to Asia back home – or closer to home. The expectation is that this will avert ongoing – and future – supply-chain disruptions, ensuring a steady and reliable supply of goods.
Russia’s invasion of Ukraine has exacerbated global supply shortages after the pandemic. It is also further fuelling expectations of major reduced reliance on global supply chains by businesses. This is particularly true of companies in Europe and the US.
This trend risks adding additional strain to economies in Africa on top of the current economic pain from soaring food and fuel price inflation imposed by the war in Ukraine. A deglobalising world poses serious risks for Africa. This has been confirmed by findings in a recent World Bank report. It shows that reversing globalisation through reshoring of value chains has the potential to push an additional 52 million people into extreme poverty. Those living in Sub-Saharan Africa would be the hardest hit.
African Development Bank Group President Dr Akinwumi Adesina concluded a three-day official visit to Washington DC on Saturday. Alongside the Spring Meetings of the International Monetary Fund and World Bank, the visit included several bilateral engagements with stakeholders on African development. Adesina garnered broad strong support for a robust 16th replenishment of the African Development Fund, the Bank Group’s concessionary lending arm that supports Africa’s low-income economies. Replenishment efforts continue through October, when partners are expected to make their pledges. During bilateral meetings, United States Assistant Treasury Secretary Alexia Latortue said the African Development Fund was critical to Africa’s the development landscape. She assured the Bank President that the US remains a strong and proud supporter of the Fund, which has strategic focus and delivers impact. Latourte applauded the leadership of Dr. Adesina in developing the Bank’s bold African emergency food production plan to avert the looming food crisis due to the Russian war in Ukraine and assured of the strong partnership of the US Treasury Department on the plan.
African Development Bank Group President Dr Akinwumi Adesina says “Africa must prepare for the inevitability of a global food crisis.” He was speaking about Africa’s priorities, as a guest at the Atlantic Council’s Africa Center on Friday. Fielding questions from the Council’s Africa Center Chair, Ambassador Rama Yade; Senior Fellow Aubrey Hruby; and Washington/UN correspondent for Jeune Afrique and The Africa Report, Julian Pecquet, the Bank chief called for an increased sense of urgency amid what he described as a once-in-a-century convergence of global challenges for Africa. According to Adesina, the continent’s most vulnerable countries had been hit hardest by conflict, climate change and the Covid-19 pandemic, which had upended economic and development progress in Africa. He said Africa, with the lowest GDP growth rates, had lost as many as 30 million jobs on account of the pandemic.
Africa’s Post-Pandemic Economic Recovery: Insights from Ghana and Nigeria (Carnegie Endowment for International Peace)
The economic impacts of the COVID-19 pandemic have been severe for parts of the African continent, exacerbating existing fiscal and socio-economic challenges. Although African economies are slowly recovering, that recovery is constrained by low vaccination rates, tight fiscal space, unequal access to external finance, and increasing debt vulnerabilities. The disruption of global trade flows and commodity markets by the situation in Ukraine is adding more pressures. Still, African governments have undertaken a wide range of initiatives to provide relief to their citizens and position their economies on the path to resilience and prosperity.
Investors pumped record amounts of private equity and venture capital into Africa last year, according to a new report by the African Private Equity and Venture Capital Association (AVCA.) The ‘African Private Capital Activity Report’(pdf), released on 19 Mar., found that the total value of private capital deals in Africa reached a record high of $7.4 billion in 2021, representing a 118% increase compared to the $3.4 billion registered in 2020. The record amount was almost double the $4 billion that was invested on an annual average basis in Africa between 2016 and 2020. “The report highlights how Africa’s economy continues to be fertile ground with attractive investment opportunities for investors in search of yields,” said Abi Mustapha-Maduakor, CEO at AVCA.
How the G-7 can support Africa’s climate agenda (Jordan Times)
One of the more concrete outcomes of last November’s United Nations Climate Change Conference (COP26) is South Africa’s Just Energy Transition Partnership (JETP). Under this plan, South Africa will receive $8.5 billion in grants and loans from the United States, Germany, France, the United Kingdom, and the European Union to support its transition from coal-fired power plants to cleaner energy sources. Details of the JETP’s implementation are still scant. But the agreement already promises to be a template for how wealthy countries, the world’s largest historical emitters of greenhouse gases, can support the climate agenda of the lowest emitters, most of which are in Africa and are bearing the brunt of the climate emergency. That makes the JETP worthy of close attention as June’s G-7 leaders’ summit in Germany approaches.
Today, the U.S. Chamber of Commerce hosted H.E. Samia Suluhu Hassan, President of the United Republic of Tanzania, culminating an impactful week during which the U.S. Chamber’s U.S.-Africa Business Center hosted official delegations from South Africa, Kenya, Nigeria, Ghana, Tunisia, and Congo. During President Hassan’s visit, the U.S. Chamber oversaw the signing of over $500 million in new investments in Tanzania, including the signing of a U.S. Chamber Memorandum of Understanding (MOU) to expand trade and investment between the U.S. and Tanzania, one of the world’s fastest growing economies. The MOU with the Tanzania Trade Development Authority will build business linkages between the U.S. and Tanzania through the countries’ mutual commitment to share investment and trade information, co-host events including public- and private-sector trade policy dialogues, and collaborate on trade and investment forums and conferences, among other measures.
Global economy news
New UNCTAD figures show that the significant uptick in consumer e-commerce activity fuelled by the COVID-19 pandemic was sustained in 2021, with online sales increasing markedly in value, despite the easing of restrictions in many countries. The average share of internet users who made purchases online increased from 53% before the pandemic (2019) to 60% following the onset of the pandemic (2020/21), across 66 countries with statistics available. But the situation prior to the pandemic and the extent of the boost to online shopping experienced vary between countries. Many developed countries already had relatively high levels of online shopping (above 50% of internet users) before the pandemic while most developing countries had a lower uptake of consumer e-commerce
The COVID-19 pandemic has made digital technologies and an internet connection even more important in our daily lives, as people and companies have moved even more online to work, learn, socialize, shop and do business. But not everyone is reaping the benefits, especially the 2.9 billion people still without an internet connection. A heavier reliance on digital tools also poses risks to the environment, as they generate more CO2 emissions and e-waste. Bridging the digital divide and tackling the risks of digitalization are at the heart of UNCTAD’s eCommerce Week, happening from 25 to 29 April.
The digital transformation that was accentuated during the pandemic pointed to the unequal opportunities that existed between the ones that could and the ones that could not take advantage of digital solutions to cope with the negative effects of the pandemic – be it in the health care area or in the economic field. This has immediately raised the awareness among the governments around the world that something needs to be changed. We cannot continue on the same trajectory because that will just result in even wider divides, even wider inequalities. But unfortunately, it’s going to be very difficult for individual governments to deal with all these issues on their own. We need to come together. This is the time when the UN should do its job by bringing all the forces together to develop something that’s not good only for individual countries but for the planet as a whole.
Least Developed Countries (LDCs) have historically faced various binding constraints to their sustainable development. These range from low productivity and limited capacity in manufacturing and other productive sectors, to a lack of economic diversification, high levels of dependence on commodities and minerals, low investment rates and limited government capacity to implement growth-oriented structural policies. Rarely has a country evolved from poor to rich without sustained structural economic transformation from an agrarian or resource-based economy towards an industrial or service-based economy. For this reason, the Istanbul Programme of Action (IPoA), which ran from 2011-2020, prioritised the building and diversifying of productive capacity in LDCs.
Helping Countries Cope with Multiple Crises (World Bank)
This year’s Spring Meetings of the World Bank Group and International Monetary Fund took place at a time of overlapping global crises. The war in Ukraine has compounded concerns about inflation, COVID-19, climate change, and debt, with many other countries also facing fragility and conflict. The chair’s statement issued on Friday by the Development Committee, a ministerial-level forum that represents 189 member countries of the two organizations, noted that the impacts will be felt most in low- and middle-income countries, especially by their most vulnerable people, including women and children. The statement added that economic recovery is at risk amid geopolitical tensions, with investment, trade, and growth affected, even as countries face further risks from the pandemic and uneven deployment of vaccines.
BRI is a boost for economic development, not a debt trap (China.org.cn)
The Belt and Road Initiative (BRI) has showcased resilience and vitality in boosting economic development amid the COVID-19 pandemic and assisted participating countries in stabilizing their economies, officials and experts said Thursday. Over the years, several low-income and emerging economies have been experiencing daunting debt risks owing to the COVID-19 pandemic and global political uncertainties. As a result, it is necessary to adopt appropriate measures to sort out the debt repayment issues of such countries with concerted efforts from all parties, said Zhou Xiaochuan, former governor of China’s central bank, at the Boao Forum for Asia Annual Conference 2022.