tralac Daily News
AfCFTA not quite the SMME trade silver bullet SA hoped (Daily Maverick)
A draft ANC policy document, which was among several discussed at the ANC’s national executive committee meeting earlier this week, envisages greater cooperation with the private sector and signals a departure from its previously somewhat more hostile stance towards business. The document could still undergo changes before being made public. Whereas the ANC and the government have thus far mostly voiced support for The African Continental Free Trade Area agreement (AfCFTA), which came into operation at the start of last year, the document warns that there are some negative consequences for South Africa in the short to medium term due which came as a result of unequal levels of development. According to the document, “the ‘asymmetrical’ trade liberalisation approach adopted to support vulnerable and [least developed countries] means that South Africa will be removing tariffs and trade barriers to about 90% of its goods and services without reciprocity from those countries, some [of which] have up to 15 years to remove their respective trade barriers”. The agreement could also “have a negative impact on less skilled labour in the short and medium-term, especially if low-skill sectors were originally protected [by tariffs]”. Lastly, it says the agreement could have “adverse effects on many economies” because when there is more competition, micro, small and medium enterprises and small-scale farmers could be threatened “because they have higher trading costs than bigger companies and consequently face financial challenges to compete with greater firms”.
To support the construction of green buildings in South Africa, IFC today announced a financing package for Business Partners Ltd to help fund environmentally friendly industrial and retail sites for the use of small and medium-sized enterprises (SMEs).IFC is providing a 600 million rand ($42 million equivalent) loan package to Business Partners Ltd, a South African non-banking financing entity specialized in providing finance, mentorship, and support programs to SMEs. Business Partners will use IFC’s loan to finance the construction of certified green commercial buildings in South Africa and/or to renovate existing commercial buildings to make them more environmentally friendly, making them at least 20 percent more energy efficient. Eligible green building certifications will include EDGE, LEED, BREEAM, and Green Star.
“South Africa is one of the world’s most carbon-intensive economies and as a result the country’s green economy has huge market potential. Through investments into the development of green buildings by the SME sector, we believe we will not only be playing our part in preserving our environment but also contributing to much-needed economic growth, job creation and energy security. We are grateful to the IFC for this opportunity to support businesses that make a difference,” said Ben Bierman, Managing Director at Business Partners Ltd.
Western Cape fruit exports expected to increase (Engineering News)
Western Cape Agriculture Minister Ivan Meyer this week said he was pleased with the forecast of an increase in fruit exports from the province, following the good rainfall in the province since 2018. In a statement, he said it was expected that the increased water availability would boost agricultural production. “In light of many disruptions to international trade due to Covid-19, trade facilitation bottlenecks continue to threaten the reliable supply of key agricultural products. “These, among others, relate to trade infrastructure, such as the capacity of ports, and tariff and non-tariff barriers,” he noted. “In addition, the ongoing war between Russia and Ukraine has resulted in a sharp increase in some commodity prices, such as those of fertilisers and wheat, due to limited supply and growing uncertainty for future supply. “Despite this, agriculture is pushing forward, as evidenced by projected harvests for various products,” Meyer said.
Were the hapless South African taxpayer ever afforded an opportunity to appraise the investment prospectus for the Musina-Makhado Special Economic Zone – the coal-fuelled steel manufacturing megaproject planned for a sprawling Chinese-controlled “Special Economic Zone” located in the far northern Vhembe District of Limpopo – it’s unlikely ground would ever be broken.
The cost to develop the industrial zone quoted in the September 2019 masterplan is a whopping R344-billion. Funding will be split between the SA public purse, the Chinese operator of the zone and prospective Chinese private investors. The South African taxpayer is liable for the bulk infrastructure estimated at R96-billion.
But consider the risks: there is a chronic glut in the global steel market which has emerged as China’s construction boom has slowed. Both China and South Africa’s domestic steel industries now operate well below their production capacities – with dumping by none other than China into the stagnant local market blamed for the contraction in the SA industry, which now survives ironically on none other than taxpayer-funded handouts.
Changes in sub-Saharan maize trade spells potential trouble for Kenya (The Conversation)
Maize production in some of the sub-Saharan African countries that dominated maize supplies during the 2021/22 marketing year is expected to be lower this coming season. This will bring about some changes in the sub continent’s maize trade in the 2022/23 marketing year, in particular creating complications for Kenya. In the 2021/22 season, Kenya was the largest maize importer in the region.
But Kenya has a longstanding policy against genetically engineered maize. This limits the role of South Africa, the sub-continent’s biggest maize producer and exporter, in meeting Kenya’s needs.
The expected lower production comes in a season when demand for maize from countries in sub-Saharan Africa that rely heavily on imports is expected to remain strong. It’s estimated that Kenya, for example, will need to import 700,000 tonnes of maize for 2022/23. Kenya’s maize production is expected to be marginally higher, but not enough to meet the country’s needs.
The second and final day of the Namibia International Energy Conference held on 21 April, cemented agreement on the continent’s need to utilise its energy mix to industrialise as it formulates a just transition to a greener energy mix, on its terms.
In a panel discussion on how to formulate a just energy transition on 21 April, there was overwhelming agreement that Africa must shape its narrative and define for itself what a just energy transition must look like. These were sentiments shared by Paulo Gomes, founder and Chairman of Orango Investment Corporation. NJ Ayuk, Chairperson of the Africa Energy Chamber further iterated that a just transition cannot exist without oil and gas. Being in varying states of economic, industrial maturity and carbon footprint emission levels, the developed world “needs to decarbonise, and Africa needs to industrialise,” said Ayuk.
The calls for Africa to exploit its existing resources to create and leverage an energy mix to transform its industrial and economic development comes at a time when there is a decline in investments in oil and gas in Sub-Saharan Africa. According to global investment trends shared by Osam Iyahem of the Africa Finance Corporation, investment and finance institutions have increasingly reallocated financing previously directed to energy capital towards renewable energy, where investment in fossil fuels reached its lowest levels yet in over 10 years in 2020.
While capital is available, access to investment is also hamstrung by how countries navigate their regulatory environments, and the feasibility and the preparation and bankability of projects.
A good regulatory environment, where the needs of both the country and investors are met, where the state facilitates energy to share; prompt exploration; addresses environmental concerns and local content through training and local employment as well as activity controls can make the difference between profit and plunder. They must also create legislative environments that enable investors to monetise and have stability and enforceability. Specifically in the Namibian context of the recent oil discoveries, the panel discussion on regulatory frameworks recommended that an independent regulator of the upstream oil and gas sector should be established in line with the White Paper on Energy Policy of 1998 and the National Energy Act.
Broadband connectivity at 89% (Namibia Economist)
The Ministry of Information and Communication Technology (MICT) has confirmed that there is an increase in the number of mobile broadband subscribers, which is attributed to the MTC 081 Nation project. The Deputy Minister of ICT, Emma Theofelus said the country’s broadband connectivity has reached 89% population coverage, while Long Term Evolution (LTE) infrastructure provides 79% coverage, compared to 40% a year earlier. Theofelus said this at the first in-country session of the Digital Rights and Inclusion Forum held on 20 April, under the theme ‘Towards a Digitally Inclusive Namibia’. Theofelus added that through the broadband policy, the country aims to provide a broadband speed of at least 2Mbps to 95% of the population by 2024.
EXPANSION and improvement of Tanzania’s sea ports of Dar es Salaam, Tanga and Mtwara has evidently started attracting more customers, especially those from neighbouring countries to park and ship their consignment. This has seen more revenues which is a form of cargo handling and that affects the entire value chain in road and railway infrastructures. However, one improvement and other competitive advantage for transporters using Tanzania ports is not being said. This is safety, security of trucks, cargo itself and that of its transporters. Yes, it is to be recalled that Tanzania, which shares her borders with eight other countries, has no recent record of highway hijacking and robbery. This means, a track transporting consignment from a given sea port, towards a certain border post, is assured of reaching without any threat to the vehicle itself or driver and other operators. This includes even in case of breakdown incidents. The Deputy Acting Director General of Tanzania Ports Authority (TPA), Mr Karim Mataka, revealed before members of the parliament that currently, South Sudan is eyeing to start using Tanzania’s ports for its consignment.
Mauritius leads African per capita wealth with SA second and Namibia third (Namibia Economist)
The total private wealth currently held on the African continent is US$2.1 trillion and is expected to rise by 38% over the next 10 years, according to the latest 2022 Africa Wealth Report, published by Henley & Partners in partnership with New World Wealth. The new Africa Wealth Report was released on Tuesday 26 April 2022. It reveals that Africa’s ‘Big 5’ private wealth markets — South Africa, Egypt, Nigeria, Morocco, and Kenya — together account for over 50% of the continent’s total wealth. There are currently 136,000 high-net-worth individuals (HNWIs) with private wealth of US$1 million or more living in Africa, along with 305 centi-millionaires worth US$100 million or more, and 21 US dollar billionaires. Despite a tough past decade, South Africa is still home to over twice as many HNWIs as any other African country, while Egypt now has the most billionaires. Mauritius has the highest wealth per capita in Africa, at US$34,500 per annum followed by South Africa at US$10,970 and Namibia at US$9,320.
Ebrima Jallow, Director of Standardization at The Gambia Standard Bureau has outlined the importance of standardization saying it will help the government to limit the number of goods that are imported into the country. He said their marketers face a lot of challenges with ministries hence it is always difficult to get the right person on board. For visibility, he noted that the bureau has outsourced its social media platform while he highlighted three divisions that help in their operation this include standardization body the confirmation assessment which help in the inspection, testing and certification based on the public standard and the other is the metrology division who responsible for all industrial and scientific metrology of the country.
Malawi, Mozambique Launch Power Interconnector Project (Voice of America)
Malawi and Mozambique this week launched a power transmission project to help Malawi meet an increasing demand for electricity. Malawi, one of the poorest nations in Africa, lost 30% of its power generation in January after Tropical Storm Ana destroyed its main power station. The new project is expected to generate 50 megawatts for the country when completed. The Mozambique-Malawi Regional Interconnector Project was launched during a visit to Maputo by Malawi’s President Lazarus Chakwera. Chakwera said the project was historic because it will establish a reliable power connection not only between the two countries but also across the Southern Africa Development Community, or SADC, a regional economic organization comprising 16 member nations.
African trade news
Unharmonised taxes blamed for unfair trade practices in EA (The East African)
East African Business Council has raised concerns that variations in tax policies are distorting prices and frustrating intra-EAC trade and investment. At the height of the recent fuel shortage at the pumps in Kenya, government officials pointed an accusing finger at oil marketers, saying they were diverting supplies to the more lucrative Ugandan market.
The officials said suppliers were trucking fuel to neighbouring countries where taxes were lower and prices were not regulated. Private sector players are now alarmed, saying this accusation points to how differences in local taxation policies could cause scarcity of commodities in future.
This week, the private sector umbrella body in the East African Community raised concerns that variations in domestic tax system, including in Value Added Tax, are distorting prices and frustrating the free movement of goods and intra-EAC trade and investment. The East African Business Council (EABC) now wants EAC partner states to start harmonisation of domestic taxes by July 1 even as a tax expert insisted on a clear common tax policy. “We want EAC partner states to commence the process of harmonising domestic taxes by July 1, given that in 2018, EAC partner states adopted EAC Policy for Harmonisation of Domestic Taxes,” said John Kalisa, chief executive of the East African Business Council.
Ugandans Urged to Tap into DR Congo Opportunities (SoftPower news)
Legislators have welcomed the admission of the Democratic Republic of Congo (DRC) into the East African Community (EAC), saying that the development provides huge economic benefits to the country. These, were responding to a statement by the First Deputy Prime Minister and Minister for East African Affairs, Rebecca Kadaga, during plenary on Thursday, 21, on the admission of DR Congo into the EAC. The premier said that admission of DRC gives the region a combined population of over 300 million, which expands the market. “This provides opportunities to produce and sell goods and services. This will enhance the prosperity of our people,” she said. Kadaga added that the development will ensure a global connectivity from the Indian to the Atlantic oceans.
Northern Corridor states ‘monitoring Kenya’s elections’ (The East African)
Northern Corridor members’ states are closely monitoring developments in the Kenyan political environment with fears that disruptions would negatively affect the supply chain along the transport route that is still recovering from the adverse effects of the Covid-19 pandemic. The Northern Corridor is an important transport route to Kenya, Burundi, eastern DR Congo, Rwanda, South Sudan and Uganda. Kenya Private Sector Alliance (Kepsa), the umbrella body for all private businesses in the country, has said it will work with security agencies under the ‘Mkenya Daima’ initiative to deal with any post poll threats along the corridor that could see the port of Mombasa lose business to Dar es Salaam. “So far we don’t have any indications of any disruptions but we are monitoring closely,” Kepsa CEOe Carol Kariuki told The EastAfrican last week.
According to the Northern Corridor Quarterly performance dashboard (October–December) in 2021 the member states’ exports to the world increased by 10 percent in 2021 compared to 2020 and are projected to grow in 2022. The total trade along the corridor stood at around $ 3.17 billion in 2020, with formal trade between Kenya and Uganda accounting for 32 percent, followed by trade between DRC and Rwanda at 19.1 percent of the total trade within the region. Kenya was the single largest exporter.
Issues in cross-border trade in West Africa (The Nation)
Skirmishes between government agencies in Ghana and Ivory Coast against Nigerian businessmen operating in their countries are a common occurrence. At a roundtable discussion on “Cross Border Trade in the West African Sub-Region,” organised by the Centre for the Promotion of Private Enterprise (CPPE), several government officials from sub-Saharan African countries agreed that these skirmishes are unhealthy and inimical to trade and growth in the sub-region.
While calling for greater co-operation among member countries of the Economic Community of West African States (ECOWAS), Consul-General, Ghana High Commission, Ms Samata Gifty Bukari conveyed the need to achieve favourable conditions for inter-trade, stressing that there are several unfavourable tariffs among member countries that inhibit trade.
Africa’s reliance on donors, debts bites as food exporters feud (The East African)
Africa’s reliance on external suppliers for food, oil and financial support could be in for harsher times as Russia’s invasion of Ukraine continues to harm supply channels. A briefing by a group of UN experts says countries in east and west Africa belt are heavily exposed to the rising food prices after main global exporters Russia and Ukraine went to war. The briefing released last week by the UN Task Team for Global Crisis Response Group was supposed to determine how Russia’s invasion of Ukraine earlier in February was going to hurt global supply chains, as well as the access to food. But it found that Africa has most of the 36 countries labelled as most exposed to the price hikes of basic food like wheat, which both Russia and Ukraine sell the most to the continent as it is cheapest.
Why the UN’s New Urban Agenda is needed now (African Business)
Ministers responsible for housing and urban development from across Africa recently met in Nairobi, Kenya, to discuss how best to respond to urbanisation on the continent. In light of the upcoming High-Level Meeting at the UN on 28 April on the implementation of the New Urban Agenda, national expert representatives of the Special African Ministerial Session on Sustainable Urbanisation and Housing made the case for working together to implement the framework in their respective countries. The two-day African ministerial consultations towards the High-Level meeting were organised by UN-Habitat, UNECA, and the African Union with the support from the government of Kenya.
Africa sits in the crossfire of one of the greatest challenges to face our global community. Accounting for only 3% of the world’s carbon dioxide emissions, the continent is one of the most vulnerable to climate change and variability, further aggravated by sub-par infrastructure and disaster response services. The continent’s increasingly urbanised cities will therefore be on the frontline of climate change.
Urbanisation is one the most profound transformations that the African continent will undergo in the 21st century. Since 1990, the number of cities in Africa has doubled in number - from 3 300 to 7 600 - their cumulative population has increased by 500 million people. Africa’s cities are the most rapidly growing cities in the world; they are the youngest and they are changing fast. Their impact on Africa’s economic, social and political landscape in the coming decades is likely to be profound. Urbanisation, therefore, presents immense opportunities to accelerate progress towards the 2030 and 2063 development agendas and for promoting continental integration in the context of the African Continental Free Trade Area (AfCFTA). For African policy makers, it also entails very important challenges in planning, managing and financing urban growth, both at the local and the national levels. In many places in Africa and beyond, there is a prevaling negative perception of the externalities of urbanisation and its impact on development. This has slowed policy processes to make urbanisation a central part of Africa’s development strategies. This report presents compelling evidence - from 2 600 cities across 34 countries - that urbanisation in Africa contributes to better economic outcomes and higher standards of living. It shows that in most socio‑economic dimensions, Africa’s cities significantly outperform the countries in which they are located, and that the gap between the performance of African cities and the national averages is larger than in many other parts of the world. One of the most underappreciated achievements of African cities over the last 30 years has been that, despite growing by 500 million people, they have maintained their economic performance, providing several hundred million people with better jobs and improved access to services and infrastructure. Positive spillovers from urbanisation are also spreading to rural areas, which benefit from proximity to cities.
African governments maintained spending on infrastructure, despite Covid-19 and rising debt levels. At the same time, West Africa has, for the first time since 2016, led the continent in both the number and value of Infrastructure projects. These are some of the findings of the Deloitte ‘African Construction Trends 2021 Outlook’, that tracks infrastructure and capital projects (I&CP) activity across Africa.
The number of projects in 2021 increased by 20%, from 385 projects in 2020. The total value of projects under construction increased by 30.7%.
Deloitte highlights transport and energy and power projects as having consistently been key contributors to the sectoral mix of projects that are under way, with the real estate sector – most prominently commercial real estate – emerging as a critical sector in recent years.
Since the turn of the 21st century African ports have opened to private sector involvement to assume a hybrid public and private character, operating as semi-autonomous economic actors. Like other ports around the world, they are beginning to acknowledge their detrimental environmental impacts and to explore what they can do to assume more environmental responsibility. Their role to facilitate Africa’s economic growth through shipping is important, but their activities impact negatively on Africa’s oceans and freshwater systems. The blue economy concept seeks to address negative impacts to keep oceans and freshwater systems healthy and productive and also harness the immense potential of waterways to support global socio-economic development and growth sustainably. However the blue economy concept is relatively new, especially to African ports and how it is being integrated operationally as part of sustainability efforts has thus far received little attention or investigation.
Global economy news
“Financing for developing is an essential part of the solution,” Deputy Secretary-General Amina Mohammed said on behalf of the UN chief, adding that so far, the global response has fallen far short.
The President of the Economic and Social Council, Collen Vixen Kelapile, brought the attendees up to date on an increasing array of interrelated global crises that underline that no country, rich or poor, is immune to external shocks. He elaborated that the SDGs are facing perhaps the “greatest threat” since their adoption. COVID-19 has exacerbated trends that are “contributing to cataclysmic effects” on development, he said, and the poorest and most vulnerable are impacted the greatest. “Millions of people around the world have been pushed deeper into extreme poverty. Inequality is rising, and the gap between developed and developing countries is growing,” said the senior UN official.
Governments and international financial institutions must act boldly and urgently to address multiple, mounting crises that threaten to push hundreds of millions more people into hunger and poverty, United Nations Development Programme Administrator Achim Steiner said this week. Russia’s invasion of Ukraine “is causing destruction, loss of life, and a large-scale humanitarian and refugee crisis in Ukraine and the region. Its repercussions are global,” Steiner, speaking on behalf of United Nations Secretary-General Antonio Guterres, told finance ministers and central bank governors at the World Bank-IMF Spring Meetings. Poor and vulnerable communities, already reeling from the impact of the COVID-19 pandemic, have been hit hardest, and the risk of escalating instability and unrest is rising, he said in a statement to the World Bank-IMF Development Committee. “Deep inequalities, together with distribution and logistics problems, mean supply chains have been disrupted. Solving these crises and alleviating human suffering calls for coordinated action across the board,” Steiner said. This will require lifting export curbs to allow surplus food, energy, and fertilizer reach those most in need, providing capital and debt relief to dozens of countries slammed by spiking prices and interest payments, addressing energy market challenges, and reviving international cooperation.
Surging cross-border data flows require a balanced global governance approach that maximizes development gains, spreads the benefits equitably and minimizes the risks and harms. “Governance is what will determine the outcome of digital transformation,” said UNCTAD Secretary-General Rebeca Grynspan on 25 April at a high-level session of the organization’s eCommerce Week 2022.
Ms. Grynspan said governance should help ensure data can be harnessed to deal with climate change, pandemics, productivity and urban planning, while protecting the privacy of users and national security and ensuring the benefits from data are shared more equitably. Global internet protocol traffic – a proxy for data flows – has more than tripled since 2017, according to UNCTAD’s Digital Economy Report 2021. But just two countries – China and the US – are reaping most of the benefits, accounting for 50% of the world’s hyperscale data centres. Meanwhile, nearly 3 billion people remain offline, 96% of whom live in developing countries.
Russia’s unprovoked invasion of Ukraine has disrupted food supplies, especially cereals, to major halal food markets given Ukraine and Russia collectively control around 30% of the global wheat trade.
Dutch government figures reflect Russia produced 85.8 million tonnes of wheat in 2020, while news agency Reuters credits Ukraine with producing 24.9 million tonnes. With imports accounting for as much as 90% of food consumption, the Gulf Cooperation Council (GCC) region has been impacted by a steep reduction in grain and sunflower seed exports from Russia and Ukraine and freight rates inflated by the war. “Supply chains have been interrupted and food prices have risen sharply due to the Gulf’s extensive reliance on Russian and Ukrainian staple foods,” said Matthew Hoffer, managing director of Europe and Middle East at OneAgrix, a global agricultural and halal digital trade platform.
“The African continent has been the most affected and harmed by the COVID-19 pandemic and now by the Russia-Ukraine war,” he said. Jebnoun predicted Africa’s collective public debt would rise by at least $300 billion because of the war and the pandemic in addition to the previously planned debts in the African countries’ budgets. “Ukraine is a main exporter of wheat, cereals, sunflower oils and other food products to Africa… We can say Tunisia has average harm following this war, while other countries have harsher effects, such as the Sahel and Sahara Desert countries,” he predicted, indicating key food importers Egypt and Algeria would also suffer. “The worst scenario is that importing countries will be left with no stock for next summer,” said Algerian economist Mourad Kouachi of the University of Oum El Bouaghi. He told Salaam Gateway the worst would come if the conflict continued through the Ukrainian harvest season as that would translate into famine for many poor countries.
Global Finance Ministers and Central Bank Governors Met in DC this Week: Here’s What You Need to Know (U.S. Chamber of Commerce)
Policymakers responsible for almost all the public money in the world met in Washington, D.C. this week for the annual World Bank and International Monetary Fund (IMF) Spring Meetings.
Rarely has close macroeconomic coordination been so badly needed. The world is facing a series of complex, interrelated crises stemming from Russia’s invasion of Ukraine, the ongoing COVID-19 pandemic, and mounting inflationary pressures. These major events have had huge ripple effects on the global economy: a surge of refugees, supply chain disruptions, food price inflation and shortages, sky-high debts, and war-induced economic disasters. This week’s meetings focused heavily on these issues, which were encompassed in the IMF’s new global policy agenda: Repercussions, Response, Resilience.
The most pressing issue is how to address the looming setback in humanity’s fight against hunger. The confluence of wartime disruption, pandemic-induced supply bottlenecks, climate change, and outdated land-use choices are now threatening to undermine the livelihood of millions and creating a very uneven playing field for less developed economies.
Before this week’s meetings, the World Bank Group, IMF, WFP and WTO issued a joint statement raising the alarm about food availability and prices and calling on the international community to urgently support vulnerable countries through coordinated actions including provision of emergency food supplies, financial support, increased agricultural production, and open trade. Food security was also the central subject that Secretary Yellen has chosen to lead on in discussion with G20, G7, and international financial institutions.
WTO members agreed on 23 February that the postponed MC12 would take place during the week of 13 June in Geneva, with the exact dates to be determined. The decision at a meeting of the organization’s General Council was taken following the easing of COVID-19 pandemic restrictions in the host country Switzerland. MC12 was originally due to take place from 30 November to 3 December 2021 but was postponed due to the outbreak of the Omicron variant of COVID-19, which led to the imposition of travel restrictions and quarantine requirements in Switzerland and many other European countries.