tralac Daily News
New opportunities in global supply chains need to be used to benefit the S.A economy - Deputy Minister Majola (the dtic)
The Deputy Minister of Trade, Industry and Competition, Mr Fikile Majola, says new export opportunities that are emerging from the disruption in the global supply chains caused mainly by Covid-19 need to be fully utilised by South African businesses and other investment partners. He was addressing a sod-turning event, to launch a carbon black production site at the Coega Special Economic Zone (SEZ) in Gqeberha
OEC is the only local producer of a wide range of carbon blacks. The product is used in various industries, such as tyre industry, ink, coatings, batteries, plastics, and other high performance applications. Key interventions had to be made by the stakeholders involved to save the project from risk of failure as it was put at risk by a decision of the Port of Port Elizabeth (PoPE) to close to liquid vessels by end of December 2022.
Transnet National Ports Authority (TNPA) then took a decision to relocate the liquid fuel storage to the Coega SEZ and the Department of Trade, Industry and Competition (the dtic) injected funding to the value of R202 million to make the carbon black project possible. The funding has made possible the development of two 18 000 cubic metre tanks for storage of carbon black feedstock with ancilliary infrastructure within Zone 7 of the Coega SEZ.
“The manufacturing sector contributes about 14% to the GDP and therefore this project will play a fair share in contributing to the country’s manufacturing and export sectors. Furthermore, the fact that the construction of the storage facility and associated infrastructure will enable the creation of approximately 150 additional jobs (50-construction phase, and 100 jobs during the operational phase of the project) is highly appreciated. This is proof that coordinated efforts across the different spheres of government and the private sector can effectively realise the investment pipelines required,” Majola said.
Voting on EU measures for Southern African citrus postponed (Fruitnet)
This week’s expected vote by the European Union’s (EU) Standing Committee on Plant, Animal, Food and Feed (SCOPAFF) on new measures for Southern African citrus did not take place as originally planned. In what was a rather confusing run-up to the vote, it appears that SCOPAFF decided that more consultation was needed, delaying the vote until next month. South African sources admitted that they were informed on Friday that the upcoming legislation on the FCM measures for citrus that were to be discussed and voted on Monday and Tuesday this week had been withdrawn. Instead, South Africa continued its intense lobbying until they received final confirmation.
Shippers’ Authority, FDA move to tackle non-tariff barriers impeding trade facilitation (Myjoyonline)
As part of measures to improve processing of documents at the port, the Ghana Shippers’ Authority (GSA) has partnered the Food and Drugs Authority (FDA) to sensitise shippers on ways to address import permit application challenges. The move is part of efforts to tackle the growing Non-Tariff Barriers (NTBs) as well as support trade facilitation. At the sensitisation forum organised under theme ‘The Role of FDA – Addressing Import Permit Application Challenges to Facilitate Trade’ held at the FDA office in Tema on Wednesday, April 27, 2022, the Tema Branch Manager of the GSA, Charles Darling Sey said, more efforts would be put in to deal with the development as a means to support the Africa Continental Free Trade Agreement (AfCFTA) which frowns on NTBs. He noted that a United Nations Conference on Trade and Development report suggests that African countries could gain US$ 20 billion in GDP growth by tackling NTBs at the continental level.
Why we closed land borders for 2 years – Buhari (Vanguard)
PRESIDENT Muhammadu Buhari said yesterday that his government shut the nation’s borders to protect farmers. Buhari spoke as President of Africa Development Bank, AfDB, Dr Akinwumi Adesina, disclosed that the bank has earmarked $1.5 billion Africa Emergency Food Plan to cushion the effect of Russia/Ukraine conflict expected to trigger global food crisis. The President, who spoke at a meeting with the AfDB boss in his office in the Presidential Villa, Abuja, explained that much had been achieved in encouraging local farmers since the land borders were closed two years ago. He, however, lauded the AfDB for planning ahead of whatever negative consequences might come from the Russia-Ukraine conflict in terms of food security.
Reopening of borders booster for manufacturing, trade, says OPS (Businessday)
Members of the organised private sector (OPS) have described the Federal Government’s full reopening of Nigeria’s major international land borders as timely, saying it would allow businesses to access more markets, source raw materials easily and explore options for expansion.
Frank Onyebu, chairman, Apapa branch of MAN, told BusinessDay that Nigeria has robust borders which offer opportunities for larger markets and expansion for businesses in the manufacturing sector, but these opportunities are being snatched away by smuggling and dumping of low-quality goods. “The reopening gives room for manufacturers to explore other markets, expand their businesses and even diversify their portfolio, in addition to this, the manufacturing sector is at the brink of collapse as stakeholders deal with rising production costs, FX shortages, supply cuts, tax burdens, among other issues, this will serve as a relief in this trying period,” he said. Onyebu noted that the borders should not have been closed in the first place if it was properly secured from the activities of smugglers and other illegal businesses, adding that following this reopening, those manning the borders need to be more effective and efficient in carrying out their activities.
Seventh ministerial meeting of the United Kingdom - Nigeria Economic Development Forum (EDF) (GOV.UK)
On 26 April 2022, the Minister for Trade Policy of the United Kingdom, the Minister of Industry, Trade and Investment of Nigeria and the Minister of State Finance, Budget and National Planning of Nigeria, held in person the 7th Ministerial meeting of the United Kingdom-Nigeria Economic Development Forum (EDF).
Both sides restated the commitment to enhancing the relationship between Nigeria and the UK and understand that a deep trade policy relationship is in the interest of both countries; because of this, and ahead of the current EDF Memorandum of Understanding (MoU) coming to a close in 2023, ministers agreed to establish an official level working group to explore the benefits of a future UK-Nigeria enhanced trade partnership. Both Nigeria and the UK agreed that such a partnership between their two countries should help encourage economic growth, job creation and greater two-way trade and investment, helping to support Nigerian and British businesses. Both the UK and Nigeria agreed to set out priority sectors they would like the working group to consider and to give feedback at EDF8. Nigeria requested that the enhanced trade partnership working group should consider discussing mutual recognition agreements for standards and professional services.
UK representatives confirmed that the UK will set out details of its new trade preference scheme, the Developing Countries Trading Scheme (DCTS), later in 2022 and appreciated the Nigerian input into the UK’s public consultation on the DCTS.
E-Tax Rollout in Ethiopia — A Challenging Road to Renaissance (Bloomberg)
Ethiopia has historically been part of the experimental deployment of electronic tax systems in Africa to provide international funders and regional tax cooperation organizations with proof of reduction of tax evasion and increase in tax payments. The challenge was tremendous in a country used to poor internet, a low level of taxpayer computer literacy, lack of a skilled workforce, and poor coordination between revenue authorities. With a 770-strong large taxpayer base in 2019, Ethiopia has been able to quickly mobilize tax revenues at a higher level than previously, allowing the country to set an ambitious new budget for the future.
Africa is part of the global move to adopt and integrate digital tools to improve processes and services with the aim of raising more revenue and reducing compliance costs.
The Africa Tax Administration Forum in June 2021 published a survey report that highlighted seven capacity blocks that will support African tax administrations in ICT. These seven blocks are a comprehensive approach providing tools to African tax administrations to improve processes and reduce compliance costs. ICT provides the benefit of better supporting taxpayers and increasing compliance, allowing remote working and online taxpayer contact.
Gabon launches new economic zone (African Business)
The Gabonese government has announced the construction of a new special economic zone (SEZ), the Mpassa-Lebombi, in the south-eastern province of Haut-Ogooué. The new zone aims at attracting investment in the agricultural and forestry sectors, which respectively represented $61m and $537m of export value in 2020. The new SEZ will, like the country’s two existing zones, be a joint venture between the Gabonese government and the Singaporean commodity trading firm Olam International, which acts as the principal shareholder (40.5%).
The Mpassa-Lebombi SEZ will be developed and modelled after Gabon’s first SEZ, Nkok, created in 2011, which now employs 4000 people, of which 80% are Gabonese. Nkok accounts for nearly 40% of the country’s exports. As a condition of setting up in its special economic zones, the government makes firm commit to exporting at least three-quarters of their production. In return, the zones provide tax exemptions, efficient infrastructure and access to the country’s resources.
Liberia: National Port Authority Signs MOU with Georgia Ports Authority for the Advancement of Trade (FrontPageAfrica)
The National Port Authority (NPA) has signed a memorandum of understanding with the Georgia Ports Authority (GPA) to renew commitments between the two sisterly cities for the advancement and the promotion of trade. The signing of the MOU was preceded by a round table discussion that touched on a host of other things that seek toward the advancement and the promotion of trade between the two sisterly ports authorities.
Speaking at the event, the Managing Director of the National Port Authority Bill Twehway was pleased to have a delegate from Georgia Ports Authority to sign what he terms as a historical document.
The MOU he says is a non-legally banding one. This, Mr. Twehway says, is to strengthen the National Port Authority and that of the Georgia Ports Authority.
Central African Republic adopts Bitcoin as official currency (Africa Times)
The Central African Republic has become the first nation in Africa to adopt Bitcoin as an official currency, saying the move will put the C.A.R. “on the map of the most courageous and visionary countries in the world.” President Faustin-Archange Touadéra announced the decision in a statement, welcoming the news following the National Assembly’s approval of a bill that established the legal and regulatory framework for using cryptocurrencies. He praised the ruling as a “decisive step” towards creating opportunity and advancing his economic agenda. “We are going on a new path that will mark a milestone for our country,” the announcement said. “In a progressive forward-looking vision, our nation must be able to pursue its destiny and to join the ranks of those who not only fully understand the importance of blockchain technology, but who are also rushing to legislate it.” The C.A.R. will continue to use the CFA franc, even as some opposition leaders plan to mount a challenge about the Bitcoin decision.
African trade news
Data of informal trade is key in accurate monitoring of intra-African trade says Karingi of ECA (UNECA)
Official trade statistics often capture formal trade and leave out informal trade, leading to underestimation of intra-African trade, intra-Regional Economic Community (REC) trade and African trade in general. Understanding the scale of informal trade will be instrumental in accurately monitoring intra-African trade, particularly in the context of the AfCFTA. “Since the majority of the informal cross-border traders are women, Informal Cross Border Trade (ICBT) data is key in understanding the different dynamics at play that could inform the development and implementation of gender sensitive trade policies and processes” said Stephen Karingi, Director of the Regional Integration and Trade Division of ECA speaking at the virtual launch of the Phase II ECA and Afreximbank project.
Brian Mureverwi, trade advisor at the African Union Economic Development, Trade, Industry & Mining department, emphasised the need to come up with a concrete methodology that captures ICBT data in order to come up with evidence-based policies. He further added that once the data are captured, it will feed into the African Trade Observatory portal where policy makers will be able to access the information in the comfort of their offices.
Investments into East African startups fall by 50pc as Nigeria shines (The East African)
East Africa’s investments in startups declined by more than 50 percent in 2021, with deal activities falling by two percent, largely due to the impact of new restrictions imposed by governments to tame the spread of the third wave of the Covid-19 pandemic. The latest Venture Capital in Africa report (April 2022) by the African Private Equity and Venture Capital Association (AVCA) shows that the value of funding raised by East African entrepreneurs as a proportion of total deal value in Africa fell by more than half to seven percent ($364 million) in 2021 from 18 percent ($900 million) in the seven-year period (2014-2020) .However, in the continent, the total amount raised by African startups more than quadrupled to $5.2 billion from $1.1 billion in 2020 helped by a surge in venture capital (VC) deal activities in Nigeria.
DRC is a key plank in regional value chain for businesses (The East African)
The official induction of the Democratic Republic of Congo into the East African Community is a watershed moment for regional business owners and investors as it marks the formal rollout of a platform that will stimulate business growth, cooperation, and unlimited investment opportunities. As a fast-expanding regional market with DRC, East African Community now boasts of increased diversity that will no doubt supplement trade with external partners and stakeholders for economic and business prosperity. With the opportunities DRC brings on board, intra-regional trade will steadily rise as businesses expand and set up supply chains across the region.
COMESA Meets Stakeholders at the Zimbabwe Trade Expo (COMESA)
COMESA Secretariat is participating at the 62nd Zimbabwe International Trade Fair (ZITF) which is being held in Bulawayo City from 26 – 30 April 2022. This is part of COMESA’s outreach to raise public and stakeholder awareness on regional integration programmes and encourage them to take advantage of the opportunities that COMESA provides. It is also part of the demonstration of the COMESA programmes in Member States as provided for in the COMESA Communication Strategy.
According to a COMESA study conducted last year titled ‘Export Potentials of Intra-COMESA Trade’ Zimbabwe has the potential to increase intra-COMESA trade by US$ 4.1 billion. Eleven of its export products have the highest trade potential, including tar distilled from coal, fruits of the genus capsicum, avocados, glass products, and tungsten ores and concentrates.
Japan auto parts makers diversify supply chain to North Africa (Nikkei Asia)
Yazaki and other Japanese auto suppliers are setting up production bases in North Africa to diversify their supply chains in the face of increasing geopolitical risks in Eastern Europe amid the Ukraine war.
Wire harness supplier Yazaki will pour 9 billion yen ($69 million) to raise output at its Morocco plants by around 25%. Of the fresh investment, 5 billion will be spent on building a new production facility in Meknes, in the north of Morocco. Yazaki will start construction of the Meknes facility this year and a new one in Egypt in 2023. The company will also increase capacity at its existing plants in Tangier and Kenitra.
Morocco is attractive because of its proximity to Europe and its close trade ties with the continent. Thanks to free-trade agreements with the EU, Moroccan exports to the bloc are exempt from tax. According to the Japan External Trade Organization, 250 auto-related companies operate facilities there.
Tough reforms needed to improve financing gap — BoG’s Elsie Awadzi (Modern Ghana)
Madam Elsie Addo Awadzi, the Second Deputy Governor of the Bank of Ghana (BOG) says that a boost in Africa’s long-term competitiveness on the global market will depend on financing for robust macro-economic recovery and medium to long term investment.
However, financing, she said, had remained a big challenge as the estimated financing gap for Africa was about $285 billion in additional funding that would be required from 2021 to 2025 to effectively respond to the effect of the pandemic.
Speaking at the Money Summit under the theme, “Africa’s Economic Growth: Facilitating Investment, Payment and Settlement Systems,” Mrs Awadzi said that improving governance and the business environment was key for promoting investment climate that would attract the needed capital flow.
PAPSS, BUNA to build payment gateway for Africa, Arab region (Businessday)
The Pan-African Payment and Settlement System (PAPSS) operated by African Export-Import Bank (Afreximbank) in collaboration with the African Continental Free Trade Area (AfCFTA) Secretariat, has announced the signing of a Memorandum of Understanding (MoU) with BUNA, the cross-border and multi-currency payment system owned by the Arab Monetary Fund (AMF).
Interoperability among payment systems, as the foundation for enhancing cross-border payments, requires technical, process and business system compatibility so that end users can seamlessly transact with each other across systems. This collaboration lays the foundation for the interoperability between PAPSS and BUNA payment systems, their participants will be able to make fast, secure and affordable transactions in their local currencies between the African continent and the Arab region.
Forging deeper relations on the continent (SAnews)
President Cyril Ramaphosa says the future of Africa depends on the strengthening and deepening of relations between countries on the continent. The President said this during his opening remarks at the State Visit of President of Guinea Bissau, General Umaro Sissoco Embaló, in Pretoria.
During his opening remarks, President Ramaphosa said the visit presents an opportunity for the two countries to implement the General Cooperation Agreement signed by the two countries in 2008 which, he said, should also form part of implementing the African Continental Free Trade Area (AfCFTA) agreement. According to President Ramaphosa, other areas of cooperation for intra-African trade include that: Preference should be given to SOEs and businesses “when bidding for significant procurement contracts in each other’s countries” and Exploration for investment opportunities by South African companies in Guinea Bissau in areas such as agriculture, mining, energy, manufacturing and infrastructure.
Africa faces new shock as war raises food and fuel costs (IMF Blog)
Sub-Saharan African countries find themselves facing another severe and exogenous shock. Russia’s invasion of Ukraine has prompted a surge in food and fuel prices that threatens the region’s economic outlook. This latest setback could not have come at a worse time—as growth was starting to recover and policymakers were beginning to address the social and economic legacy of COVID-19 pandemic and other development challenges. The effects of the war will be deeply consequential, eroding standards of living and aggravating macroeconomic imbalances.
The IMF now expects growth to slow to 3.8 percent this year from last year’s better-than-expected 4.5 percent, according to the latest Regional Economic Outlook. Though we project annual growth to average 4 percent over the medium term, it will be too slow to make up for ground lost to the pandemic. Inflation in the region is expected to remain elevated in 2022 and 2023 at 12.2 percent and 9.6 percent respectively—the first time since 2008 that regional average inflation will reach such high levels.
Africa: Shocks for an Already-Stretch Region - IMF Africa Head Abebe Selassie Discusses Hard Choices (allAfrica)
For African leaders, input from the International Monetary Fund is factor that must be considered when economic policies are decided. During the 1980s and 1990s, the Fund was frequently criticized for ‘structural adjustment’ programs that made free-market policies a condition for much-needed financial assistance. A more collaborative working relationship with less-developed member countries including those from Africa, has softened the public image.
The Regional Economic Outlook (REO) for Sub-Saharan Africa – one of a semi-annual series on each region and the world – acknowledges the challenges Africa is facing. Since publication of the last regional outlook in October, when modest growth was projected, “sub-Saharan Africa has experienced a series of adverse shocks.” More recently, the war in Ukraine, which has result in higher commodity prices, has added to the ongoing impact of the pandemic, Africa’s low vaccination rates and damage caused by the climate crisis as well as political instability and conflict in several areas.
Africa mulls innovations to reduce reliance on food import (The New Times)
The current situation where Africa relies on food imports from other continents is precarious. Not only does it cause an increase in food prices for its population, but it also leads to shortages as evidenced by the Covid-19 pandemic and the Russia-Ukraine war. This is one of the observations made by actors in Africa’s agriculture sector on April 26, during the Africa Wide Science Technology and Innovation Conference held in Rwanda.
“The continent is highly vulnerable because we are importing a massive amount – close to 30 per cent of food in the continent is actually being imported,” said Martin Bwalya, Ag Director for Knowledge Management and Programme Evaluation at the Africa Union Development Agency, (AUDA-NEPAD). “And that is a huge risk the continent is taking. Because anything can happen in those supply chains, in those systems as we’ve seen it during Covid-19, we’ve seen it now during the Ukraine war,” he observed.
People in Africa’s cities benefit from better socio-economic outcomes and standards of living, according to new report (UNECA)
Urbanisation in Africa contributes to better economic outcomes and higher standards of living, with cities notably outperforming national averages across most socio‑economic indicators such as education, health and employment, according to a new report. Produced by the Sahel and West Africa Club (SWAC/OECD) in partnership with the United Nations Economic Commission for Africa (ECA) and the African Development Bank (AfDB), the report Africa’s Development Dynamics 2022 analyses data from four million individuals and firms in 2,600 cities across 34 African countries. It offers the most extensive assessment of the impact of Africa’s cities on social and economic outcomes. Speaking at the virtual launch, Dr. Ibrahim Assane Mayaki, SWAC Honorary President and CEO of AUDA-NEPAD, said: “Africa’s cities […] have maintained their economic performance despite growing by 500 million people over the last 30 years, providing several hundred million people with better jobs and improved access to services and infrastructure. This in a context of very limited public support and investment is probably one of the most underappreciated achievements of African cities.”
Conflict minerals due diligence scheme failing in Africa, group warns (Global Trade Review)
Campaign group Global Witness says it has uncovered “compelling evidence” that minerals linked to armed conflict and human rights abuses in the Democratic Republic of Congo have been laundered through an influential due diligence scheme.
Major companies including Apple, Intel and Tesla use the International Tin Supply Chain Initiative (ITSCI) to responsibly source tin, tantalum and tungsten (3T metals) from the African Great Lakes region, which encompasses countries such as the Democratic Republic of Congo (DRC), Rwanda, Burundi and Uganda.
Given the vital role of these minerals in the manufacture of various consumer products, including smartphones, computers and automotive systems, foreign companies are being urged to ramp up their due diligence efforts.
Ethiopia signs the African Medicines Agency Treaty (2merkato)
Ethiopia has signed the treaty of the African Medicines Agency (AMA). Dr. Lia Tadesse, Ethiopia’s Minister of Health, has inked the treaty at the AU headquarters. Ethiopia is the 29th African Union member state to sign the treaty. Dr. Monique Nsanzabaganwa, Deputy Commissioner of AU Commission, for her part, remarked the establishment of AMA will help make sure there is a sustained medical provision across Africa. She also reiterated the importance of the platform to establish a strong regulatory framework and create a vigorous local medical industry in the continent.
Global economy news
The World in Disarray: Is This the End of Multilateralism for Trade? (Observer Research Foundation)
For decades, trade has been an important driver for economic growth, job creation, and wellbeing. It helped lift billions of people out of poverty, and promoted economic—and in some cases political—freedom. It allowed for a diffusion of knowledge and ideas and created interdependencies that—while not always preventing conflicts and wars, as Russia’s war on Ukraine shows—contributed to international stability. The multilateral trading system, with the World Trade Organization (WTO) at its centre, held power politics at bay and allowed for settling trade disputes in a rules-based and mostly fair way.
These times seem to be over. Great power politics, a competition of ideas and systems, cold and hot conflicts, as well as wars threaten to divide the world into new blocks—large autocracies on one side, and liberal democracies on the other. Trade is increasingly seen from a security lens: As a source of national vulnerabilities, and as a coercive, strategic instrument. This will massively impact trade flows. It will accelerate the re-regionalisation and re-nationalisation of value chains that began a few years ago, gaining momentum during the COVID-19 pandemic, and is fuelled by the power competition between the United States and China. At the same time, the WTO, which is already fragile, could weaken even further, at a time when a strong institution is more important than ever.
What are the current trends in trade and how healthy is the multilateral trading system? What are possible scenarios for the WTO and what needs to be done to reform it so it can continue doing its job?
DG Okonjo-Iweala urges US business to continue backing the WTO (WTO)
The Director-General spoke in Washington at the National Foreign Trade Council Foundation’s annual dinner where she received the organization’s prestigious World Trade Award.
In her speech, Dr Okonjo-Iweala acknowledged that the COVID-19 pandemic and now the war in Ukraine had disrupted trade, strained global supply chains and led many companies to rethink trading patterns and supply options. Moreover, she said, some commentators have even begun to question multilateralism itself, suggesting that trade be conducted in two or three competing or perhaps adversarial blocs.
Goods Council addresses high number of trade concerns, notification issues, LDC graduation (WTO)
The Council heard 41 trade concerns on measures maintained or newly introduced by 25 WTO members, which included 11 new issues. These concerns were raised over a wide range of measures, including tariffs and tariff rate quotas, import and export bans and restrictions, technical barriers to trade, sanitary and phytosanitary measures, alleged discriminatory domestic taxation, domestic content requirements, import licensing requirements and countervailing duties. The measures encompass a wide range of sectors (e.g. agricultural, information technology, fisheries, forestry and food products) as well as specific products, such as air conditioners, apples, cheese, cosmetics, energy drinks, instant coffee, mobile phones, pears, plain copier paper, pulses, tyres and steel.
Concentrated digital markets need stronger scrutiny to protect consumers (UNCTAD)
A small number of companies such as Google, Amazon, Meta, Apple and Microsoft dominate global digital markets. Their business models heavily rely on massive data collection, storage and processing to achieve market power. This can undermine “competition on the merits” and potentially shut out smaller rivals, as the dominant platforms use the granular data they collect – such as search histories, social networks, contacts and prior purchases – to tailor and micro-target advertisements to specific consumer segments. At UNCTAD’s eCommerce Week 2022, a high-level session on April 28 brought together governments, regulators and economists to discuss how to tackle data-driven market dominance of digital platforms while ensuring better consumer protection.
“The rapid growth of digital platforms entails new challenges in terms of regulating data use and developing data-based economies, specifically in the proper management and treatment of data, respect for users’ privacy, and enhancing competition between digital platforms,” said Carmen Ligia Valderrama Rojas, Colombia’s minister of information and communication technologies.
But the current competition regime remains inadequate or insufficient in handling competition issues in digital markets.
New partnership forged to make the digital economy work for all (UNCTAD)
A new strategic partnership between the International Chamber of Commerce (ICC) and the eTrade for all initiative seeks to strengthen efforts towards more inclusive development outcomes from the digital economy. The partnership was announced on 25 April during the UNCTAD eCommerce Week held in Geneva and online, following a vetting process among the initiative’s 34 members.
The eTrade for all initiative serves as a global helpdesk for developing countries to bridge the knowledge gap on e-commerce. It provides access to information and resources, promotes inclusive dialogues on e-commerce and the digital economy and catalyses partnerships.
It will enable consistent, systematic and strategic engagement of micro, small and medium-sized enterprises (MSMEs) across all sectors, which are affected by the increased digitalization of economies in developing and developed countries.
The World Can Stop Capital Flight Now (Inter Press Service)
Curbing capital flight from developing countries is long overdue. New sanctions against Russian oligarchs show this can be done with the requisite political will. Recent research also shows how to more effectively stop capital flight.
Capital flight is widespread, with resource-rich countries more vulnerable. ‘Mis-invoicing’ exports and embezzling export earnings of state-owned mineral companies have been central to such wealth appropriation.
Capital flight is enabled, not only by national conditions, but also by transnational facilitators. Internationally, capital flight is aided by institutions and professional enablers such as bankers, lawyers, accountants and consultants.
Developing countries – especially resource-rich economies – are generally more susceptible to abuse. Wealth buys power and influence, enabling further accumulation. Thus, in the real world, natural resource endowments become a curse – not a blessing.
Many developing countries continue to suffer significant resource outflows, largely due to illicit capital flight. On the trail of capital flight from Africa: The Takers and the Enablers – edited by Leonce Ndikumana and James Boyce – studies this blight in sub-Saharan Africa. The world has much to learn from their forensic analysis. The volume estimates haemorrhage from African countries since 1970 at US$2 trillion! Of this, almost 30% has been lost in the 21st century. Adding interest, cumulative offshore assets were US$2.4 trillion by 2018 – more than thrice Africa’s external debt!
DG Okonjo-Iweala: Trade has central role in addressing food security challenges (WTO)
DG Okonjo-Iweala stressed that trade and food security has long been a critical issue on the WTO agenda but has now “shot to the top of the global policy agenda” due to the impact of the Ukraine conflict, especially in countries dependent on food exports from Ukraine and Russia. The high-level participation at the seminar was testimony to the importance the international community attaches to this issue, she said. Russia and Ukraine together account for more than one-quarter of all traded wheat, and around three-quarters of world exports of crude sunflower oil, said the DG. In addition, Russia accounts for nearly one-tenth of fuel exports and, together with Belarus, one-fifth of the world supply of fertilizer. She emphasized that households in Africa and the Middle East are particularly vulnerable to disruptions in these supplies
“35 countries in Africa import food and 22 import fertilizer from Russia, Ukraine, or both countries.” This could exacerbate the hunger already faced by millions of people around the world. The current spike in food prices comes on top of challenges due to the pandemic, economic downturns, climate-related shocks and conflict, she noted.
Commodity Markets Outlook April 2022 (World Bank)
The war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024, according to the World Bank’s latest Commodity Markets Outlook report. The increase in energy prices over the past two years has been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilizers, which rely on natural gas as a production input, have been the largest since 2008. “Overall, this amounts to the largest commodity shock we’ve experienced since the 1970s. As was the case then, the shock is being aggravated by a surge in restrictions in trade of food, fuel and fertilizers,” said Indermit Gill, the World Bank’s Vice President for Equitable Growth, Finance, and Institutions. “These developments have started to raise the specter of stagflation. Policymakers should take every opportunity to increase economic growth at home and avoid actions that will bring harm to the global economy.
Climate change putting 4% of global GDP at risk, new study estimates (Reuters)
Climate change could see 4% of global annual economic output lost by 2050 and hit many poorer parts of the world disproportionately hard, a new study of 135 countries has estimated. Ratings firm S&P Global, which gives countries credit scores based on the health of their economies, published a report on Tuesday looking at the likely impact of rising sea levels, and more regular heat waves, droughts and storms.
Bangladesh, India, Pakistan and Sri Lanka’s exposure to wildfires, floods, major storms and also water shortages mean South Asia has 10%-18% of GDP at risk, roughly treble that of North America and 10 times more than the least-affected region, Europe. Central Asia, the Middle East and North Africa and Sub-Saharan Africa regions all face sizable losses too. East Asia and Pacific countries face similar levels of exposure as Sub-Saharan Africa, but mainly because of storms and floods rather than heat waves and drought.
Shared fortunes: Why Britain, the European Union, and Africa need one another (European Council on Foreign Relations)
Britain and Africa are deeply connected through their history and people as much as through trade, investment, aid, and culture. They can both benefit greatly from this relationship – especially in areas where their interests converge, including economic development, security, education, and climate. But political forces on both sides could push them apart – even as, increasingly, Britain needs Africa more than Africa needs Britain.
A closer and more responsive relationship between Britain, Africa, and the EU would have significant benefits for all sides – partly because each is weaker individually than they are together, and because Britain still has strengths that are most useful in cooperation with others. But this will only be possible if the British government significantly changes its approach to Europe as well as to Africa.