tralac Daily News
South Africa’s economy is now back to pre-pandemic levels (BusinessTech)
South African gross domestic product (GDP) expanded by 1.9% in the first quarter of 2022, representing a second consecutive quarter of upward growth. The size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the Covid-19 pandemic, Statistics South Africa said on Tuesday (7 June). However, the release covers the first quarter of the year, which means that the economic impact of the devastating floods in KwaZulu-Natal, which occurred during the second quarter in April, will only reflect in the GDP results due for release in September. The release also largely ignores South Africa’s recent intense round of load shedding – which primarily occurred in March and April.
On the production side of the economy, eight of the ten industries recorded positive growth in the first quarter, with manufacturing the key performer. The sharp increase in manufacturing output was mainly driven by a rise in the production of petroleum and chemicals, food and beverages, and metals and machinery, StatsSA said. “Finance, real estate and business services, as well as trade, also made sizable positive contributions to GDP growth. Trade activity was buoyant in the first quarter, with positive results from wholesale, retail, motor trade, and catering and accommodation. “After a strong fourth quarter, agriculture growth was more subdued in the first quarter, edging higher by 0,8%. The rise in the first quarter was mainly underpinned by increased horticulture production.” On the downside, both mining and construction contracted in the first quarter.
IMF worried about impact of South Africa’s growth outlook on poverty (Engineering News)
The International Monetary Fund (IMF) said on Tuesday at the end of a visit to South Africa that its staff were increasingly concerned about the country’s economic growth outlook and the implications on employment, poverty and inequality. Africa’s most industrialised economy has recovered from the Covid-19 pandemic faster than many analysts had predicted, with data on Tuesday showing first-quarter output reached pre-pandemic levels.
Kenya’s real gross domestic product (GDP) is projected to grow by 5.5 percent in 2022 and 5.2 percent on average in 2023–24. This growth rate, while still strong, will be a moderation following a remarkable recovery in 2021 from the worst economic effects of the pandemic, when the country’s economy grew by 7.5 percent, much higher than the estimated average growth in Sub-Saharan Africa of 4 percent. According to the 25th edition of the World Bank Kenya Economic Update, Aiming High: Securing Education to Sustain the Recovery, the impact of the war in Ukraine is weighing on the global economic recovery from the pandemic. Domestically, a key risk to the outlook is a further worsening of the current drought, which is having a devastating effect on food security and livelihoods in affected parts of the country and is necessitating increased social spending on food assistance. For example, using the Integrated Food Security Phase Classification, it is estimated that 3.1 million Kenyans (out of 13.6 million) living in counties with arid and semi-arid land are food insecure. The baseline economic projections assume that below average rains will hamper agricultural performance and accounts for the downside effects of the ongoing war in Ukraine through increased global commodity prices.
Coffee trade risks disruption in July as new rules start (Business Daily)
Kenya’s multi-billion-shilling coffee trade is at risk of disruption starting July as the Capital Markets Authority (CMA) and Nairobi Coffee Exchange remain mum over the establishment of the Direct Settlement System (DSS) as the old regulations come to an end this month. The CMA had extended the use of the old coffee regulations to June 30 in the absence of DSS in place. The platform is meant to facilitate payment between farmers and coffee brokers. The new law — the Capital Markets (Coffee Exchange) Regulations 2020 — was to be effected in July 2020 but since then it has been postponed twice amid fights between the CMA and the Ministry of Agriculture.
As the cost of doing business continues to rise in the country, the Association of Ghana Industries (AGI), is cautioning that Ghana could miss out on the expected benefits from the much-touted African Continental Free Trade Area (AfCFTA).
Data from the Ghana Statistical Service shows that the year-on-year producer price inflation which measures the average change in the prices of goods and services received by domestic producers for their production activities increased to 31.2%.
The 31.2 % year-on-year producer price inflation for all industries indicates that between April 2021 and April 2022, prices received by domestic producers for the production of their goods and services increased by 31.2 %.
In April 2022, two out of the sixteen major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 38.6 percent. Manufacture of coke, refined petroleum products and nuclear fuel recorded the highest inflation rate of 76.1 percent, while the Publishing, printing and reproduction of recorded media recorded the least inflation rate of 2.6 percent
African Export-Import Bank (AFREXIM) and other trade experts have charged the Nigerian government to deploy mechanisms aimed at maximising the opportunities of Africa Continental Free Trade Area (AfCFTA), one year post-implementation. The experts gave the advice on Tuesday during a Breakfast Meeting organised by the Nigerian-American Chamber of Commerce (NACC) in Lagos. The meeting had the theme: “One Year of AfCFTA: Opportunities, Challenges and the Nigerian-American Partnership”. They said the call became pertinent following observations that the country was not harnessing the benefits of the AfCFTA due to structural and trade-related issues such as inadequate payment system integration, logistics and trust. Mr Mike Ogbalu, Chief Executive Officer, Pan-African Payment and Settlement System (PAPSS), said there was a need for Nigeria to utilise the efficient payment system to facilitate Intra-African trade.
He said the platform if utilised would save African traders about 5 billion dollars annually in currency convertibility. “Intra-African trade is about 15 to 18 per cent which is by far the lowest intra-continental trade globally. “High cost, high dependence on foreign exchange and inefficient payment systems contribute to these poor statistics. “Cross-border transactions are very expensive leading to an estimated five billion dollars in payment charges annually. “Most cross-border payment transactions originating from African banks are cleared outside the continent with less than 20 per cent of the total payment flows being cleared in Africa.
Egypt’s exports to EU, int’l blocs rise by 77% in 2021 (Egypt Today)
Egypt’s exports to the international blocs of which the African country is not a member rose by 76.9 percent in 2021 to reach $20 billion up from $11.3 billion in 2020, the Central Agency for Public Mobilization and Statistics (CAPMAS) has reported.
Egypt’s exports to the European Union (EU) ranked first among these blocs as they rose by 85.9 percent from $7.8 billion in 2020 to $14.6 billion in 2021, the country’s statistical agency said. This was followed by the Egyptian exports to North American Free Trade Agreement (NAFTA) bloc, which amounted to $3.4 billion in 2021 against $2.4 billion in 2020, up by 44.4 percent. The European Free Trade Association (EFTA) came last regarding the Egyptian exports, which declined by 65.9 percent to reach $51.6 million down from $151.1 million in2020.
On the other side, Egypt’s imports from these blocs rose by 14.2 percent to amount to $38.1 billion in 2021 compared to $33.3 billion in the previous year.
Four landmark agreements were signed with various Egyptian entities at the 47th Annual Meeting of the Islamic Development Bank Group in Sharm El Sheikh, including the Ministry of International Cooperation, the Ministry of Planning and Economic Development, and the Ministry of Trade and Industry. These deals include the establishment of the Export Academy under the Aid for Trade Initiatives for Arab States plan, which is hoped to increase exports to USD 100 billion annually. The other agreements involved signatures from other members of the Arab Africa Trade Bridges (AATB) Program, which will help enhance Egyptian exports across Africa by organising Egyptian trade missions, bringing Egyptian companies into trade fairs and economic forums in African nations, and involve Egyptian entities in workshops and meetings amongst exporters and importers all throughout the continent.
African Development Bank Group President Dr. Akinwumi Adesina met with President Ismail Omar Guelleh of Djibouti and senior government officials at the weekend to discuss the country’s economic progress and opportunities. Adesina was on a two-day official visit to the Horn of Africa nation. For more than two hours, he and President Guelleh discussed ways of transforming Djibouti’s economy as the country strives to achieve its vision of becoming an information, communication and technology (ICT) hub in the region.
Adesina said: “Djibouti needs to look beyond the port, diversify its economy and scale up development. Flying over the country, one sees huge tracts of dry land. But it is only when one meets and talks to the people in this country that one realizes, there is no drought in terms of ideas, creativity, passion and determination.”
SMEs Minister calls on businesses to use the WTO platform (Business in Cameroon)
The Cameroonian Minister of SMES, Achille Basilekin III, issued a note on May 30 to inform local economic operators of the existence of the TRADE4MSME platform. The latter was launched by the World Trade Organization (WTO) to accompany businesses and help them boost exports. “This important tool for promoting SMEs provides a set of information and useful data on export opportunities to growth markets, and informs on the regulatory and operational procedures relating to import and export, to enable micro, small, and medium enterprises to position themselves effectively in the international market,” the official said. This platform is presented as an aid to decision-making for SMEs in Cameroon.
Sierra Leone’s economy was severely impacted by COVID-19 in 2020 and the first half of 2021. Fiscal slippages, the war in Ukraine, and concerns about global growth pose renewed challenges. The surge in international fuel and food prices has set back a nascent recovery and projected growth in 2022 has been revised down to 3.6 percent, from 5.9 percent at the time of the 3rd/4th review in July 2021. The shock has added pressure in several areas, such as poverty and other key development indicators, inflation, exchange rate, foreign exchange reserves, as well as an already highly constrained fiscal position. Inflation has been revised up to 22.1 percent (end-of-period, 2022) from 12 percent, given higher import prices and exchange rate depreciation.
“The medium-term outlook remains challenging on account of the deteriorating terms of trade, more uncertain global prospects, and remaining COVID-19 risks. A global supply shock resulting from the war in Ukraine is negatively impacting global growth and accentuating inflation, with spillovers to Sierra Leone. Further increases in already high global fuel and food prices could deteriorate budget and external balances, as well as development outcomes.
African trade and integration news
Trade Barometer: Trade index (Standard Bank)
Launched in 2022, Standard Bank’s Africa Trade Barometer seeks to provide the analysis and insight to intelligently inform and grow Africa’s trade ecosystem.
The report focuses on Angola, Ghana, Kenya, Mozambique, Namibia, Nigeria, South Africa, Uganda, Tanzania and Zambia – and presents one of the most comprehensive views of actual trade, as experienced on-the-ground by real African businesses transacting within and between these 10 markets, as well as globally.
The Africa Trade Barometer serves as evidence of our ambition to become Africa’s leading trade bank, by providing the market insight to drive client growth across the continent.
Africa’s regional integration still lagging behind other regions (African Business)
Africa’s trade with the rest of the world far outweighs the level of trade between African countries, reducing the continent’s ability to deal with external shocks, said Stephen Karingi, Director of Regional Integration and Trade Division at the United Nations Economic Commission for Africa (ECA). A UNCEA report found that all regional economic communities in Africa, except the East African Community (EAC) and the Intergovernmental Authority on Development (IGAD), are importing more from the European Union than from within their own respective communities. “The most shocking thing is that only 11% of Africa’s agricultural produce is traded inside the continent,” said Karingi, reinforcing the need for the continent to shorten supply chains as agricultural commodities face supply constraints due to Russia’s invasion of Ukraine.
The African Continental Free Trade Area (AfCFTA) presents an enormous opportunity for Africa to boost intra-African trade, eliminating 90% of tariffs on goods and creating a single market of more than one billion consumers with a total GDP of more than $3trn. However, even though the AfCFTA was signed in 2018 there is still “a long way to go” to implement the free trade deal across African Union member states, Karingi said.
African countries must strengthen their efforts to absorb shocks – Songwe (African Business)
The Covid-19 pandemic has reversed two decades of development in Africa, driving an estimated 55 million people into extreme poverty in 2020, said Vera Songwe, Under-Secretary-General of the United Nations and Executive Secretary of the Economic Commission for Africa (ECA).
AfCFTA: Border hurdles dampen free trade deal expectations (The East African)
African traders and companies are facing challenges operating across the borders despite the opening up of a $1.2 billion market in January 2021.The latest study by the United Nations Economic Commission for Africa (UNECA) on selected African countries shows that things are not working on the ground after the African Continental Free Trade Area (AfCFTA) agreement came into effect on January 1 last year. The survey conducted in seven countries — Angola, Côte d’Ivoire, Gabon, Kenya, Namibia, Nigeria and South Africa — shows companies have a neutral to slightly negative perception of the investing and trading environment across Africa. The AfCFTA Country Business Index survey, which was launched in 2018, shows that the private sector has a negative perception of trade in goods, suggesting that more work needs to be done to remove tariff and non-tariff barriers. According to the survey, firms in the sampled countries appear to have negative perceptions of unauthorised charges, customs procedures and additional fees.
Members of the East African Legislative Assembly (EALA) on Tuesday, June 7, decried the numerous challenges traders face at the Rusumo border crossing between Rwanda and Tanzania. Lawmakers stressed that regional countries should swiftly tackle issues at the border, and at other EAC borders, with urgency so as to better facilitate trade and the movement of people. Unharmonised tax rates, limited access to essential utilities, as well as lack of laboratory and testing equipment from the Tanzania Bureau of Standards, Tanzania Food and Drug Authority, and even a medical laboratory to facilitate respective inspection tasks, among others, was observed by members of the Assembly’s standing Committee on Communication, Trade and Investment, during an oversight activity in October 2021.
ECA implements key recommendations from CoM2021 (African Business)
On regional integration, the ECA has helped 10 African countries implement AfCFTA strategies and overseen the formulation of seven new national strategies.... It also developed a Country Business Index tool that uses high-quality data to assess the impact of the AfCFTA on the private sector, which was deployed in five countries.
The COMESA Protocols on free movement have over the years faced slow pace of implementation, with many decisions of the Council of the Ministers calling on Member States to speed up ratification. The protocols are on the Gradual Relaxation and Eventual Elimination of Visa Requirements (commonly known as the visa protocol) and on the Free Movement of Persons, Services, Labour and the Right of Establishment and Residence.
Concerned at the slow pace of implementation, the COMESA Council of Ministers have made several decisions to spur action on this front. This led to the creation of two COMESA Task Forces on the implementation of the legal instruments, the COMESA Council of Ministers Decisions and capacity building on the COMESA programme on free movement protocol.
Implementation of the protocols is critical in deepening COMESA’s regional integration for economic development under the Free Trade Area. This is in respect to trade in goods and services, in the context of the COMESA Trade in Services Protocol which requires movement of labour, among others, as a factor of production and service providers. Once validated, the draft strategy and roadmap/ action plan will be presented to the COMESA Ministers responsible for immigration for adoption and subsequent implementation.
Small and medium-scale farmers and agri-businesses in east and southern Africa are getting a raw deal. To succeed they need fair and integrated regional markets. Research by the Centre for Competition, Regulation and Economic Development has highlighted the need for better integration of regional economies as a step towards food security in the region. Powerful commercial interests, high transport costs and poor access to facilities such as for storage mean that small and medium-scale farmers are often not getting fair prices for the food they grow. Fair prices are those that meet demand and cover reasonable costs of supply including transport across borders.
The fragile food systems in the region, combined with increasing concentration at multiple levels of key value chains, calls for a regional competition policy for resilient and sustainable regional value chains. A stronger regional market referee to monitor and enforce competition rules would level the playing field for fairer food markets.
The COVID-19 pandemic has been a key factor in slowing progress toward universal energy access. Globally, 733 million people still have no access to electricity, and 2.4 billion people still cook using fuels detrimental to their health and the environment. At the current rate of progress, 670 million people will remain without electricity by 2030 – 10 million more than projected last year. The 2022 edition of Tracking SDG 7: the energy progress report shows that the impacts of the pandemic, including lockdowns, disruptions to global supply chains, and diversion of fiscal resources to keep food and fuel prices affordable, have affected the pace of progress toward the Sustainable Development Goal (SDG 7) of ensuring access to affordable, reliable, sustainable and modern energy by 2030. Advances have been impeded particularly in the most vulnerable countries and those already lagging in energy access. Nearly 90 million people in Asia and Africa who had previously gained access to electricity, can no longer afford to pay for their basic energy needs. The impacts of the COVID-19 crisis on energy have been compounded in the last few months by the emergency in Ukraine, which has led to uncertainty in global oil and gas markets and has sent energy prices soaring.
Africa remains the least electrified in the world with 568 million people without electricity access. Sub-Saharan Africa’s share of the global population without electricity jumped to 77% in 2020 from 71% in 2018 whereas most other regions saw declines in their share of the access deficits. While 70 million people globally gained access to clean cooking fuels and technologies, this progress was not enough to keep pace with population growth, particularly in sub-Saharan Africa.
The report finds that despite continued disruptions in economic activity and supply chains, renewable energy was the only energy source to grow through the pandemic. However, these positive global and regional trends in renewable energy have left behind many countries most in need of electricity. This was aggravated by a decrease in international financial flows for the second year in a row, falling to US$ 10.9 billion in 2019.
African Development Bank Group President Dr Akinwumi Adesina wrapped up his official visit to Kenya on Friday, meeting with African diplomatic envoys and international development partners in Nairobi. He called for joint collaborative support to help accelerate Africa’s development. “Africa’s pace of development must be accelerated. We must work together for the continent to prosper, be competitive, and address the challenges facing it,” he said. Adesina said Africa was the continent being impacted the most from climate change. He said as the world prepared for the next global climate summit (COP27) in Egypt this November, many African countries could still not access green climate financing because they had not developed required national determined contributions and long-term strategies. So far, only three African countries—Benin, Morocco and South Africa—have developed long term strategies.
The African Development Bank has been pushing for the channelling of International Monetary Fund Special Drawing Rights to African countries through the Bank. The president explained that in this manner, they could be leveraged by a factor of four on the international capital market. He said this could help African countries deal with debt issues and allow them to invest more in transformative developments.
The Ministers Responsible for Gender and Women’s Affairs from the Southern African Development Community (SADC) Member States will be in Lilongwe, Republic of Malawi on 10 June 2022, to review progress on the implementation of the gender and development programmes in the region. Honourable Patricia Kaliati, Minister of Gender, Community Development and Social Welfare of the Republic of Malawi, will chair the meeting in her capacity as the Chairperson for SADC Ministers Responsible for Gender and Women’s Affairs. The Ministers will track the progress in implementation of the SADC Protocol on Gender and Development, through the review of the 2022 SADC Gender and Development Monitor on Women in Politics and Decision-making, focussing specifically on Article 12 on Representation, Article 13 on Participation, and Article 5 on Special Measures of the Protocol.
As part of implementing the SADC Regional Multi-dimensional Women Economic Empowerment Programme (RMD-WEEP) 2020-2030, the Ministers will review the progress on the SADC Industrialisation and Women’s Economic Empowerment Project (IWEE Project), a project aimed at increasing women-owned businesses’ and female entrepreneurs’ participation in value addition for selected sectors and regional value chains (RVCs).
Global economy news
Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation, according to the World Bank’s latest Global Economic Prospects report. This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike. Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January. It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend.
“The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid,” said World Bank President David Malpass. “Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality.”
The amount of money needed for UN humanitarian appeals involving extreme weather events like floods or drought is now eight times higher than 20 years ago — and donors are failing to keep up, reveals a new Oxfam brief today. For every $2 needed for UN weather-related appeals, donor countries are only providing $1. Average annual extreme weather-related humanitarian funding appeals for 2000-2002 were at least $1.6 billion and rose to an average $15.5 billion in 2019-2021, an 819 percent increase. Rich countries responsible for most of today’s climate change impacts have met only an estimated 54 percent of these appeals since 2017, leaving a shortfall of up to $33 billion. The countries with the most recurring appeals against extreme weather crises — over 10 each — include Afghanistan, Burkina Faso, Burundi, Chad, Democratic Republic of Congo, Haiti, Kenya, Niger, Somalia, South Sudan and Zimbabwe.
The report, “Footing the Bill”, says that the increasing frequency and intensity of extreme weather events due to climate change is putting more pressure on an already over-stretched and underfunded humanitarian system. The costs of the destruction from these storms, droughts and floods are also increasing inequality; people in poorer communities and low-income countries are the worst hit yet they lack the systems and funding that wealthier countries have to cope with the effects. The richest one percent of people on Earth are emitting twice as much carbon pollution as the poorest half of humanity.
M-Pesa to transact in 200 countries after deal with Visa (Business Daily)
Millions of M-Pesa customers can now pay for goods and services in more than 200 countries under a deal with Visa that further cements the platform’s leading position as a mobile money service provider. Safaricom inked the deal with Visa to form M-Pesa GlobalPay Visa Virtual card that allows them to transact up to Sh150,000 per payment and Sh300,000 per day. The deal is set to lift the profile of M-Pesa at the international stage as it takes on global giants. “By partnering with Visa to provide the M-Pesa GlobalPay Visa virtual card, we are looking to bridge the gap for our customers who would like to use M-Pesa anywhere across the world,” Safaricom CEO Peter Ndegwa said.
LDC Group demands emission cuts and climate finance in Bonn (EnviroNews Nigeria)
Six months since COP26 in Glasgow, Parties to the UN Framework Convention on Climate Change (UNFCCC) are meeting at the Bonn Climate Change Conference to take forward negotiations on the global response to the escalating climate crisis.
Ms. Madeleine Diouf Sarr, who represents the 46 least developed countries (LDCs) at the talks, sets out the LDC Group’s expectations, saying: “The climate crisis is worsening: our people and communities are suffering from the devastating impacts of climate change, while emissions continue to rise. In Bonn, governments must commit to fair and ambitious action to cut emissions and provide adequate support to the poorest and most vulnerable, so we can adapt to the impacts of climate change and address the loss and damage it causes.” Key issues up for discussion at Bonn include a new goal for climate finance to support developing countries address climate change; a work programme for scaling up countries’ emissions reductions targets to match the level needed to limit warming to 1.5°C; finance to address loss and damage caused by climate change; and the beginning of a “global stocktake” to assess progress on the implementation of the Paris Agreement.
Ms. Sarr said, “The issue of finance to address losses and damages already being experienced in our countries because of climate change deserves more than a dialogue. Countries with much greater responsibility and capabilities than ours must close the funding gap so that when the impacts of climate change hit – when houses and hospitals are washed away, when crops are destroyed, when islands sink and when whole communities are displaced – the costs don’t land on the already vulnerable households. A failure to cut emissions and provide adequate finance for adaptation is increasingly causing loss and damage in our countries, and we’re paying for it.”