tralac Daily News
A just transition of the liquid fuels value chain to a low- and zero-carbon value chain presents opportunities for South Africa, but also holds risks in terms of timing and the impact of the transition on workers and employment. These were some of the impacts discussed by researchers and industry practitioners and experts during a virtual event hosted by economic research institution Trade and Industrial Policy Strategies (TIPS) on June 7.
Shipping industry disruption trends and the impact on insurance (COVER Magazine)
As factories and supply chains come back to life after years of pandemic-related lockdowns, it is causing transport bottlenecks, rising shipping costs, and shortages of commodities. South Africa also faces large-scale congestion and logistical challenges at its ports, due to decaying railway infrastructure, as well as damage from the floods in Kwa-Zulu Natal. What is the impact on insurance during such an unprecedented time? There is a perfect storm brewing in the shipping industry. Brought on by an extraordinary set of global and local circumstances, it is having the domino effect of driving global and local inflation to levels not seen for decades, with significant cost implications on the transportation of goods, as well as the goods themselves.
“The impact of this situation on South Africa could undermine post-COVID-19 economic recovery. Consumers and businesses may have to make difficult trade-offs when it comes to the transportation of goods, paying an inflated price for these items, and coping with shortages,” says Boyd.
Govt probes energy price impact (New Era)
Finance minister Iipumbu Shiimi said government has embarked on a study to fully comprehend the overall impact of elevated energy prices on food prices and supplies. The study aims to mitigate the impact of increasing energy prices and aims to determine any additional measures government has to take to reduce the burden on businesses and consumers. Shiimi made these remarks on Monday at the press briefing where government officials provided feedback on the just ended World Economic Forum in Davos, Switzerland. Consumers have been struggling with massive increases in food prices and more expensive bank loans, factors forcing them to tighten their belts even more. On top of this, the country has experienced massive fuel price increases.
In order to mitigate the local impact of rising international oil prices, the mines and energy ministry temporarily reduced fuel levies by 50%. In April 2022, Cabinet approved the ministry’s recommendation to temporarily reduce these levies from May to July 2022. Fuel levies and taxes make up 34% to 45% of the cost of Namibian fuel per litre.
Specific levies imposed on Namibian petrol and diesel prices include a customs and excise duty for the SACU Revenue Pool; National Energy Fund Fuel Levy (comprised of the fuel equalisation levy, Namcor levy and National Oil Storage Facility levy); road user charges, which go to Road Fund.
KQ eyes more cargo flight for Kisumu route (Business Daily)
Horticulture business in the Lake Region is set to get a boost as the national carrier, Kenya Airways plans to increase cargo flights at the Kisumu International Airport. Kenya Airways also plans to triple cargo flights to the Netherlands and United Kingdom. “We are likely to have more frequencies of shipment being lifted from Kisumu,” said Kenya Airways Cargo officer Joseph Omwanda.
Some of the fresh produce in the Lake Region include avocados, fish, chilies, mangoes, pineapple, peanuts, bananas and traditional green vegetables. The news come as the region plans to resume the export of chili from Kisumu. The shipment of the produce had taken a break due to low supply.
Uganda has reached the middle income status despite an onslaught of crises in the past three years, President Museveni said on Tuesday. According to official data, the nation’s economy stood at about $45.7billion by the exchange rate method or $131billion by the Purchasing Power Parity (PPP) system- one week to the FY2022/23 Budget Day. “This means that the GDP per capita is $1046. We have now passed that figure of middle income status ($1,030),” Mr Museveni observed as he delivered the annual State of the Nation Address in Kampala. Speaking in-person to mainly ruling NRM party legislators, Mr Museveni June 7 expressed confidence that Uganda would maintain its spot above the middle income status GDP per capita minimum of about $1,030.
Tanzania to spend $3b to service debts: Finance minister (The East African)
The Tanzanian government is planning to spend Tsh9.09 trillion ($3.9 billion) on debt servicing during the financial year 2022/23, Finance and Planning Minister Mwigulu Nchemba has said. The amount is part of the Tsh14.94 trillion ($6.4 billion) that he requested Parliament to endorse for his ministry’s budget for the next financial year that is set to kick off on July 1, he said on Tuesday. Dr Nchemba told Parliament that out of the Tsh14.94 trillion ($6.4 billion), about Tsh13.62 trillion ($5.8 billion) is meant for recurrent expenditures, with the rest being channelled into development projects
Ghana’s delegation at the 52nd CPA Africa Regional Conference has moved a motion on the role of African Parliaments in accelerating Intra-African trade. The motion which was moved by the Majority Leader, Osei Kyei-Mensah-Bonsu on behalf of the Rt. Hon. Speaker, Alban Sumana Bagbin, and the Parliament of Ghana as a whole are expected to fashion out ways to stimulate local and intra-African trade in a bid to reduce the shocks of the global crises being felt by African countries. Mr. Kyei-Mensah-Bonsu in moving the motion outlined the significance of the trade agreement which he said will turn around the negative to extremely low economic growth being witnessed on the African market as well as its unsustainable fiscal deficits and the constant increase in rising debt levels. “As a direct consequence of Covid- 19, African economies experienced negative to extremely low economic growth, unsustainable fiscal deficits, rising debt levels, huge populations being pushed below the poverty brackets, and balance of payment problems. As African economies were about to emerge from the shocks of Covid-19, entered the war in Ukraine which is affecting food, fuel, and steel products prices as well as access to international finance.”
Nigerian seaports to undergo upgrade, boost trade (The Guardian Nigeria)
Nigerian seaports have experienced decades of infrastructural decay and reduction in commercial shipping activities. At a recent media parley, the Managing Director of the Nigerian Ports Authority (NPA), Mr. Muhammad Bello-Koko, decried the long years of abandonment and highlights the authority’s efforts to make ports real catalysts of trade.
We have very old ports. One of the major problems of the Eastern ports is the decay in infrastructure. Tin Can Island port is practically collapsing. Therefore, we took a holistic review of those decaying infrastructures and decided to focus our budget on the rehabilitation of the quay walls and others.
We must rehabilitate Tin Can, Apapa and other ports. What we have done was to start talking to lending agencies, but we don’t intend to borrow from them. We are asking the terminal operators if they have operated in this place for 10 to 15 years, especially as some of them, their leases are about to expire, we need to know how much money are they going to put back into this.
The Director-General of the Nigerian Civil Aviation Authority (NCAA), Capt Musa Nuhu, has advised that, for Nigeria to benefit fully from the Single African Air Transport Market (SAATM) initiative, the country has to build strong airlines. Speaking at the presentation of Air Transport Licence (ATL) to interim management of Nigeria Air on Monday in Abuja, Capt Nuhu said that ATL was a prerequisite for the airline to acquire Air Operation Certificate (AOC) to start operating. According to him, the NCAA works and supports all operators currently existing and aspiring in the industry to get necessary documents after meeting all the requirements.
Informing that the regulator works with the operators, he emphasised that “As a regulator, we work with operators. That is a goal to promote the growth of the industry. It is important to have strong airlines in Nigeria in view of the Single African Air Transport Market.”
Inside Dongo Kundu’s plan to create regional industrial hub (Business Daily)
The Dongo Kundu Special Economic Zones Authority (SEZ) is set to start in July, kicking off a chain of events that are expected to make Mombasa a regional logistics and manufacturing hub. The centre will comprise an export-processing zone (EPZ), industrial parks, free trade zones, as well as other auxiliary services such as tourism, meeting, conferencing and exhibitions. It will also have zoned residential areas for workers. “Phase one consisting the industrial park - one of the projects whose detailed designs have been completed—will include, the port, the free trade zone, power supply, as well as water reservoir,” said Kiyonori Matsushima the Special Economic Zone Development Advisor at JiCA.”Already a port access road inside the zone and SEZA administration block are under construction. The latter is set for completion within the year.”
Tunisia will begin gradually reducing food and energy subsidies in 2023, its trade minister said, as the cash-strapped North African nation readies for fresh talks with the International Monetary Fund. The move will reduce subsidy spending that has risen to 4.2 billion dinars ($1.4 billion) in 2022 from 3.2 billion dinars the year before, minister Fadila Rabhi said Tuesday at a press conference. Cash transfers will be disbursed to people on lower incomes, she said.
African trade news
Instant payment systems are key for cross-Africa commerce (The East African)
The high cost of sending and receiving payments from one region to another is proving to be one of the biggest challenges to trading within Africa even as the continent eyes increased commerce and investment from a free trade area. The Africa Continental Free Trade Area (AfCFTA) is projected to increase the volume of exports in Africa by 29 percent and intra-Africa trade by 81 percent, lift over 60 million Africans from extreme poverty and raise the continent’s real income by seven percent to $450 billion by 2035.In East Africa, according to the United Nations Economic Commission for Africa (UNECA), AfCFTA will create at least eight million new jobs and yield an estimated $35 billion in welfare gains. But the high cost of cross-border transactions may haul the prospects of the continental trade agreement, added to the jitters of partial implementation of the terms of the same and persisting non-tariff barriers.
Private sector firms yet to leverage AfCFTA (BusinessGhana)
Majority of private sector firms in the country are yet to develop a corporate strategy to gain competitive advantage of the Africa Continental Free Trade Area (AfCFTA), nearly 18 months after trading started. A Senior Partner of AB & David Africa, a law firm, David Ofosu-Dorte, described the situation as worrying and urged the firms not to hesitate to come up with the strategy to enable them to benefit from the initiative. Mr Ofosu-Dorte, who was addressing the Ghana Academy of Arts and Sciences (GAAS) Forum 2022 in Accra last Monday, said the failure to develop a corporate strategy by businesses was not the lack of knowledge of the AfCFTA, but the lack of ability to take advantage of the initiative and see Africa as a big market for their products.
The Africa focused trade show, showcasing feed to food innovation for the poultry industry in Sub-Saharan Africa, started in 2017 as a biennial B2B international trade show, and this year’s event, in Kigali, Rwanda, will be the third edition. The show will be located in the Kigali Convention Centre (KCC), one of the largest venues in the region.
Africa’s poultry industry is set for strong growth over the next decade, according to forecasts from Rabobank. It says the industry could grow at a compound annual rate of around 4.7% from a current valuation of US$25bn, with markets such as South Africa, Nigeria, Algeria, Ethiopia, and Morocco leading the charge.
Global economy news
Russia’s invasion of Ukraine immediately slowed the recovery from the COVID-19 pandemic and set the global economy on a course of lower growth and rising inflation. The OECD’s latest Economic Outlook projects global growth to decelerate sharply to around 3% this year and 2.8% in 2023, well below the recovery projected in the previous Economic Outlook last December.
The economic and social impact of the war is strongest in Europe, with many of the countries hardest hit in Europe, given exposure through energy imports and refugee flows.
“Countries worldwide are being hit by higher commodity prices, which add to inflationary pressures and curb real incomes and spending, dampening the recovery,” OECD Secretary-General Mathias Cormann said during the presentation of the Outlook. “This slowdown is directly attributable to Russia’s unprovoked and unjustifiable war of aggression, which is causing lower real incomes, lower growth and fewer job opportunities worldwide.”
“Many gaps remain but we are making progress. Let us keep on the pressure, let us keep up the work at this critical juncture,” DG Okonjo-Iweala said in her role as Chair of the Trade Negotiations Committee (TNC). “The next hours will be critical. We need to use each hour effectively to close as many gaps as possible. The success of this whole endeavour is in our hands. Let us deliver. The people outside are waiting for us and, believe it or not, I really think we will do it.” Following the reports from chairs and facilitators of the respective negotiating bodies working on potential MC12 deliverables, the DG summarized the state of play of what she characterized as the “four pillars plus”: fisheries subsidies, agriculture, the WTO response to the pandemic (including the waiver to the Agreement on Trade-related Aspects of Intellectual Property Rights) and WTO reform, plus development and least-developed country (LDC) issues. Members have agreed on the need to close the remaining gaps before MC12 in these areas, she said, and ministers should be able to work in Geneva “with a manageable agenda and ensure productive ministerial engagement.”
“We are on the verge of something positive,” the Director-General told the meeting. She once again urged members to show restraint in their comments, with a view to improving prospects for reaching consensus on the texts before the 12th Ministerial Conference (MC12), which begins on 12 June. The chair said the four-page document further streamlined the three draft negotiating texts, which comprise a draft ministerial decision on agricultural trade, a draft ministerial declaration on trade and food security, and a draft ministerial declaration on exempting from export restrictions food purchased by the UN’s World Food Programme (WFP) for humanitarian purposes.
She said the revised draft decision on agricultural trade sought to strike a balance across negotiating topics, without prejudicing any future proposals that members might want to table for discussion.
Plastic pollution: Can aid for trade help least developed countries tackle this crisis? (Trade for Development News)
As governments prepare for negotiations on a global treaty on plastic pollution, aid for trade can support LDC efforts to tackle this pollution crisis across the life cycle of plastics. Several pathways for cooperation can be pursued at the World Trade Organization. Plastic pollution is a major threat to the environment, human health, and sustainable development. In March 2022, governments adopted a landmark resolution at the United Nations Environment Assembly (UNEA) to launch negotiations on a legally binding international instrument on plastic pollution. The ambition is to conclude a treaty by the end of 2024. Importantly, the resolution addresses the full life cycle of plastics. In 2019, the value of international trade across the life cycle of plastics—from feedstocks and primary forms of plastics through to manufactured products and plastic waste—reached over US$1 trillion. This underlines the centrality of trade to the global plastics economy.
The revised version of the list incorporates feedback received from industry and reflects 13 new critical inputs that were identified. These are mostly products relevant for the process of vaccine manufacturing such as consumables and specific equipment. In addition, the revision updates the indicative tariff codes to take into account the introduction of the changes resulting from the Harmonized System (HS) 2022 version.
Rich countries are delivering little more than half the $40bn a year they promised to poor countries to help them adapt to impacts of climate change, according to new analysis.
Research by climate think tank the International Institute for Environment and Development (IIED) suggests developed countries and multilateral organisations are on track to channel $21.8bn in climate adaptation finance a year by 2025, more than $18bn short of the sum promised at last year’s COP26 climate talks.
“Climate change is now a reality,” said Madeleine Diouf Sarr, climate lead in Senegal’s environment ministry and chair of the Least Developed Countries (LDC) group of 46 vulnerable nations at COP talks. She told Sky News the latest report from United Nations scientists the IPCC showed the impacts are “worse in poorest countries like LDC countries, small island countries”, and highlighted the resources gap “between what is needed and what is actually available”.
It comes as negotiators meet in Bonn to examine progress made since COP26, and just before the G7 leaders summit where the UK - which retains the COP presidency until COP27 in November - will hope to put pressure on other rich countries.
Europe turns to Africa as energy crisis worsens (Voice Online)
EUROPEAN NATIONS are increasingly turning to Africa for energy resources as they attempt to wean their reliance off of Russian gas and oil amid the war with Ukraine. Algeria, Congo and Nigeria are already just some of the countries to have reportedly signed new deals across the continent. Earlier this month, the President of Senegal, Macky Sall, announced to the German Chancellor Olaf Scholz that the west-African country was “ready to work” on supplying liquid natural gas (LNG) throughout European nations. Along the border of Mauritius, it is understood that Senegal is in possession of the largest deposits of natural gas. It comes after African leaders and European oil giants met at the African Energy Summit in London last month to strike new oil trade deals which is expected to leave many African countries in debt.
India imposed a ban on wheat exports to protect the domestic market and to cut access for speculators, Indian External Affairs Minister, Subrahmanyam Jaishankar, told the Globsec 2022 Bratislava Forum on June 3.Lower output coupled with strong domestic demand had pushed the Indian government to impose a wheat ban on exports on May 14. However, trading firms that had already secured letters of credit (LCs) to export grain before the ban were allowed to proceed with those sales. The government had also made abundantly clear that it would continue to cater for the genuine need of neighbouring countries and food-deficit nations through government-to-government deals and fulfil supply commitments already made. “What we saw was that the low-income buyers were being squeezed out, the wheat was growing, but was actually being stopped from being traded, in a way our goodwill was being used for speculation. So, we had to do something to stop that, because it was also impacting us at home - prices were going up,” explained Jaishankar.
The role of industrial zones in SME growth in emerging markets (Oxford Business Group)
As governments across Africa look to bolster the economic potential of small and medium-sized enterprises (SMEs), industrial parks and special economic zones (SEZs) are emerging as key enablers of their development. SMEs are the backbone of the global economy, particularly in emerging markets, where they make up 90% of all businesses and create 50% of all jobs. The impact is higher in Africa, where SMEs employ around 80% of the continent’s workforce. But while SMEs are a major economic driver, there is also significant room for further growth.
Given their economic potential, supporting SMEs is seen as a key path to expanding the middle class and achieving more inclusive economic growth in emerging markets. Although SMEs have long been central to national growth and development plans, this focus has intensified as a result of the pandemic.