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Building capacity to help Africa trade better

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tralac Daily News

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South Africa is making a big localisation push – and has stopped using some international products: Ramaphosa (BusinessTech)

Answering a recent parliamentary Q&A, Ramaphosa said localisation is one of several tools in the economic reconstruction and recovery plan to improve the dynamism of the economy, promote investment, develop new markets, transform the economy, promote equitable spatial development and contribute to the development of a capable state. “Localisation is pivotal in stimulating growth and transformation. It is about creating an enabling environment for inclusive growth, deepening the country’s industrialisation base and creating targeted transformation measures,” he said. “It seeks to expand the economy to include more participants and to ensure that more parts of the population, including women, young people, black South Africans and the rural poor, can contribute to and benefit from growth.”

Mutually respectful, beneficial foreign investments key – Bonakele (Engineering News)

South Africa needs “very predictable, clear regulatory systems” as it seeks mutually respectful and mutually beneficial foreign investment, South African Competition Commission Commissioner Tembinkosi Bonakele said at the Southern Africa France Business Forum on June 22. Hosted by Business France, French Foreign Trade Advisors and the French South African Chamber of Commerce and Industry, the forum sought to strengthen business ties between France and South Africa.

Stabilisation to growth: Policy reforms bear fruit as imports substitution gain ... (Chronicle)

ZIMBABWE’S economy has transitioned from stabilisation to growth as policy reforms being spearheaded by the Second Republic continue to register positive results as evidenced by the increase in capacity utilisation and the shift towards import substitution, President Mnangagwa said yesterday. Despite persistent speculative exchange rate distortions and the recent global supply chain disruptions linked to Covid-19 and the ongoing Russia-Ukraine conflict, which have induced inflationary shocks, the President said the country’s economic transformation journey remains on track. Zimbabwe’s export earnings hit the highest levels in history last year, driven by the growth in the manufacturing sector which has seen capacity utilisation increasing to above 60 percent as at December 2021, according to ZimStat. This is a huge increase when compared to 47 percent in 2020 and about 36 percent in 2019, economic experts have said.

Maize flour to remain costly on expensive imports (Business Daily)

Expensive imports have dampened hopes for cheaper flour as the cost of transporting maize from the source markets has shot by 150 percent. Transporters are charging the equivalent of Sh1,500 for a single bag of maize transported from either Malawi or Zambia from Sh600 previously, pushing the landing cost of a 90-kilo bag to Sh6,000 when it lands in Nairobi. The price of flour in the country has been on an upward trend since the beginning of the year and this week it crossed the Sh200 mark, a first in Kenya’s history as the shortage of the staple food persisted. Animal feeds manufacturers, who are also importing the same standard maize for feeds say the high cost has curtailed most of their members from shipping in the produce.

World Bank shields Kenya from costly foreign debt (Business Daily)

Kenya has relied heavily on the World Bank Group for foreign funding since January on the back of a relatively high-interest international market that saw the Treasury shun expensively-priced commercial loans. The latest Treasury data on external borrowing shows the stock of debt from rich countries (bilateral) as well as commercial lenders — banks and Eurobond — fell in the four months ended April. Loans from multilateral lenders, however, increased Sh95.71 billion on net borrowing basis — driven by World Bank’s International Development Association (IDA) and Asian Development Bank/Asian Development Fund (ADB/ADF).The two multilateral financiers, whose loans come on concessional terms as low as 0.5 percent interest and a longer repayment period with a generous grace period, accounted for nearly three-quarters of the growth in multilateral debt and 95.5 percent of the net external debt.

Manufacturers hit lenders with Sh21bn defaults in months (Business Daily)

The manufacturing sector accounted for nearly half of loan defaults in the first quarter of the year on the back of high input costs, according to the Central Bank of Kenya. The sector’s non-performing loans climbed to Sh77.8 billion by March from Sh57 billion three months earlier, the highest quarterly growth in value on record. The Sh20.8 billion jump came at a time the sector complained of the high cost of shipping and challenges in accessing adequate stocks of dollars to pay suppliers on time amid increased competition for raw materials in the global markets.

The Kenya Association of Manufacturers blames the default in servicing loans on high cost of doing business as a result of “global increase in commodity prices and the weakening of the Kenyan shilling”. “All importers of raw materials for production have been affected by these challenges from global economic crisis which have greatly disrupted global supply chains for imported goods,” KAM’s head of policy and research Job Wanjohi said on Thursday.

British firms blame corruption for low investments in Kenya (Business Daily)

British firms have blamed corruption as an impediment in the country’s business environment, but they maintain Kenya remains an investment hotspot in Africa for profitable investments. The firms under their business lobby say they will back the private sector’s fight against graft as part of the business reforms they hope to achieve. This is after Kenya signed a Memorandum of Understanding (MoU) with the British Chamber of Commerce Kenya (BCCK) to promote Kenya’s business climate reforms agenda.

Speaking during the signing of the MoU, Principal Secretary, State Department for East African Community in the Ministry of East African Community and Regional Development Dr Kevit Desai, said that business integrity is the foundation of international trade. “While corruption is a global issue, it is a concern that has been raised in our discussions with businesses and international investors,” he said. “This MoU will create a platform to reaffirm Kenya’s commitment to strengthening the business climate. It will also build private sector participation in the digitisation and automation of government services in procurement, revenue collection and cross-border trade.”


African trade and integration news

More Education Is Needed On PAPSS – GITFIC (News Ghana)

The Ghana International Trade and Finance Conference (GITFIC) at their sixth annual conference recommended the upscaling of education on the Pan African Payment and settlement systems (PAPSS). The key players, they suggested would be the PAPSS Council, GITFIC secretariat, WAMI and the African Continental Free Trade Area (AfCFTA) secretariat who would target Traders’ Unions, Industry players, Exporters, Financial Watchers and Analysts. In doing so, the stakeholders must identify and seek collaboration with existing mobile money platforms for seamless interoperability and Signatories to AfCFTA must harmonise local financial rules with AfCFTA protocols.

Speaking on high cost and bureaucratic systems of doing business in many African countries, Mr Ackom called for the creation of an African business regulatory database, which would be accessible to investors and traders and recommended the development of the opening of a, common platform describing all business rules for investors, traders in goods.

He said in the trade and finance ecosystem within Africa to address some of the key challenges affecting implementation of the AfCFTA, the GITFIC would continue to engage the key stakeholders to facilitate the execution of the proposed action points.

Adopt common approaches to tackle economic challenges: Dr Bawumia urges African countries (BusinessGhana)

The Vice-President, Dr Mahamudu Bawumia, has urged African countries to adopt common regional and continental approaches to navigate the present global economic challenges. Such measures, he said, would help the continent exploit synergies to speed up their integration into the global economy. “Regional and economic integration will not only help our countries access the expanded regional markets within but also facilitate their global competitiveness,” added. Addressing the 22nd annual general meeting (AGM) of the African Trade Insurance (ATI) Agency in Accra yesterday[June 23, 2022], the Vice-President further said Africa needed to play increasing roles in the global market to maximise opportunities available in the interconnected world economy.

Dr Bawumia also called for closer cooperation between the AfCFTA Secretariat and the ATI to speed up the implementation of the free trade area. He said if Africa worked together in that direction, “we will gain more time and mileage in reducing reliance on external markets and enhance value addition of our resources for our socio-economic development”.

Southern African Railway Association says improved rail infrastructure will boost economies in the region (IOL)

The Southern African Railway Association (Sara) says improved rail infrastructure and co-operation between neighbouring southern African countries will help to boost the economies of these countries.

Sara president Sizakele Mzimela, who is also the Transnet Freight Rail chief executive, was speaking at a media briefing in Durban yesterday. The event was also attended by Babe Botana, Sara’s executive director.

“We know rail transport is crucial for rebuilding our economy. As we and our SADC countries’ economies have still been recovering from the Covid-19 pandemic, we look to rail transport between our countries to rebuild our economies.” Mzimela said the damage to infrastructure affects the rail transport industry and the economy as a whole.

East African court delivers verdict on Gatuna border closure (Independent)

The closure of the Gatuna border by Rwanda was illegal and contravened the East African Community Treaty, the East African Court of Justice has ruled. A panel of three Judges of the East African Court of Justice comprising Monica Mugenyi from Uganda, Audace Ngiye from Burundi, and Dr. Charles Nyawello from South Sudan delivered the verdict read in a zoom court session on Thursday. The judges noted that the actions of the Rwandan government contravened provisions of the EAC treaty including Article 5, which lays down the objectives of the community, Article 6 on fundamental principles of the Community, and Article 7 which provides for the operational principles of the Community. In February 2019, Rwanda closed the Gatuna border, blocking the movement of people and goods from Uganda and Rwanda.

EAC unveils Regional Bioeconomy Strategy 2021/22-2031/32 (EAC)

The East African Community has unveiled the Regional Bioeconomy Strategy 2021/22-2031/3 at the EAC Headquarters in Arusha, Tanzania. The strategy will offer an opportunity for Partners States to achieve their individual aspirations, making use of the region’s abundant natural resources, including underutilized agricultural waste materials, to produce value-added products with applications in many sectors including food, health, energy and industrial goods. Among the key interventions proposed in the strategy that was unveiled by the EAC Deputy Secretary General in charge of Planning and Infrastructure, Eng. Steven Mlote, on behalf of the Secretary General, is the creation of new forms of sustainable bioenergy, and the conversion of waste materials to useful products.

The strategy further seeks to ensure the transformation of economies and place innovation in bio-based products and processes at the centre, with a bio-based circular economy as the organising framework.

An Africa-G7 energy food and security grand bargain (UNECA)

Europe, the US, and Africa are all reeling from the prolonged Russia/Ukraine crisis. They need to forge a new grand bargain that holds out the promise of shared energy security, food security, job creation and long-term green growth and prosperity, argues Vera Songwe. This grand bargain offers a three-pronged deal to the G7.

The EU gets short to medium-term access to energy, stability of supply, and acceleration of the transition as well as new and stronger trade and geopolitical partnerships. Africa gets a surge in investment into food and energy systems and investment for its youth who number seven times as many as European youth and for whom migration seems to be the only attraction.

Africa50, African Development Bank and the newly launched African Sovereign Investors Forum signal strong desire to jointly mobilize capital for infrastructure projects (AfDB)

The African Development Bank, Africa50, and Africa Sovereign Investors Forum (ASIF), have signed a letter of intent to collaborate on developing green and climate resilient infrastructure projects across Africa. The three entities will work together to galvanize financing and to drive the development of skills and expertise within the infrastructure sector. The signing took place on 20 June 2022 in Rabat, Morocco, during an event to launch the Africa Sovereign Investors Forum. Under the high patronage of His Majesty King Mohammed VI of the Kingdom of Morocco, 10 African sovereign investors agreed to set up the Forum. The newly formed platform will accelerate coordination to mobilize patient capital for the continent’s development.

Africa50 CEO Alain Ebobissé said: “this is an important step to building strong collaboration between the right stakeholders to meet the substantial infrastructure financing needs of Africa. We must make key regional infrastructure projects attractive and bankable for both global and African private investors and today’s signing will go a long way to address the continent’s infrastructure deficit. It is therefore important that we leverage the strength of the African sovereign wealth funds on the continent, who manage significant domestic savings, to drive the growth of Africa’s economies through the development and successful implementation of strategic infrastructure”.

Firms from rich countries are taking factories home: what this means for Africa (The Conversation)

There is no doubt that globalisation has benefited Africa greatly. This includes job creation, innovation, increased productivity and foreign direct investment. But global value chains are shifting in the wake of the COVID pandemic and Russia’s ongoing invasion of Ukraine. These changes are informed by the decisions of various companies to shift or move their manufacturing or supply chain networks closer to their home country. These decisions are being driven by a number of factors. They include a race to reduce exposure to disruptions, increase proximity and reduce vulnerability to external shocks. In light of this, Africa’s current benefits from globalisation will be jeopardised. Can African countries build a resilient economic future post-COVID-19 that is less reliant on the current uncertain global value chain?

To maximise the advantages of regional growth and markets, Africa must look inward and perhaps consider how to establish its own internal and national value chains.

Now is the time for African countries to start looking for African value chains or alternatives to the global value chain. Of course, this presents a myriad of challenges. Most African nations still don’t have the necessary transportation and road infrastructure to support logistical operations in regional markets. Consequently, significant investment is required for this to work.

European Parliament advocates equalizing EU trade relations with Africa (DW)

The European Parliament on Thursday backed a report advocating the use of trade policy to equalize relations between African countries and the European Union. “For too long, Africa has been reduced to a supplier of raw materials, with the result that the continent’s immense economic potential remains untapped,” Kathleen Van Brempt, a Belgian Social Democrat member of the European Parliament, said in a statement. The 27-country bloc should focus on five strategic areas as set out in the report, according to fellow Belgian MEP Saskia Bricmont of the Green Party: efficient infrastructure, food security, civil society, fair-trade agreements and sustainable economic development.

In the European Parliament report on the future of African trade relations, one major issue highlighted is how the majority of goods imported into the EU from Africa are cheaper primary goods such as food, drink and energy, while the EU ships mostly higher-value manufactured items the other direction, such as machinery and pharmaceutical products.

“Due to the continued direction of trade from colonial times, wealth is being transferred continuously from the African periphery to the industrialized and increasingly digitized centers,” the report states.

The EU therefore ought to share more of its technical knowledge with Africa to encourage on-the-ground manufacturing, Van Brempt told journalists in a briefing.

More African Central Banks Are Exploring Digital Currencies (IMF Blog)

Several sub-Saharan African central banks are exploring or in the pilot phase of a digital currency, following Nigeria’s October introduction of e-Naira. Nigeria was the second country after the Bahamas to roll out a CBDC.

CBDCs are digital versions of cash that are more secure and less volatile than crypto assets because they are issued and regulated by central banks. Countries have different motives for issuing CBDCs but for the region there are some potentially important benefits. The first is promoting financial inclusion. They can also facilitate cross-border transfers and payments.

Sub-Saharan Africa Reveals Lessons for Governance (IMF)

Countries in the region have made important strides in tackling corruption, with some outperforming emerging market and even advanced economies. A new book by the IMF, Good Governance in Sub-Saharan Africa features three countries—Botswana, Rwanda and Seychelles—that are leading in the effort to improve governance.

The most successful countries usually have five key elements in place. First, a high level of political commitment to good governance and transparency. Second, respect for the rule of law and property rights. The third element is ensuring efficiency, transparency, and public oversight of investments. Fourth, access to information. And finally, innovation and technology, which we believe can play a big role in helping governments deliver on these priorities.

African Union Commission Chairperson statement at the Vaccine Equity for Africa groundbreaking event with BioNTech (AU)


Global economy news

14th BRICS Summit Beijing Declaration (China.org.cn)

Recalling the BRICS Joint Statement on Strengthening and Reforming the Multilateral System adopted by our Foreign Ministers in 2021 and the principles outlined therein, we agree that the task of strengthening and reforming multilateral system encompasses the following:-Making instruments of global governance more inclusive, representative and participatory to facilitate greater and more meaningful participation of developing and least developed countries, especially in Africa, in global decision-making processes and structures and make it better attuned to contemporary realities;

Using innovative and inclusive solutions, including digital and technological tools to promote sustainable development and facilitate affordable and equitable access to global public goods for all;

We reaffirm our support for an open, transparent, inclusive, non-discriminatory and rules-based multilateral trading system, as embodied in the World Trade Organization(WTO). We will engage constructively to pursue the necessary WTO reform to build an open world economy that supports trade and development, preserve the pre-eminent role of the WTO for setting global trade rules and governance, supporting inclusive development and promoting the rights and interests of its members, including developing members and LDCs.

We note that the COVID-19 pandemic has caused serious shock and hardship to humanity, unbalanced recovery is aggravating inequality across the world, the global growth momentum has weakened, and the economic prospects have declined. We are concerned that global development is suffering from severe disruption, including the widening North-South development gap, divergent recovery trajectories, pre-existing developmental fault-lines and a technological divide. This is posing huge challenges to the implementation of the 2030 Agenda for Sustainable Development as economic and health scarring, particularly for EMDCs, is projected to persist beyond the current pandemic. We urge major developed countries to adopt responsible economic policies, while managing policy spillovers, to avoid severe impacts on developing countries. We encourage multilateral financial institutions and international organizations to play a constructive role in building global consensus on economic policies and preventing systemic risks of economic disruption and financial fragmentation.

Commonwealth Heads of Government Meeting opens in Kigali (The Commonwealth)

Leaders of more than fifty Commonwealth nations gathered in the Rwandan capital, Kigali, today for the official opening of the 2022 Commonwealth Heads of Government Meeting (CHOGM), held under the theme, ‘Delivering a Common Future: Connecting, Innovating, Transforming’.

This morning, His Royal Highness The Prince of Wales, representing Her Majesty Queen Elizabeth II as Head of the Commonwealth, emphasised the great value she has placed on the common friendship, humanities and values of the Commonwealth. He said: “As we build back from the pandemic that has devastated so many lives, as we respond to climate change and biodiversity loss that threatens our very existence, as we see lives destroyed by the unattenuated aggression from violent forces, such friendships are more important than ever. “The Commonwealth we need is on the frontlines of global challenges not on the peripheries watching events unfold. Our special strength is to bring issues into focus that might otherwise be overlooked.”

Rwanda to feature in UK’s new preferential trade system (The New Times)

British Prime Minister Boris Johnson has said that Rwanda is among countries expected to feature in the United Kingdom’s preferential trade system. Johnson was speaking at the closing of the Commonwealth Business Forum which concluded on Thursday in Kigali. He said that the United Kingdom would on July 6 announce countries to feature in their new preferential trade system which among other things removes tariffs when exporting to the UK. Rwanda and the United Kingdom have been negotiating the trade deal over recent months to establish future trade relations between the two countries.

The preferential system is likely to see Rwanda access the UK market without tariffs consequently reducing cost of doing business. This could have impacts such as increased production and value addition locally.

Statement By His Excellency Yoweri Kaguta Museveni at CHOGM Business Forum (Uganda Media Centre)

In the Global value chain, we see a full range of activities (design, production, marketing, distribution and support to the final consumer, etc.) that are divided among multiple firms and workers across geographic spaces to bring a product from its conception to its end use and beyond. Cross-border production has been made possible by the liberalization of trade and investment, lower transport costs, advances in information and communication technology, and innovations in logistics (e.g. containerization). Covid-19 pandemic, however, disrupted the GVC, adversely affecting the World economy and reversing the hard earned economic gains.

Uganda as a country realized the need to be creative and innovative. Uganda started efforts to produce her own Vaccine. But in this process, we found the Global value chains were not helpful.

The persistent uncertainty related to the shift of the epicentre of the pandemic from region to region, and the parallel instability affecting production costs, further exacerbated the situation, making it difficult to resume business on a global scale, leading many firms to reduce or stall their production activities.

At the same time, temporary surges of demand for certain critical commodities have not been met by increased supply since, under the current model, dramatic changes in the scale of production might not be easily absorbed after a return to normality.

GVCs have proven resilient and will play a significant role in the recovery. In addition, they have played a vital role in producing personal protective equipment and vaccine components as COVID-19 recedes. But shall require a fit-for-purpose re-modification to bring about the prosperity of those countries in most need without leaving anyone behind.

PM speech at the Commonwealth Business Forum (GOV.UK)

This is a very very timely meeting, as Jonathan has just said we’ve all come out of the misery of the covid lockdowns and look at what is going on in the world today – unfortunately we still see economic pressures. And we’re seeing spikes in the cost of energy, spikes in the cost of food, and of fertiliser.

I massively support that new Africa free trade area, we’re backing the new secretariat in Accra, and as African countries remove trade barriers from their borders, we’re making it easier to sell to the UK because on 6th July we’re launching a new preferential trade system for 65 developing countries, including Rwanda and 17 other Commonwealth members. liberalising our tariffs, getting rid of those pointless tariffs that are totally vexatious, that cost more to collect than the revenues you get from them abolishing the nuisance tariffs – they exist and improving our rules of origin to make it easier for all our countries to benefit. And what I feel so strongly about the Commonwealth is it’s not just about imports and exports – it’s about the partnerships we build

Members laud Ministerial Declaration addressing food safety, animal, plant health challenges (WTO)

The Sanitary and Phytosanitary Declaration for the 12th Ministerial Conference: Responding to Modern SPS Challenges acknowledges that the global agricultural landscape has evolved since the SPS Agreement was adopted in 1995. It instructs the SPS Committee to launch a work programme, open to all members and observers, that would further enhance how the SPS Agreement is implemented. This work programme would consist of new efforts to identify challenges in the implementation of the SPS Agreement and the mechanisms available to address them as well as the impacts of emerging challenges on the application of the SPS Agreement.

Members took the floor to underline that the principles and obligations of the SPS Agreement remain as relevant today as ever. They commended the process to achieve consensus on the Declaration, which they said could be used as a template for work in other areas. Many delegations noted that members had driven the talks leading to this outcome, with key proponents of the initiative listening to views expressed by other members and responding to questions and concerns in a constructive manner.

Commodity losses strip emerging markets of their lone attraction (BusinessTech)

The most popular trade in emerging markets this year – betting on commodity-exporting nations – is losing its appeal. The currencies and bonds of Brazil to Mexico and South Africa were the best performers among developing-nation peers in the first five months of 2022 as commodity prices skyrocketed following Russia’s invasion of Ukraine.

“We are closer to the end of the emerging-market commodity boom than the beginning or even the middle,” said Todd Schubert, head of fixed-income research at Bank of Singapore. “The rising risk of a severe economic downtown will further sap demand for a broad swath of commodities.”

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