Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Local news

South Africa’s FDI inflows increased to R27.2bn in the first quarter (Engineering News)

South Africa recorded foreign direct investment (FDI) inflows of R27.2-billion in the first quarter of 2022, up from R22.7-billion rand in the fourth quarter of 2021, the central bank said on Tuesday. The South African Reserve Bank said in its Quarterly Bulletin that the increase was due to foreign entities increasing equity investments and granting loans to domestic subsidiaries.

Infrastructure delivery key to growing economy, creating local demand (Engineering News)

The construction and development of infrastructure is critical to accelerating demand for associated goods and services, as well as to significantly boost the economy, Infrastructure South Africa investment and unblocking chief director Mashopha Moshoeshoe said earlier this month. Speaking at the Southern Africa France Business Forum on June 22, he explained that the gap in infrastructure required in South Africa was significant, but that, as South Africa emerges from destruction and delays as a result of the Covid-19 pandemic, it was on a path to recovery.

Zim targets US$3,4 trillion bloc (NewsDay)

Industry and Commerce minister Sekai Nzenza believes Zimbabwe has built the foundation to compete in the African Continental Free Trade Area (AfCFTA), a US$3,4 trillion regional bloc that kicked off in 2021. In a paper released during a tour of Gweru-based companies last week, Nzenza said recoveries in firms such as Bata Shoe Company, cement maker Sino Zimbabwe and yeast maker Lessafre showed domestic firms were building the blocks to tackle stiffer competition from bigger African producers as the continent opens up. There have been concerns that lack of capital in Zimbabwe’s manufacturing sector, which says it requires up to US$2 billion to scale up production, would be a stumbling block to trade in a bigger market. And in a recent interview with our sister paper the Zimbabwe Independent, a United Nations Economic Community for Africa (Uneca) executive said a strong Zimbabwean financial system would be a crucial factor in the quest to shore up trade under AfCFTA.

Zimbabwe lobbies to rejoin Commonwealth (The East African)

Zimbabwe at the ongoing Commonwealth summit in Rwanda continued with lobbying for readmission 18 years after it was thrown out of the body over allegations of human rights abuses. President Emmerson Mnangagwa’s government submitted an application on May 15, 2018 to re-join the grouping of 54 countries, a year after the ouster of strongman Robert Mugabe in a military coup. “Zimbabwe is excited to be participating in Commonwealth forums as this presents opportunities to network with the international community taking into account the government of Zimbabwe’s policy of engagement and reengagement,” Zimbabwe’s ambassador to Rwanda Charity Manyeruke said.

Transporters call for level playing field (The Citizen)

Parliament’s Budget Committee yesterday asked the government to introduce charges on commercial vehicles from the Southern African Development Community (SADC) entering Tanzania in response to fees Tanzanian transporters are subjected to when travelling within the bloc. It is estimated that goods destined for neighbouring SADC member states account for up to 75 percent of all transit goods that pass through Tanzania’s ports. The committee recommended the introduction of three different fees to align with charges Tanzanian transporters were subjected to when their vehicles go to any of the other 15 SADC member states. Data shows that the value of cargo passing through Tanzania to Zambia, the Democratic Republic of Congo (DRC) and Zimbabwe is estimated at $1.5 billion annually.

Tanzania needs Sh44 trillion to cut Green House Gas emissions (The Citizen)

As the country is determined to contribute to the global efforts to reduce greenhouse gas (GHG) emissions with a number of interventions being implemented to mitigate the negative impacts of climate change, it needs $19.2 billion (Sh44 trillion) to achieve the goal come the year 2030.Vice President’s Office environment assistant director Catherine Bamwenzaki said the mitigation and adaptation measures include implementation of the Ecosystem-based Adaptation for Rural Resilience (EBARR) in five districts— Kishapu, Mvomero, Mpwapwa, Simanjiro and Kaskazini ‘A’ in Zanzibar.

She said Tanzania’s share of GHG emission is low at 0.36 percent, but the country is vulnerable to climate related disasters such as extreme floods and droughts that affect livelihoods as well as agricultural production, water resources, public health, energy supply, infrastructure, biodiversity and marine and coastal zones.

Kenya Private Sector Alliance position on the Kenya Standard 1515 (Kenya Broadcasting Corporation)

In Kenya, the automotive industry has the potential to significantly contribute to the manufacturing sector’s growth, and the government target to increase its share of the GDP from the current 9.2pc to 15pc by 2022 as part of the Big Four Agenda. This will also be instrumental in achieving the aspirations of Vision 2030, of creating a globally competitive and prosperous country with a high quality of life. Passing the Kenya Standards 1515 which lowers the importation age of trucks, buses, and prime movers is an important incentive to increase the volume of vehicles produced locally hence attracting investment into the Industry.

Uganda U-turn on car imports upsets Kenya vehicle dealers (The East African)

Uganda has made an about-turn and relaxed the tough import conditions it has set for vehicles aged over nine years entering its market from July, dealing a setback to Kenyan dealers who had hoped to benefit from curbs on the sale of such automobiles. The Uganda Revenue Authority (URA) had in April issued a directive that imports of vehicles older than nine years be cleared under the East Africa Community’s Single Customs Territory (SCT)-- which allows members of the bloc to jointly collect customs taxes-- from July 1, 2022.

“Pursuant to section 64 (k) of the East African Customs Management Regulations 2010, the Uganda Revenue Authority wishes to inform the general public that effective July 1, 2022 motor vehicles of nine years old or more from the date of manufacture shall no longer be cleared under the warehousing regime,” URA said in a notice in April. “The customs clearance of such motor vehicles shall be facilitated under the Single Customs Territory arrangement where taxes will be paid upon arrival at the port of entry into the East African Community,” the Ugandan taxman added.

Trades Minister Launches 67 BRCs To Support MSMEs (News Ghana)

Mr Alan Kyerematen, Minister of Trade and Industry, has launched a one-stop enterprise support centre to provide Business Development Service (BDS) to Micro Small Medium Enterprises (MSME) at the district level. With funding mostly from the African Development Bank (AfDB) and the International Fund for Agricultural Development (IFAD), the Ministry under the Rural Enterprise Programme (REP) has established 67 Business Resource Centres (BRC). The core services provided by the BRCs include business opportunity identification; business plan preparation; facilitation of access to finance/credit; business diagnostics and training in management and entrepreneurship.

The Minister, in his remarks at the launch, said the key to transforming the country did not lie in natural resources endowment but taking advantage of the human capital and unleashing of the entrepreneurial spirit of the population. He observed that the transformation of the economy was hindered mainly by unemployment, poor revenue mobilisation and lack of sustained flow of foreign exchange.

Addressing those challenges, he said, would require the transformation of the MSME sector that created jobs and could help the country derive optimum benefit from trade agreements that allowed the country to export its products under free quota and duty free.

New Economic Analysis Calls for Bold Reforms for Malawi’s Macroeconomic Stability and Service Delivery Ambitions (World Bank)

A series of external and domestic shocks are putting acute pressure on Malawi’s macro-economy, increasing the urgency to protect essential services for the vulnerable says the latest World Bank’s Malawi Economic Monitor (MEM).The 15th Edition of the MEM underscores significant deterioration in the government’s finances, with the deficit reaching its highest level in over a decade. For several years, spending has exceeded revenues while the country has imported more than it exports. This has been financed by increased commercial borrowing and Malawi’s debt has now become unsustainable. Malawi’s economic growth is expected to decline further due to these chronic imbalances, which have been heightened by severe weather events. The Ukraine-Russia war has added a new crisis to what was already a challenging economic climate, with rising prices for fuel, fertilizer and other commodities impacting foreign reserves and exerting pressure on inflation.

IMF Executive Board Completes Fifth Review Under the Extended Credit Facility Arrangement and Concludes the 2022 Article IV Consultation for Sierra Leone (IMF)

Sierra Leone continues to pursue its development path amidst continued vulnerability to shocks and capacity needs. Growth is estimated to have recovered moderately in 2021 (about 3 percent) following the COVID shock and is projected to increase to 3½ percent in 2022, reflecting higher iron ore production. However, this is a downward revision relative to the 3 rd/4th review, reflecting a deterioration of the terms of trade and increased uncertainty about global economic prospects. Inflation has been on a rising trend since mid-2021 due to higher international fuel and food prices, and is expected to average about 22 percent this year, exacerbating already-high levels of food insecurity. Over the medium term, the war in Ukraine, and concerns about global growth pose renewed challenges for the outlook. Further increases in already-high fuel, food and fertilizer prices could deteriorate budget and external balances, put debt sustainability at risk, increase costs for businesses, prolong fuel subsidies, and stoke social tensions.

Guinea-Bissau: 2022 Article IV Consultation and Third Review under the Staff-Monitored Program (IMF)

After years of political turmoil and delayed reforms, the authorities started implementing in 2021 an ambitious fiscal consolidation and reform program to ensure debt sustainability, create fiscal space to address developmental needs and strengthen state capacity. A Rapid Credit Facility (RCF) disbursement of SDR 14.2 million (50 percent of quota) was approved in January 2021 to provide urgent financing to support critical spending in health. A 9-month Staff-Monitored Program (SMP) with three quarterly reviews was approved in July 2021 to support the government’s reform program aimed at stabilizing the economy, strengthening governance, and building track record of policy implementation to underpin the authorities’ request for an Extended Credit Facility (ECF) arrangement. The August 2021 SDR 27.2 million allocation and the reforms underpinned by the SMP have helped address the adverse impact of the pandemic, improve government spending transparency, mitigate debt vulnerabilities.

African trade and integration news 

AfCFTA as Africa’s Industrialisation Accelerator (This Day)

The African Export and Import Bank (Afreximbank) has affirmed that the African Continental Free Trade Area (AfCFTA) agreement would be the continent’s industrial accelerator. It stated unequivocally that, “AfCFTA will accelerate the growth of labour-intensive manufacturing industries.” The Afreximbank’s affirmation was contained in a report it published in this month, which was titled “Africa’s 2022 Growth Prospects: Poise under Post-Pandemic and Heightening Geopolitical Pressures.” It said in the report that the AfCFTA agreement would usher in a period of renaissance in African manufacturing sector and become a critical driver of African economic growth in the near-term.

The report identified East and West Africa as the regions manufacturing would play a critical role in sustaining economic growth. “The sustained injection of patient capital and rise of East Africa’s automotive industry is helping to expand opportunities for labour-intensive employment under a proven manufacturing-led growth model and will expand the fiscal space to gradually strengthen the foundation of macroeconomic stability,” the report said.

Africa’s food imports to hit $110 billion in three years - Ofosu-Dorte (BusinessGhana)

The Senior Partner of AB & David law firm, David Ofosu-Dorte, has predicted that Africa’s food import will increase from $35 million to $110 billion in the next three years. “That’s food import and that tells you how much we are sending outside. Mr. Ofosu-Dorte said this when he presented a paper on Africa and the Global Economy; New Realities, New Possibilities” at a Citi Tv event organised in Accra on Monday. In terms of infrastructure development, Mr. Ofosu-Dorte said the continent needed $1.7 trillion in order to fill the infrastructure gaps.

He said fashion, integration, infrastructure, recovery, automation, healthcare and pharmaceuticals, logistics and supply chain, as well as value addition to raw materials were areas Africans needed to direct focus. Among other things, he explained that an area like agri-food where local foods were packaged could change the urban imports and reduce the demand for the dollar. “But there’s something that we overlook. As many as 400 companies of African origin or located in Africa now cross a million dollar. Seven hundred and fifty of them now have more than half a billion dollars in terms of annual turnover,” he said.

Russia-Ukraine conflict could force African countries to become more self-reliant - Ramaphosa (News24)

The Russia-Ukraine conflict could have a silver lining for African countries in the long run, according to President Cyril Ramaphosa, because it forces them to be more self-sufficient as they look to bolster their food supply. He said African countries faced a similar concern during the Covid-19 pandemic when they had no choice but to manufacture their own vaccines.

The president spoke after he took part in a G7 summit meeting in Germany on Monday. He said one of the pertinent engagements between the seven members of the G7 and the five invited non-members - South Africa, Argentina, India, Indonesia and Senegal - was around food security in light of the Russia-Ukraine conflict.

He said they reflected “on the path that we had traversed together with India and many other countries on the issue of the Trade-Related Aspects of Intellectual Property Rights (Trips) waiver to ease access to vaccines for the Global South”.

African officials renew call for financing to deliver climate justice (News Ghana)

The quest for climate justice in Africa will be realized subject to the availability of funds, technology, and capacity building to help the continent withstand extreme weather events like droughts, floods, and cyclones, officials said on Monday.

Jean Paul-Adams, director for technology, climate change, and natural resources management at the United Nations Economic Commission for Africa (UNECA), said the continent’s green and justice transition is possible once the financing gap toward climate mitigation and adaptation is bridged. Paul-Adams called for improved governance, transparency, and monitoring to ensure that adaptation financing benefits local communities bearing the brunt of climate-induced disasters like recurrent droughts and disease outbreaks.

For Africa to overcome poverty and underdevelopment linked to climatic stresses, Mwangi said, the continent should bargain for its fair share of funding from multilateral lenders besides leveraging domestic resources. “Adaptation financing is crucial to help Africa liberate itself from climate emergencies that have led to the loss of lives and livelihoods,” he said.

Africa’s dream of feeding China hits hard reality (Reuters)

Watching workers poke avocados from the treetops in an orchard owned by Kenyan agriculture firm Kakuzi, managing director Chris Flowers revels in the thought some might soon go to the crown jewel of emerging consumer markets: China. Taking advantage of Beijing’s deeper focus on trade with African countries to help reduce gaping deficits, Kenya struck an export deal with China for fresh avocados in January after years of lobbying for market access. Six months later, no shipments have left, Kenya’s avocado society, the East African country’s plant health inspectorate and Kakuzi (KUKZ.NR) told Reuters.

While 10 avocado exporters have passed Kenyan inspections, China now wants to do its own audits and, based on the past experience of some other African fruit producers, it could take a decade to get the green light.

Ramping up agricultural exports, however, is one of the few options many African countries have to rebalance their trade relationships with China and earn the hard currency they need to service mountains of debt, much of it owed to Beijing.

Global economy news

DDG González: “More cooperation on services trade key to building the WTO of tomorrow” (WTO)

To listen to the supply-chain debate these days, services is rarely mentioned. We hear about semiconductors, not ICT services; about vaccines and pharmaceuticals, not health services; and about critical minerals and large capacity batteries, not transport or energy services. And yet, services have become the most dynamic sector of world trade. In fact, just as services have come to dominate many of our national economies, they are playing a bigger role in the global economy too. Which means that it is impossible to understand modern supply chains, let alone where they are heading or how geopolitics will affect them, without understanding trade in services.

WTO issues research papers on small business and international trade on MSMEs Day (WTO)

The WTO has published on the occasion of Micro, Small, and Medium-sized Enterprises Day (27 June) three research papers on the participation of small businesses in international trade and on climate change policies that could help them engage in sustainable practices. The first research paper looks at the participation of small businesses from developed economies in international trade. The second research paper looks into the participation of small businesses in the manufacturing sector in developing countries. The third research note traces connections between international trade policy and climate change and proposes policy interventions that could help small businesses make more rapid progress towards decarbonization.

Bringing sustainable entrepreneurship to the next level (UNCTAD)

Micro, small and medium-sized enterprises (MSMEs), which employ 60% to 70% of workers worldwide and produce 50% of global GDP, were hit hard by COVID-19. They were 2.5 times more likely to go under than larger businesses during the first months of the crisis. And small businesses are less prepared for the impacts of climate change, which could trigger a pandemic-sized shock every decade. To underscore the urgent need to boost support for small businesses around the globe, UNCTAD is organizing for international MSME Day 2022 a joint UN event in New York in collaboration with the Permanent Mission of Argentina to the UN and the International Council for Small Business.

At the start of the COVID-19 pandemic and ensuing global lockdowns that severely affected businesses, UNCTAD quickly reoriented its work priorities on entrepreneurship. UNCTAD now leads the global initiative towards post-COVID-19 resurgence of the MSMEs sector, part of the UN framework for the immediate response to COVID-19. This initiative develops and implements capacity-building tools for governments and MSMEs in developing countries and economies in transition to strengthen their resilience while mitigating the economic and social impact of the crisis. The initiative also facilitates MSMEs’ contribution to the implementation of UN Sustainable Development Goals.

UN report: Reducing trade costs can help drive sustainable development (FAO)

A robust and well-integrated global agrifood system can help all countries withstand unprecedented challenges, as evidenced during the COVID-19 pandemic in early 2020 when global agrifood markets proved to be remarkably resilient. “We are committed to working together”, wrote QU Dongyu, Director-General of the Food and Agriculture Organization of the United Nations (FAO) in the foreword to The State of Agricultural Commodity Markets 2022 (SOCO 2022), an FAO flagship report launched today. The ongoing war in Ukraine, affecting a region of great importance for worldwide food security, is increasing uncertainty, and raising the risk of fragmenting global agrifood markets and magnifying hunger threats, which were already very high because of COVID-19, countries in conflict and humanitarian crises across the world.

The SOCO report, in its new edition, examines how mutually reinforcing multilateral and regional efforts can address the sustainable development challenges of today and those of the future. It does so with an eye to the global agrifood markets, agrifood systems resilience, economic growth, and environmental outcomes, cognizant that trade policies cannot be expected to fully address all the entailed trade-offs and require complementary measures.

In composing the SOCO report, FAO conducted modelling exercises to identify patterns between bilateral trade flows, relative prices and geographic barriers, and to identify key drivers of trade such as comparative advantage and trade costs.

New research shows how disruption in wheat trade can affect food security (Phys.org)

Global supply issues related to the pandemic and war in Ukraine have highlighted yet another global vulnerability: food availability. While international trade allows countries to buffer against domestic food shortfalls and gain access to larger markets, what happens when supplies run short, or the global supply chain slows or even breaks down like it did during the pandemic? A new University of California, Davis, study sheds light on how trade, and centrality in the global wheat trade network, affect food security. The study shows that many countries depend on trade to fulfill their food needs. Further, the global wheat trade is concentrated in a handful of countries whereby disruption in only a few countries would have global impacts, researchers suggest. The study, “Connected and Extracted: Understanding how centrality in the global wheat supply chain affects global hunger using a network approach,” was published in June in the journal PLOS ONE.

Support to agriculture has risen in response to global crises, while reforms to combat climate change and market distortions remain essential - OECD (OECD)

Public support for agriculture has reached record levels as governments enacted measures to shield both consumers and producers from the COVID-19 pandemic and other crises, according to a new report from the OECD. Only a small share of this support has been directed at longer-term efforts to combat climate change and other food systems challenges. Agricultural Policy Monitoring and Evaluation 2022 shows that the 54 countries monitored – including all OECD and EU economies, plus 11 key emerging economies – provided on average USD 817 billion of support to agriculture annually over the 2019-21 period, a 13% increase over the USD 720 billion reported for 2018-20. Support has remained substantial among OECD countries, and has increased significantly in the 11 emerging economies.

G7 Should Look to Africa for Lessons in How to Manage Multiple Crises (BusinessGhana)

The G7 will convene shortly to agree on a common response to the multiple crises buffeting our world. War, food shortages, energy shocks and inflation are causing havoc in nations both rich and poor, but Africa has been here many times before. Through long and painful experience, it has learned much about managing crises. What can Africa teach the rest of us? First and foremost, Africa’s new approach is to look beyond immediate crisis to tackle the deeper causes of recurrent catastrophes.

It is a strategy born of necessity. Africa’s best efforts at development have been repeatedly dashed by events beyond our control—with climate change the most destructive force. For a long time, the continent has depended on aid and grants to fight climate impacts. But these are often emergency responses, when what Africa needs is to build long-term resilience to both current and future shocks.

Disinvestment in Fossil Fuels is a Great Threat to Africa, Ramaphosa Says (IT News)

President Cyril Ramaphosa said that cutting investments in fossil fuels is a great threat to Africa. Ramaphosa was speaking at the G7 Summit in Germany. This summit hosted leaders of G7 countries and President Ramaphosa was participating in working sessions where Climate, Energy, Health as well Global Food Security, and Gender Equality were discussed. Ramaphosa cautioned against adverse ramifications of the proposed revision of the European Union Renewable Energy Directive, which is intended to accelerate green hydrogen investments. He highlighted that the proposed regulations have the potential to limit the ability of enterprises to supply key export industries with sustainable energy solutions and impact their global competitiveness.

“As we pursue a just transition, developing economies need development space to address high levels of inequality, unemployment, under-development and the economic impact of the COVID-19 pandemic,” Ramaphosa said. “Abrupt disinvestment from fossil fuels by international financiers poses a great risk to Africa because of the impact on jobs, stranded assets, national economies, energy, and food security,” he added.

FACT SHEET: President Biden and G7 Leaders Announce Further Efforts to Counter Putin’s Attack on Food Security (The White House)

President Biden and G7 leaders will announce that they will contribute over $4.5 billion to address global food security, over half of which will come from the United States. President Biden will announce $2.76 billion in additional U.S. Government funding commitments to help protect the world’s most vulnerable populations and mitigate the impacts of Russia’s unprovoked and unjustified war in Ukraine on growing food insecurity and malnutrition. These new investments will support efforts in over 47 countries and regional organizations, to support regional plans to address increasing needs.

The Great Finance Divide (UN DESA)

Over the last two years, the world economy has been rocked by multiple non-economic shocks, from the COVID-19 pandemic to the war in Ukraine. Climate-related disasters continue to increase in frequency and severity. Together, these events have had enormous socio-economic consequences due to the interrelated nature of economic, social and environmental risks. But not all countries and people have been impacted in the same way, in part because a financing divide is sharply curtailing the ability of many developing countries to respond to shocks and invest in recovery. The outbreak of COVID-19 delivered a seismic shock to the global economy, but developed countries were able to respond with aggressive macroeconomic policies. They financed massive response packages (worth 18 percentage points of GDP) at very low interest rates, stabilizing household incomes and financial markets. Developing countries lacked the resources for a response at similar scale, despite international support. Middle-income countries generally had supportive fiscal policy, but at a smaller scale than in developed countries. The poorest countries, most of whom were shut out of markets or faced very high borrowing costs, were forced to cut spending in areas critical to the SDGs, including education and infrastructure, as they faced shortfalls in revenues at a time of greater needs. On the monetary policy side, while many developing country central banks lowered interest rates and reserve requirements, their interventions were smaller in scale and shorter in duration, due to concerns over currency depreciations, inflation and capital outflows.

Urban resilience: Addressing an old challenge with renewed urgency (UNDP)

Incredibly, over half of humanity already lives in urban settings. With this figure projected to rise to two thirds by 2050, the need for development action in cities can no longer be overlooked. Urban resilience – the ability of city dwellers to withstand economic, social, health, environmental, disaster and climate related risks – has assumed renewed urgency and has become central to our development discourse. We know that the impact of COVID-19 has been predominantly urban (nearly 90 percent of people affected, according to a UNSDG Policy Brief), and most significant socio-economic disruption has occurred in cities. The pandemic has exposed the “soft underbelly” of our urban development, governance and risk management systems.

More than ever before, a multitude of risks are manifesting themselves with higher frequency, greater magnitude and cascading impacts in cities. According to UNDRR, nearly 84 percent of the fastest growing cities face extreme climate and disaster risks; the vast majority of which are in Asia and Africa. This disconcerting scenario is compounded by the location of many high-risk cities in challenging development contexts such as least developed countries (LDCs), low-income countries (LICs) and Small Island Developing States (SIDs), coupled with considerable governance deficits and resource constraints. In fact, the World Bank projects that COVID-19 may have pushed an additional 88 million to 115 million people into extreme poverty, with a majority engaged in informal services and living in congested urban settings.


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