tralac Daily News
The SA government needs to urgently intervene in the unilateral closing of their borders by Botswana and Namibia to certain fruits and vegetables from South Africa, claiming it is to protect their local producers. Since the beginning of the year, for example, Botswana has blocked SA exports of tomatoes, carrots, beetroot, potatoes, cabbage, lettuce, garlic, onions, ginger, turmeric, chilli peppers, butternut, watermelons, sweet peppers, green mealies and fresh herbs.
This unilateral action is against trade agreements with South Africa, including the Southern African Customs Union (SACU) agreement, according to agricultural body Agri SA. Botswana, Eswatini, Lesotho, Namibia (BELN) and SA form the SACU, meaning they are supposed to have a common external trade border with free flow of goods within the union.
The situation has become “untenable” and requires government intervention urgently to prevent the SACU agreement from being nothing more than a “lame duck”, Agri SA executive director Christo van der Rheede writes to Minister of Agriculture, Land Reform and Rural Development Thoko Didiza and Minister of Trade, Industry and Competition Ebrahim Patel in a letter dated 8 August and seen by Fin24. He claims Botswana and Namibia are the main culprits.
“These countries have cited a need to protect local production as the motivation for these border closures,” Van Rheede tells Didiza. “We have noted that, while Botswana and Namibia close their borders to vegetables from SA, they remain happy to send their like products back into SA, and at predatory prices to boot.”
Traders stare at losses as gold coins boost Zimbabwe dollar (Engineering News)
Not everyone is happy about the Zimbabwean dollar’s gains. Black market traders have been left reeling as measures taken by authorities, including new gold coins, to support the embattled local currency dry up excess liquidity and erode arbitrage opportunities.
Costly imports of fuel, edible oils and fertiliser widened Kenya’s trade deficit to a record Sh666.2 billion in the first five months of the year, piling pressure on the shilling and straining household budgets due to rising inflation.
The 23 percent or Sh189 billion jump in the import bill to Sh1.02 trillion is largely a result of the ongoing Russia-Ukraine conflict, which has disrupted global supply chains of critical commodities such as petroleum fuels, metals, fertiliser and grains.
Data from the Central Bank of Kenya (CBK) shows that this growth in imports has significantly outstripped that of export earnings, which in the period grew by Sh41 billion to Sh354 billion. The ballooning trade deficit is eating into the country’s foreign reserves, which are critical in supporting the stability of the currency.
In addition to the supply disruptions caused by the conflict, the shilling has also felt the heat of higher dollar demand and is now trading at an all-time low against the greenback. Importers require more shillings to acquire dollars to pay their suppliers, resulting in imported inflation.
Sh40bn terminal shapes Mombasa port battle (Business Daily)
Before the launch of the new Sh40 billion Kipevu Oil Terminal in Mombasa, the old facility that had been in existence for six decades could only handle 35,000 tonnes of cargo at a time. It could also accommodate one vessel at a time of upto 120,000 dead weight tonnage. But the new offshore terminal has changed the fortunes of the Mombasa port, which is facing increased threat from neighbouring ports in Tanzania and Djibouti, given that it will handle four vessels of up to 200,000 dead weight tonnage at a time. This means that at optimum, in seven days, it would handle what the old port would do in a month.
The new facility promises to ease pressure on the Mombasa port that had been aggravated by increased demand in Kenya and the region.
Kenya says it will invest in the energy and petroleum sector, to create a reliable and efficient energy supply through oil exploration and oil handling facilities. “Over the last few years, the region has been making a significant effort towards the exploration and mining of oil. Soon the region will join the oil-producing and exporting countries of the world,” President Kenyatta said. He said the need for petroleum products has continued to increase in the region due to economic growth and development through rapid industrialisation.
“The modern terminal is faster and will have various benefits to the economies of the region. Key among them include reduced vessel turn-around time from four to two days, with a significant reduction in demurrage costs. On the other hand, it is expected to reduce freight costs owing to improved cargo handling capacities and leverages associated with larger economies of scale,” said Mr Kenyatta.
Truckers resume normal regional operations after elections hitch (Business Daily)
Truckers have resumed normal operations after the flow of goods between Kenya and the neighbouring countries was interrupted this week with the announcement of presidential results on Monday. The chaos and uncertainty that had been witnessed in some pockets of the country saw truckers withdraw from the roads, paralysing trade along the Northern Corridor. Chief executive officer of the Kenya Transporters Association (KTA) Mercy Ireri said they are now fully operational and that the flow of goods to either side of the border is back to normal.
“We have been at near zero in regard to road transport from the Port of Mombasa to the border towns of Malaba and Busia in the last couple of days, but now the situation has come back to normal,” said Ms Ireri. Cargo trucks destined for Kenya via the Busia border were being diverted through Mumias road in Kakamega County to Bungoma and Eldoret on their way to Mombasa.
Angola and the European Union are set to start talks for a trade deal this year after EU and African partners approved a request from the oil-producing nation to join a regional trade bloc, according to an EU document and an official. The green light to start negotiations came in late July, an EU document shows, shortly before the southern African country holds general elections next week. “We are now in a position to open formal negotiations, but there is not yet a date agreed with Angola. We expect this to happen in the last quarter of this year,” an EU spokesperson told Reuters.
The possible deal would likely increase the export of Angolan products to the EU, and possibly reduce the dominance of oil which currently accounts for nearly all exports by value.
With the boost in trade expected from the deal and EU’s increased need of fuel amid the energy crisis caused by the war in Ukraine, Angola might also export more oil to the 27-nation bloc. Currently China is by far its largest customer, despite oil now faces no import duty in the EU.
Under the deal, EU products will also access the Angolan market with lower duties - an advantage for local consumers but a risk to domestic industries if they do not invest to remain competitive.
Ghana: Local poultry sector nears extinction (The Business & Financial Times)
Over 400 poultry farms in the country have had to shut down operations due to multiple reasons – including high production cost mainly driven by the price of raw materials and feed cost, the Ghana National Association of Poultry Farmers (GNAPF) has indicated. Other reasons such as the prevailing interest rate, surge in chicken imports, bird-flu and cost of labour have been mentioned by the association as key drivers of the industry’s collapse.
“The current situation is dire, and our farmers are losing millions through the closure of their farms. We are at the emergency level now. As it stands, 70 percent of existing farms nationwide are empty,” Victor Oppong Adjei, President of the GNAPF, told the B&FT.
Cameroonian authorities say record flooding on its western border with Nigeria has killed at least six people, washed away homes, and destroyed thousands of tons of food meant for export. The floods destroyed a 36-meter-long bridge on the River Momo, keeping hundreds of merchants and commuters stranded on both sides of the river. Momo, an administrative unit where Widikum is found, is a production basin for palm oil, maize, potato, tomatoes and vegetables.
Cameroon’s National Observatory on Climate Change last month predicted that floods and landslides would hit many Cameroonian towns and villages including Widikum.
Senegal and Egypt Emerge as Potential LNG Exporters to Europe (The Maritime Executive)
As Europe struggles to gain a greater degree of energy independence and replace energy historically imported from Russia it is looking to new parts of the world to become suppliers. In a rather unique turn of events, some African countries are promoting their rich hydrocarbon deposits as a solution. It could become a win-win situation for Europe desperate for new sources and for the African nations that are hungry for foreign currency to support their sagging economies.
African nations that historically would not have been thought of as potential suppliers to meet Europe’s energy needs are emerging as leading candidates. Senegal in West Africa is moving rapidly to develop its liquefied natural gas operation to become an exporting nation. Similarly, European companies have projects under development in Mozambique while Egypt is working to boost its operations after the discovery of the Mediterranean’s largest deposits of LNG.
In July, the Pan-African Payment and Settlement System (PAPSS) marked three years since it was launched on July 7, 2019, in Niamey, Niger. The PAPSS chief executive officer, Mike Ogbalu III talked to Bamuturaki Musinguzi about the achievements, prospects and bottlenecks.
Why was the Pan-African Payment and Settlement System (PAPSS) developed?
A: The barriers, or challenges to increased intra-African trade include lack of adequate trade information, structural rigidities, historical trading patterns (historical ties with former colonial countries), poor trade facilitation and regulatory issues, poor implementation of regional commitments, poor state of trade related infrastructure (barriers to the movement of goods), and fragmented payment, clearing and settlement infrastructure.
PAPSS was adopted in July 2019 in Niamey, Niger, by the African Union heads of state as the payment and settlement system to support the implementation of AfCFTA. It is a financial market infrastructure that has been developed and initiated through a collaborative effort of the AfCFTA Secretariat, Afreximbank and the African Union Commission.
How is PAPSS being implemented across the continent?
A: The journey started with a pilot phase in the West African Monetary Zone (WAMZ) where central banks of Nigeria, Ghana, Liberia, Guinea, the Gambia, and Sierra Leone successfully performed live transactions between each other. We chose this region because it presented decisive arguments for a pilot exercise, before considering a deployment of the system throughout the continent: six countries with different currencies, speaking English and French and carrying out a substantial volume of cross-border transactions.
With this successful pilot-run, we are now ready to bring any central banks and commercial banks on board. We expect to be in the five regions of Africa before the end of 2023, all central banks signed up by end of 2024 and all commercial banks by end of 2025.
Traders fear Kenyan goods could face stiff competition in AfCFTA (The East African)
The KAM, in their latest survey titled Implication of the African Continental Free Trade Area on Kenya’s manufactured products and its impact on Kenya’s trade, reveals that the dwindling country’s competitiveness due to a high cost of doing business, bureaucratic policy and regulatory environment could inhibit its ability to take advantage of the AfCFTA.
Kenya’s manufacturers are worried about losing out on the benefits of the African Continental Free Trade Area (AfCFTA), due to a high cost of production that may hurt their competitiveness. The Kenya Association of Manufacturers (KAM) has tallied local costs of production to be higher than the continental average, meaning their goods may face stiff competition in trading across Africa. Kenya’s global competitiveness index is about 55 percent, while it ranges between 35 to 60 percent in Africa, an indication of a constrained business environment.
“There is a positive change for Kenya’s export to Africa under 90 and 100 per cent tariff liberalisation for South Africa, Eswatini, Ghana, Morocco, Togo, Côte D’Ivoire, Botswana, Namibia, Senegal and Tunisia,” the report says. ”Change is negative for Kenya’s exports to Zambia, Rwanda and Madagascar.”
The report also reveals that the impact of tariff liberalisation under the AfCFTA on Kenya’s economy is estimated to grow imports by five per cent at 90 per cent tariff liberalisation, and at 11.4 per cent at full liberalisation. ”There are strong value chains in agro-processing, textile and garment, footwear, mining, leather, rubber and plastic sectors,” it says.
“The EAC bloc should boost its transactions under the regional and international trade agreements and opportunities of African Continental Free Trade Area (AfCFTA), African Growth and Opportunity Act (AGOA), Economic partnership agreement,” said EABC Chairperson Angelina Ngalula at the High-Level Business Dinner in Arusha. Statistic show intra-EAC trade is below 20%, intra-African exports is 18% of total exports, EAC exports to AGOA valued at USD. 5.26 Billion while EAC exports to EU stood at USD.2.67 billion (ITC,2021).
EABC Chairperson Angelina Ngalula said that despite the agreements & opportunities East Africans have not fully utilized these agreements as trade is still fractional due to low productive capacity, fragmentation and infrastructure challenges.”With the AfCFTA, there are no boundaries of doing business in Africa, but the EAC bloc should be well-prepared to export competitive professional services and skills to the continent,” said Chairperson Angelina.
On his part, Mr. John Bosco Kalisa, EABC CEO said EABC with support from GIZ developed a Barometer on East African Trade in Services to gauge the growth of the service sector in the EAC. He expounded that the EAC region exported services worth USD 12.9 billion against USD. 933.6M worth of imports globally in 2019.
EABC Chairperson Angelina Ngalula has called upon the Governments of the EAC Partners States to market East Africa as a single investment destination by showcasing and reinforcing the bloc’s comparative and competitive advantage.
Improving the quality & competitiveness of products and services is one of the top priorities Chairperson Ngalula seeks to spearhead in order to reposition East African business to seize opportunities availed by the 1.3 billion African Continental Free Trade Area (AfCTA). Other priorities are improving the performance of EAC transport corridors and eliminating persistent Non-Tariff Barriers.
On his part, Mr. John Bosco Kalisa EABC CEO said “EABC is a core partner of the EAC regional integration agenda as outlined in Article 127 of the Treaty.” He urged Governments to liberalize EAC airspace to reduce the cost of tickets & cargo freights as well as boost the volume of air cargo exports outside the region.
Leaders of Southern African nations are meeting in Kinshasa for their 42nd summit. The leaders are expected to review the progress made towards achieving closer integration and deepening regional trade. The summit will be held under the theme “Promoting Industrialization through Agro-Industry, Mineral Resource Enrichment and Regional Value Chains for Inclusive and Resilient Economic Growth.
Today, the pontoons sit ashore, mercifully redundant. You might spot them while crossing the 923-meter (3,028-foot) long Kazungula Bridge, a $260 million project co-financed and co-operated by Botswana and Zambia, that a year into service has already transformed this southern African trade artery. The bridge was conceived to speed up travel along the Southern Africa Development Community (SADC) North-South Corridor, a route historically beset with costly border delays.
The bridge opened in May 2021 but was over a decade in the making, explains Kazungula project engineering manager Isaac Chifunda.
“Africa was massively represented on this project,” says Chifunda. Although construction was overseen by South Korean company Daewoo E&C, the team was multinational, he says, and raw materials including cement, steel and aggregates came from across southern Africa. As a significant investment for Zambia and Botswana, the bridge is packed with technology to ensure its long-term future.
Africa Needs Investments, Not Food Support—Adesina (Business Post Nigeria)
A new report from Climate Policy Initiative (CPI) has said that Africa is getting just 12 per cent of the finance it needs to manage the impact of climate change. It, however, raised pressure on rich nations to do more in the run-up to global climate talks at COP27 in November. CPI said that around $250 billion is needed annually to help African countries move to greener technologies and adapt to the effects of climate change, yet funding in 2020 was just $29.5 billion.
“Harnessing climate investment opportunities in Africa will require innovation in financing structures and strategic deployment of public capital to ‘crowd-in’ private investment at levels not yet seen,” the CPI report said.
Time to fix seed systems to tackle Africa’s hunger crisis (Mail & Guardian)
Between 2008 and 2018, Africa suffered an estimated $30-billion in losses caused by a decline in crop and animal production, as a result of floods, diseases, droughts and other shocks, according to the United Nations Food and Agriculture Organisation. With such increasingly unpredictable weather patterns, a result of the effects of climate change, and frequent pest and disease outbreaks, farmers must take any measures to enhance yields. This includes access to and planting quality seeds. Seeds significantly influence the quality and quantity of farmers’ output. The African Union Commission’s Seed Sector in Africa: Status Report and Ten-year Action Plan (2020-30) indicates that good quality seeds can potentially increase overall productivity by nearly 40%.
Clearly, it is critical that efforts to put quality seeds in the hands of smallholder farmers, who represent 70% of Africa’s agricultural production, are accelerated. A key measure to support this is the formalisation of seed systems being rolled out in many African countries by instituting legislation.
Africa Has a Food Shortage of Over 30 Million Metric Tonnes (Morocco World News)
The UK will be extending its import tariff cuts to hundreds more products such as clothes and food from 65 developing nations, but South Africa does not qualify for the benefit.
The Developing Countries Trading Scheme (DCTS) comes to effect in January and replaces a previous scheme - the Generalised System of Preferences (GSP), Reuters reported. The new scheme will apply to existing beneficiaries of the GSP – these include 47 countries in the Least Developed Countries Framework, such as Angola, Malawi, Mozambique and Zambia. It will also apply to 18 additional countries – classified as low-income and lower-middle-income countries by the World Bank.
According to a policy paper issued by the State Secretary for the UK’s Department of International Trade, Anne-Marie Trevelyan, the scheme will offer lower tariffs and simpler rules of origin requirements for products exported to the UK. This will make it easier for the world’s poorest nations to export to the UK. BBC reported that the scheme will affect 99% of goods exports from Africa.
South Africa is classified as upper-middle income by the World Bank, which the scheme does not apply to. Nor does the scheme apply to low and lower-middle-income countries with a free trade agreement with the UK. If countries are considered least developed, they can choose to trade with the UK under the DCTS or on free trade agreement terms.
Meanwhile, the UK has halted development aid payments – that are considered non-essential – due to concerns of overspending, Bloomberg reported. It is however, prioritising humanitarian support for Ukraine.
Nine programs for China-Africa co-operation that have yielded fruitful results (The Zimbabwe Mail)
Since its establishment in 2020, the Forum on China-Africa Cooperation (FOCAC) has become an important platform for collective dialogue, an effective mechanism for China-Africa practical cooperation, and a pacesetter for international cooperation with Africa in the new era. At the 8th Ministerial Conference of FOCAC last year, President Xi Jinping put forward for the first time the “spirit of China-Africa friendship and cooperation”. He set forth “four-point propositions” on building a China-Africa community with a shared future in the new era, and announced the “Nine Programs” for practical cooperation with Africa, which have set a new milestone in the history of China-Africa relations. Over the past year, the “Nine Programs” have reaped rich early harvest.
Third, the trade promotion program has made great strides forward. From January to June this year, China-Africa trade volume registered US$137.38 billion, up by 16.6% year-on-year, of which China’s exports to and imports from Africa increased by 14.7% and 19.1% respectively. China has opened “green lanes” for faster export of African agricultural products to China. As a result, agriculture products like the Rwandan stevia, South African fresh pears and soybeans and Zimbabwean citrus have gained access to the Chinese market. China has signed exchange of letters with Togo, Eritrea, Djibouti, Guinea, Rwanda, Mozambique, Sudan, Chad and Central Africa among other LDCs on expanding the scope of zero-tariff treatment to 98% for products exported to China, which covers more than 350 kinds of African products.
Fourth, the investment promotion program is growing against the odds. From January to June this year, China’s industry-wide direct investment in Africa amounted to US$1.74 billion, growing by 1.5% against all the odds. The turnover of Chinese enterprises’ contracted projects in Africa amounted to US$ 18.32 billion, an increase of 8.4% year-on-year. The two sides have set up a China-Africa cross-border RMB center in the pioneering zone for in-depth China-Africa trade and economic cooperation, in an effort to explore RMB settlement for China-Africa trade, logistics and industrial cooperation. China has continued to provide aid in the form of grants, interest-free loans and concessional loans to help African countries achieve independent and sustainable development.
Fifth, the digital innovation program is thriving. The first China-Africa Conference on Innovation Cooperation witnessed signing of 15 China-Africa science and technology cooperation projects. In an effort to expand Silk Road e-commerce cooperation, China and Africa have jointly made a success out of the “Quality African Products Online Shopping Festival”, where coffee from Ethiopia, chili sauce from Rwanda, black tea from Kenya and other high-quality products from a total of 23 African countries were well received among Chinese consumers.
African participants in the first-ever AfriCaribbean Trade and Investment Forum (ACTIF2022) taking place in Bridgetown, Barbados, from 1 to 3 September will benefit from a decision by the Government to waive visa requirements for passport holders from 24 African countries who would have needed visas to enter the country.
ACTIF2022, which is being held under the theme “One People, One Destiny: Uniting and Reimagining Our Future”, is being hosted by the Government of Barbados and the African Export-Import Bank (Afreximbank).
The 24 African countries to which the visa waiver decision applies are: Algeria, Angola, Benin, Cape Verde, Central Africa Republic, Chad, Comoros, Republic of Congo, the Democratic Republic of the Congo, Côte d’Ivoire, Djibouti, Egypt, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mozambique, Namibia, Niger, Sao Tomé and Principe, Sudan, South Sudan and Togo.
Kay Sealy, acting Permanent Secretary of the Barbadian Ministry of Foreign Affairs and Foreign Trade, said: “The move to add these countries to Barbados’ visa waiver list is intended to enhance business and investment opportunities, and facilitate the ease of travel for tourists.”
New digital tools to help maritime economies overcome trade disruptions (Daily Cargo News)
THE UNITED Nations Conference on Trade and Development is launching new digital tools to help maritime countries and ports reinforce supply chains against disruptions. UNCTAD said vulnerable economies in particular had been impacted by extreme weather events, the war in Ukraine and other crises beyond the pandemic adding pressure to global supply chains. “Ensuring the integrity and effective functioning of maritime transportation is critical for all economies, especially small island developing states and least developed countries,” UNCTAD said in a statement.
“These vulnerable economies depend heavily on maritime transport networks for their livelihoods and access to the global marketplace. “Moreover, they are already burdened by disproportionately high transport costs and low shipping connectivity, which make their trade uncompetitive, volatile, unpredictable and costly.”
In light of the consequences felt around the world, UNCTAD has launched a new website to promote “resilient maritime logistics in the face of disruptions”.
Shipping accounts for close to 3% of global greenhouse gas (GHG) emissions. The latest IPCC reports have shown a pressing need to decarbonize all sectors, including heavy industry, and align with the goal of no more than 1.5°C of warming outlined in the Paris Agreement.
The International Maritime Organization (IMO), through its initial Greenhouse Gas Strategy, aims to halve shipping emissions by 2050, compared with 2008 levels. As the industry seeks to raise climate ambition and align with science-based climate targets, there has been a push for full sector decarbonization by 2050.
This ambitious goal will require huge amounts of scalable zero-emission fuels — that means it also constitutes a major economic opportunity for countries with the potential to produce, bunker and export this kind of fuel, including many developing and emerging economies.
In their latest Food Security Update the World Bank highlights that domestic food price inflation remains high around the world. High inflation continues in almost all low- and middle-income countries and the share of high-income countries with high inflation has increased sharply.
The most affected countries are in Africa, North America, Latin America, South Asia, Europe and Central Asia. In real terms, food price inflation exceeded overall inflation (measured as year-on-year change in the overall CPI) in 81% of the 153 countries for which food CPI and overall CPI indexes are both available.
This poses a threat to global food security as the planting season starts. “So far, the war in Ukraine has mostly affected countries importing wheat and corn. But many countries, including some major food exporters, are net fertiliser importers.
“Persistently high fertiliser prices may spread to a broader variety of crops including rice, a staple which has not yet seen war-related price hikes. We must act now to make fertilisers more accessible and affordable to avoid prolonging the food crises,” said Voegele.
He goes on to discuss three policy proposals for making fertilisers more accessible and affordable: Countries should lift trade restrictions or export bans on fertilisers; Fertiliser use must be made more efficient, for instance by providing farmers with appropriate incentives that do not encourage overuse; and Invest in innovation to develop best practices and newer technologies that may help increase output per kilogram of fertiliser used.
Importance of cryptocurrency in today’s Era (Ripple Coin News)
Bitcoin tends to have an enticing use case in cross borders remittance. By utilizing cryptocurrencies as a fundamental medium to transfer funds internationally, senders and recipients can now complete the exchange without high remittance fees.
Cryptocurrencies seem to be the utmost awaited revolution in international exchange, and global trade will become a piece of cake after the mass adoption of these digital currencies. Yet the question remains, what are the strengths and threats of cryptocurrencies in terms of international exchange?
Several people have recently explored ingenious ideas involving different altcoins for international exchange. However, digital currencies, which serve as payment and transfer mediums between countries, are often overlooked as a solution to increase overall economic growth.
However, it is difficult to ignore that trade facilitation acts as a catalyst that brings benefits and value to various parts of the world. The World Trade Organization (WTO) claims that around half a billion people save on annual costs from trade in goods and services. Statistics also indicate that trade volume has doubled since the 1980s due to the globalization of the economy and trade facilitation.