tralac Daily News
Metals, engineering sector bearing the brunt of various economic events (Engineering News)
After starting the year off strong, the outlook for the metals and engineering (M&E) sector is starting to show deterioration, the Steel & Engineering Industries Federation of Southern Africa (Seifsa) reports. The federation explains that the performance of the M&E sector is indicative of the prevailing economic fundamentals, with it being extremely vulnerable to global and domestic economic events. Seifsa’s estimates already point to production contracting by between 1.1% and 1.3% in the second quarter of the year, with notable downside risks for the full year.
Chibanguza has identified the themes behind global and domestic economic fundamentals as being aggressive monetary policy tightening in the US – in response to multiyear record inflation; the effect of the Russia/Ukraine conflict on the European Union economy; and China’s aggressive zero-Covid-19 policy, which has impacted the country’s economic hubs of Shanghai and Beijing.
“These themes will dominate the global economic narrative and the slowing of global economic growth. Steel production is highly correlated to growth and the early warning signs of a slowing growth rate are evident in the decline in iron-ore prices, a key ingredient in steel production,” he says.
Energy transition also requires choices to ensure food, water security (Engineering News)
While the jury is still out on how exactly climate financing will be used to set South Africa’s energy sector on a low-carbon path, there are various other impacts and changes to industries and households looming, that are not discussed as often. Some of these issues and considerations were unpacked in a webinar hosted by the Black Energy Professionals Association, with comments from exhibition host Enlit Africa head of content Claire Volkwyn, research institute Trade and Industry Policy Strategies senior economist Nokwando Maseko and civic education institution Rosa Luxemburg Stiftung South climate justice project manager Dr Roland Ngam.
Growing need to embed climate resilience into SA’s infrastructure (Engineering News)
News about extreme weather events has become a monthly occurrence, highlighting the importance of embedding some measure of infrastructure and societal resilience in the evolving climate. Damage to the built and natural environments disrupts socioeconomic activity, but the general public, naturally, tends to focus on visibly dramatic and/or traumatic events, often ignoring the more understated impacts of climate change.
Global Centre on Adaptation (GCA) CEO Patrick Verkooijen notes that “every corporation and individual is vulnerable to climate risk because they all depend, to some degree, on infrastructure. Ensuring that these infrastructure systems can operate under future climate scenarios is vital for us and our economies”.
He adds that the cost of infrastructure damage will increase exponentially by 2050. Citing Ghana as an example, he notes that climate risk could lead to $3.9-billion worth of damage to the transport sector by 2050. This would, in addition to strangling the Ghanaian economy, risk cutting off 80% of the population from access to healthcare.
Creating infrastructure resilience requires that local governments understand the current and future impact of climate change on the built and natural environment, and all the potential implications of climate risks. They should also model the risk impacts and use such models to create a comprehensive and strategic plan to help drive resilience, he explains.
Mozambique to export first LNG as global natural-gas prices soar (Engineering News)
Mozambique is poised to ship its first cargo of liquefied natural gas overseas, joining the ranks of the world’s exporters as a global energy crunch pushes prices of the fuel to record highs. The LNG tanker British Mentor, operated by BP Plc, is set to arrive Aug. 24 at a new floating terminal that Eni is completing off Mozambique’s northern coastline, ship-tracking data compiled by Bloomberg show. Eni didn’t immediately respond to a request for comment. The Italian company has said it’s already planning a second floating export platform in the southern African country that could be brought on in less than four years.
Nigeria recorded a favourable trade balance of $2.6 billion in its bilateral trade relationship with Indonesia in 2021. This was disclosed yesterday by the President of Nigerian Indonesian Chamber of Commerce and Industry (NICCI), Mr. Ishmael Balogun, during a press conference to announce the Nigerian Indonesian Investment and Trade Forum 2022, which would be holding in Jakarta, Indonesia between October 17, and October 27, 2022.
Balogun said that deliberate effort is needed to increase the trade balance to $4 billion in favour of Nigeria in 2023 by attracting more foreign direct investments from Indonesia to Nigeria as well as showcasing the best of Nigerian products for export trade with Indonesia in particular and the rest of the world in general.
He said: “Our (Nigeria) trade balance with Indonesia in 2021 was exactly $2.6 billion. It is my opinion that we can actually do better than that. And that is why we need to take deliberate actions. For that reason, we said that we going to do Nigeria Indonesia Trade Mission in Jakarta, Indonesia.
“We want the trade balance to reach $4 billion by 2023. And in order to do that we are sensitising Nigerian business elites and informing them that Indonesia is a place where there are opportunities in agriculture, horticulture, pharmaceutical, beauty and lifestyle, aviation, defence, digital economy and green energy. If they are doing it right, then there is a lot we can learn from them.
Over $600 million worth of chicken is dumped onto the Ghanaian market annually. This has compounded the woes of Ghana’s poultry industry which is on the verge of collapse due to the lack of regulation to check the dumping of chicken onto the market. Speaking at a hearing over allegations of dumping of chicken into the country by the Ghana International Trade Commission, National Chairman of the Poultry Farmers Association, Victor Oppong, expressed worry that local players may be forced out of business.
The Ghana International Trade Commission seeks to find an amicable solution to unfair trade practices that has been a hindrance to many Ghanaian businesses including the poultry industry. The investigation of dumping of poultry products is influenced by widespread agitations from local players regarding loss of jobs and quality of products onto the market.
Exporters urged to be mindful of fake Certificate of Origin (Ghana Business News)
Exporters must be mindful of the originality of Certificates of Origin (COO) that accompany their exports since some unscrupulous freight forwarders are generating fake ones. Mr Daniel Osei Torgbor, Greater Accra Regional Head of the Ghana National Chamber of Commerce and Industry (GNCCI) who made the call, said the issuance of fake certificates to accompany export goods, could mar the image of the country globally and affect bilateral agreements meant to extend some privileges to Ghanaian exporters. Speaking to Ghana News Agency in an interview in Kumasi, he said COO was an important international trade document that certified that goods in a particular export shipment were wholly obtained, produced, manufactured and processed in a particular country.
It also facilitates international trade and proves authenticity of the product, while providing documentary evidence of origin of the goods exported and other varieties of documentation such as packing lists, commercial invoices and proforma invoices.
He stressed that immediate attention and action was needed to address the issues considering the role of the certificate of origin in the African Continental Free Trade Agreement (AfCFTA), since it was the primary document that was being used to facilitate trade.
Establish more firms in Ghana – Kyerematen woos Indian investors (BusinessGhana)
The Minister of Trade and Industry, Alan Kyerematen, has urged Indians to invest more in Ghana, especially in the manufacturing sector, to benefit from the opportunities offered by the African Continental Free Trade Area (AfCFTA). He said although existing Indian companies in the country had contributed immensely to Ghana’s economy and also created jobs for the youth, India could still do more by taking advantage of the peaceful business environment in the country. Mr Kyerematen was speaking at a reception to mark the 75 Independence anniversary of India at the India House in Accra last Monday.
“Our two countries share a lot in common — our struggles for independence from colonial rule, our shared democratic values and our common challenges, to mention but a few. We cherish the longstanding friendship and cooperation between our two countries,” he added.
Ghana has developed a maritime policy. Here is what it means (The Conversation)
Ghana has an abundance of marine resources. They include fisheries, hydrocarbon reserves, inland waterways and ports that are located along important international shipping lanes. These present the country with a wide range of opportunities for ensuring food security, bridging income inequalities, attracting foreign direct investment, increasing domestic productivity, and enhancing trading conditions. This underscores the imperative to harness and safeguard them wisely.
The vision of the strategy is to ensure that by 2040, Ghana’s maritime space will be safe and secure with a thriving blue economy that benefits every Ghanaian. It presents an integrated approach towards achieving this vision.
The document outlines six strategic objectives that focus on safety, security, marine environmental protection, blue economy development, capacity building and cooperation. It also provides a framework for implementation and sustainability. This includes calls for the allocation of resources funded from the national budget.
35.8% decrease in Egypt’s trade deficit in May 2022 (Daily News Egypt)
The Central Agency for Public Mobilization and Statistics (CAPMAS) issued on Wednesday the monthly bulletin of Foreign Trade in May 2022. The trade deficit reached $2.61bn during May 2022, versus $4.06bn in May 2021, a decrease of 35.8%.
Egypt’s exports increased by 18.3% as it reached $4.01bn during May 2022, versus $3.39bn in May 2021, due to an increase in the value of some commodities such as petroleum and liquefied natural gas products by 44.1%, crude oil by 30.7%, fertilizer by 33.9%, and ready-made clothes by 48.1%.
The strategic partners’ consultative retreat on AMDC’s theory of change was inclusive of an overview of the new AMDC’s operational metrics alongside the current and rapidly evolving minerals management and development landscape on the continent.
Opening remarks by His Excellency Albert Muchanga, the African Union Commissioner on Economic Development, Trade, Tourism, Industry and Minerals (ETTIM) began by describing the milestone memory lane trek since the launch of the first phase AMDC in 2013 to date as a response to the question of where AMDC has come from in its mandate to become the facilitator of choice to enable AU Member States realise the Africa Mining Vision. Against that backdrop, the Commissioner envisaged the retreat would come up with a roadmap towards AMDC becoming a dynamic organisation capable of meeting the sustainable development needs of Africans courtesy of the minerals sector.
In concluding his remarks, the Commissioner urged the strategic partners, of which he hoped in future will have all the African Union Regional Economic Communities(RECs) represented in addition to the Africa Finance Corporation as well as the Africa Trade Insurance Agency, to work in conjunction with the mandate of the AMDC Interim Secretariat
Upon presentation of the AMDC’s results framework centred around several goals, presentations were made by the strategic partners on their work and how they would collaborate on the Centre’s goals amongst which are to ensure: That Member State policies are consistent with the principles of the Africa Mining Vision (AMV), including governance and participation in the minerals sector; Minerals contribute as a driver for industrialisation, facilitated by intra-African trade; Enhancing geological and mineral knowledge and information systems for development; Modernising Artisanal and Small-scale Mining (ASM) and ensuring the sector is fully integrated into the formal national and regional economies; Sustaining and integrating the management of Africa’s mineral and energy resources, business process innovation and efficient capital resources allocation whilst encompassing robust follow-up, coordination, reporting, knowledge management and capacity building and/or strengthening.
Transport start-ups growing in sub-Saharan Africa (Engineering News)
In the past year, the transportation sector achieved an impressive record of 21 start-up companies, the majority of which were aimed at unlocking new growth opportunities through software, Internet-enabled solutions, and alternative e-mobility solutions. With roads being the arteries through which the African economy pulses, the ongoing challenges have been great hindrances to sustainable economic growth and global competitiveness and trade. The spark of positive change being driven by recent start-ups in markets such as Nigeria, South Africa and Kenya has the potential to continue being positively influenced by global trends and shifts, but will require the continued support of innovators in both the private and public sectors.
This start-up wave brings one step closer achieving the estimated jump of $16-billion in intra-regional trade that economists and trade experts expect to be possible through the African Continental Free Trade Area (AfCFTA) agreement. Though not without challenges, including an infrastructure investment shortfall of between $67-billion and $107-billion yearly, according to the International Finance Corporation, a look at recent start-ups and funding avenues in Africa points to a growing attraction of the continent as the last growth frontier for investors.
For transport start-ups specifically, the records show a proactiveness by innovators to help solve Africa’s connectivity predicament, where supply chain challenges and limitations in physical infrastructure network limitations amount to about 40% to 60% of the surcharge costs for goods in Africa.
Post-Covid restart offers African airlines a new chance (The Citizen)
African airline operators are going back to the drawing board. They are mapping sustainability plans including fostering cross-market collaborations to rev up the continent’s intra-African and grow their global air traffic market share. Africa’s aviation operators and experts have retreated to the drawing board to analyse the continent’s falling global air traffic share as rising passenger demand begins to lift airlines performance closer to pre-pandemic levels.
The establishment of Africa’s first ‘aviation laboratory’ and the start of implementation of a strategic alliance between Kenya’s and South Africa’s national carriers in July are the latest indications of an industry keen on addressing bottlenecks to its growth and expansion, competitiveness and sustainability.
“The overall objective of the laboratory was to address the root cause of challenges facing the air transport industry in Africa and develop relevant solutions to revamp the sector,” said African Airlines Association (Afraa) secretary general Abdérahmane Berthé.
Developing and integrating agricultural markets may be key to addressing Africa’s sustainability challenges. By modelling trade costs from farm gate to potential import markets across eight African regions, we investigate the impact of individual components of continental free trade and the complementary role of domestic agricultural development through increased market access for farmers and agricultural intensification. We find that free trade would increase intra-African agricultural trade sixfold by 2030 but—since it does not address local supply constraints—outside food imports and undernourishment would reduce only marginally. Agricultural development could almost eliminate undernourishment in Africa by 2050 at only a small cost of increased global greenhouse gas emissions. While continental free trade will be enabled in Africa through the African Continental Free Trade Area, aligning this with local agricultural development policies is crucial to increase intra-African trade gains, promote food security and achieve climate objectives.
JICA, AfCFTA collaborate to enhance opportunities for businesses (Graphic Online)
THE Japan International Cooperation Agency (JICA) has opened discussions with the Secretariat of the Africa Continental Free Trade Area (AfCFTA) in Accra on how to maximise the benefits of the trade pact for businesses in Africa. The discussions are to explore the possible areas of cooperation between the two sides to for JICA to invest resources and technical expertise to help enhance the opportunities for businesses.
The Vice President of JICA said Japan, through its international assistance agency has been a critical component of private sector development in Africa and would continue to support critical stakeholders in the continent to create opportunities for businesses. Mr Kato said the agency saw the AfCFTA to be a great opportunity for opening up trade among African countries and efforts to maximise its gains would be prioritised.
He noted that while the free trade area was critical to Africa’s development, its successes could be limited if the right programmes were not put in place.
Towards deeper integration in SADC (sardc.net)
The 42nd SADC Summit adopted a raft of measures to deepen regional integration and sustainable development in southern Africa. The theme of the summit was ”Promoting industrialization through, agro-processing, mineral beneficiation, and regional value chains for inclusive and resilient economic growth.”
The approval of the much-awaited SADC Regional Parliament brings on board what has long been seen as the missing piece in the regional integration jigsaw puzzle. A SADC Regional Parliament will ensure broader citizen participation in regional affairs. It will also facilitate more extensive debate on regional issues and thus accelerate the implementation of SADC protocols that need to be ratified and domesticated into national legislation. This can become a key driver of integration and development, bridging the gap between citizens and policymakers.
Operationalisation of the Sadc Regional Development Fund is vital to unlocking and fast-tracking integration and industrial development as it avails the necessary resources for the implementation of various development programmes.
This was a key message expressed by the leadership of the Southern African Development Community (Sadc) at the 42nd Sadc Summit in Kinshasa, the Democratic Republic of Congo. Mooted nearly a decade ago, the Sadc Regional Development Fund (RDF) is a self-financing and revolving mechanism intended to end the reliance on external support to drive southern Africa’s development agenda. The Fund will provide a window for financing economic development and sustainable growth through supporting regional infrastructure development, industrial development, integration and other economic needs as well as social development at concessionary rates.
Current estimates to fund development programmes targeted in the Sadc Regional Indicative Strategic Development Plan 2020-2030 have been put at over US$50 billion.
As West Africa’s population booms, its economy continues to expand, the opportunities for businesses to trade across the region are vast. The rising need economy has presented various opportunities across all industries in West Africa. Previously an agriculturally driven economy is now facing a transition. Majority of the newly established businesses are catering the growing needs of the people of west Africa, which include industries such as Hospitality, Healthcare and Banking.
One of the catalysts and driving forces for this economic can be seen from active participation of the West Africa Trade & Investment Hub (Trade Hub, which is a 5-year, $140 million trade and investment facilitation activity designed to improve private sector productivity, profitability, and competitiveness in West Africa through market-based approaches. The West Africa Trade and Investment Hub is a one-stop shop that partners with banks/financial institutions to provide financial support and business development services, capacity building, and best practices with the aim of making businesses viable and export ready, through the African Growth Opportunity Act (AGOA).
One of the largest economies in West Africa, Nigeria has seen significant surge in Energy usage. The government has been looking at alternate sources of energy such as Solar & Waste-to-Energy plants which has led to the inception of green power projects across the region. Barika and Kraft has been actively participating in this sector with a multitude of projects securing Seed-funding under the patronage of Barika and Kraft.
Apart from Nigeria, another nation observing a significant spike in economic prosperity is Ghana.
Beijing refutes West claims of ‘Chinese debt trap’ in Africa (Al Mayadeen English)
China hits back at the US claims that it is setting up a debt trap in Africa as Beijing grows closer to the African continent.
The Western claims of Beijing setting up a “Chinese debt trap” in Africa are baseless and irresponsible, Chinese Foreign Ministry spokesperson Wang Wenbin said on Thursday. Wang provided a list of data to show the win-win nature of Sino-African cooperation while criticizing Western officials and media over their attempts at driving a wedge between China and developing nations by using false claims. Asked about claims of a “Chinese debt trap” raised and pushed by US Secretary of State Antony Blinken during a trip to Africa, Wang said at a regular press conference on Thursday that such claims were only used by US and other Western officials to shift responsibility.
According to data from the World Bank, at the end of 2020, bilateral creditors held 26% of the foreign loans of 82 low and medium-income countries, while commercial creditors and multilateral creditors made up 40% and 34%, respectively. China held less than 10% of the total external debts.
In the newly-added $475.2 billion of external debt in low and medium-income countries between 2015 and 2020, commercial debt from the global financial market accounted for 39%, Wang highlighted, quoting a European Network on Debt and Development survey that showed that 95% of sovereign debt in 31 indebted countries was held by Western financial firms.
The Developing Countries Trading Scheme is a major milestone in growing free and fair trade with developing nations. The Developing Countries Trading Scheme applies to 65 countries, offering lower tariffs and simpler rules of origin requirements for exporting to the UK. The scheme helps countries to diversify their exports and grow their economies, while British households and businesses benefit from lower prices and more choice.
The Developing Countries Trading Scheme cuts administrative costs for businesses by reducing more tariffs and bringing more countries in scope of the most generous tariff reductions. It also cuts red tape for developing countries, for example by simplifying rules of origin requirements for the least developed nations. This helps the world’s poorest countries to export to the UK and play a more active part in fast growing global supply chains.
It also helps lower costs for UK businesses, leading to lower prices for consumers across a range of everyday products, by reducing tariffs on imports from low income and lower-middle income countries. Increasing trade and decreasing tariffs is another way the government is supporting businesses and individuals with cost-of-living increases.
Issues related to acquiring innovative clean technologies and access to finance determine businesses’ ability to adapt in order to maintain business competitiveness. Overcoming these concerns by obtaining resource efficient technologies and strengthening access to finance requires national trade and investment policies designed to build resilient and sustainable economies.
Supporting countries in greening requires a concerted effort at multilateral, regional, and national levels to translate circular economy principles into trade and investment policy frameworks.
At global and regional levels, this entails organizing targeted dialogues and engagements with policymakers, trade negotiators, private sector, civil society, and other stakeholders to consider how the principles of the circular economy could be integrated into trade agreements.
Determining the cost and value of garment manufacturing operations is a challenge faced by all textile and clothing companies, particularly those in developing countries where many small and medium-sized manufacturers remain focused on simple cut and sew operations, providing low value services and producing very basic commodity-type garments.
The new ITC publication, The Garment Costing Guide: for small firms in value chains, helps manufactures, and those that support them, understand the true costs and value of producing clothing beyond simply sewing operations. Manufacturers that provide additional services will be more competitive and take an important step towards becoming a preferred supplier to customers.
Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC) explains: “Garment manufacturing has evolved from a simple manufacturing operation into a complex service industry where the actual cut and sewing operations are the simplest and least remunerated tasks. The guide not only explains how to capture and calculate all costs of making a garment, but also offers solutions on how to reduce costs along the full supply chain to increase profit margins for garment manufacturers as well as their customers”.
Consensus will be key to next G20 summit (China Daily)
The meeting of G20 finance ministers and central bank governors in Bali last month－largely overshadowed by discord over the Russia-Ukraine conflict－did not produce a communique at all. And, as it stands, there is little reason to think that November’s G20 Leaders’ Summit in Bali will go any better.
The G20’s host this year is a representative of this more diverse group of major economies. Indonesia understands that strategic patience is essential to build consensus among countries operating from different perspectives and stages of development. After all, it is a member of the highly diverse Association of Southeast Asian Nations, which emphasizes consultation and consensus. Most developing and emerging-market economies view peace and stability as prerequisites to their continued development.
If this year’s G20 summit is to produce any progress, its members－especially the G7 countries－must embrace consultation and consensus.
Emerging-market economies, already shaken by the collapse of the Sri Lankan economy, are bracing for higher inflation, escalating food shortages and increased debt distress. JPMorgan notes that intensifying pressure on external and fiscal accounts is driving a growing number of countries to seek assistance from the International Monetary Fund, or at least to move in that direction.
Amid such far-reaching and interconnected crises, one might imagine that global cooperation would be forthcoming. But there seems to be little appetite to compromise, especially at the G20 level.
The situation is very different within the G7. At 47 years, the G7 has been around more than twice as long as the nearly 23-year-old G20, though it is worth noting that the G7 was the G8 for much of that history. Russia was kicked out in 2014.
This points to a defining characteristic of this older, smaller club: It comprises the Western democracies that have largely dominated the world economy since 1945.
In 2020, the G7 accounted for over half of global net wealth and roughly half of world GDP, despite being home to just 10 percent of the world’s population.