tralac Daily News
South Africa needs to step up its reform efforts to avoid its economic recovery from the COVID-19 pandemic losing steam, according to a new OECD report. Persistent weaknesses in productivity growth and the negative impact of Russia’s war of aggression against Ukraine on purchasing power through the rise in food and energy prices continue to weigh on economic activity.
The latest OECD Economic Survey of South Africa says that improving the tax system and reducing spending inefficiencies would help to put public finances on a more sustainable path, while taking action to revive productivity growth would help to revive GDP growth and raise living standards. If needed, the tightening of monetary policy should continue to allow inflation – which disproportionately affects the poorest households – to return to the Reserve Bank’s target. It is also vital to intensify efforts to raise the country’s low COVID-19 vaccination rate to reduce the health and economic risks from future outbreaks.
Artisanal and small-scale mining tends to be a hand-to-mouth enterprise with economic sustainability being achieved only further along the value chain by aggregators involved in buying, smelting and trading the yellow metal. Nowhere along the value chain are taxes and royalties consistently paid and much of the industry, in all countries, is in the hands of criminal networks.
All artisanal and most small-scale mining (ASM) is illegal in South Africa, by definition. The basic mining law, the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, simply fails to mention artisanal mining and treats small-scale miners in the same way as large mining companies (in itself an incentive to informalisation). This regulatory gap is to be filled by legislative amendment and to this end an Artisanal and Small-scale Mining Policy was published at the end of March 2022.
Steel industry backs temporary ban on metal-scrap exports (Engineering News)
Members of the South African Iron and Steel Institute (SAISI) have come out in full support of the proposed six-month ban on the export of scrap metal from South Africa. SAISI members include ArcelorMittal South Africa, Cape Gate, Columbus Stainless, Force Steel, Scaw Metals, SA Steel Mills and Unica Iron and Steel, while Safal Steel and Grinding Media are affiliated members.
Senior African Development Bank officials recently undertook a three-day business mission to Zimbabwe. The bank’s vice president for power, energy, climate and green growth, Dr Kevin Kariuki, and its vice president for private sector, infrastructure and industrialization, Mr. Solomon Quaynor, both met with senior Zimbabwean government officials and business leaders in Harare last week. Discussions covered developing the private sector and ways Zimbabwe could best tap its renewable energy resources.
Energy and Power Development Minister Soda Zhemu said: “The government of Zimbabwe appreciates the African Development Bank’s support and involvement, particularly in the Kariba Dam Rehabilitation project ($32 million), the ZimFund Emergency Power Infrastructure Rehabilitation project ($59.5 million), the Alaska-Karoi Transmission Reinforcement project ($19 million) and the Energy Sector Reform Support project ($3.5 million).”
Ncube underscored the Zimbabwe government’s progress in tackling the economy’s structural and fiscal bottlenecks. He also noted the importance of the private sector.
Women breaking gender barriers in supply chain (Business Daily)
Kenya’s supply chain industry remains predominantly a ‘boys club.’ For most companies, entry-level workers would be equally divided by gender, but the share of women heading supply chain departments drops at every succeeding level. But now there is a remedy. In September 2021, the African Women in Supply Chain Association (Awisca) recognised 100 women in Africa for their exemplary work.
This will become an important platform that will boost the visibility of women in the sector, and amplify their work as they continue to break barriers.
A report by John Lewis Partnership published in 2021 found women are concentrated in the lower cadres of the supply chain with 58 percent in garment and textile industries and 53 percent in tea and flower plantations.
“It is true that we have more women at the middle level in the supply chain, especially in the public service. Women tend to shy away because it becomes noisy as you go up, and are more susceptible to bruising battles as you get into areas where there is likely conflict of interest. This discourages women from going higher up,” Ms Murichu says.
Nigeria lags behind African peers in exports (Businessday)
Nigeria, Africa’s largest economy, is lagging behind its peers on the continent as its struggles to ramp up exports. Its total exports as a percentage of Gross Domestic Product in 2021 was 26 percent, the highest since 2011 when it was 32 percent. As of 2021, the country’s GDP stood at $440.7 billion, according to World Bank data. However, some other African countries, although with smaller GDPs, such as Morocco, Angola, and Ghana, except South Africa, the second biggest economy on the continent, have been able to boost the contribution of exports to their GDP.
Muda Yusuf, CEO of Centre for Promotion of Private Enterprise, said Nigeria’s large economy should be an advantage to the country as its export component should be bigger. “Our export sector is still extremely weak,” he said.
The total trade in 2021 was N39.8 trillion, up 57.6 from N25.2 trillion in 2020. Exports rose by 43.8 percent to N18 trillion in 2021, less than imports, which were N19.5 trillion in 2021, up 70 percent from N11.5 trillion in the previous year, according to the National Bureau of Statistics. This shows that Nigeria recorded a trade deficit of N1.9 trillion in 2021. However, in the first quarter of 2022, Nigeria recorded a trade surplus of N1.2 trillion as exports totalled N7.1 trillion while imports totalled N5.9 trillion. According to Tajudeen Ibrahim, director, research and strategy at Chapel Hill Denham, Nigeria has to develop its power sector and infrastructures to encourage more production of goods that can be exported.
“If we work on power and our road network, it is likely that we gain momentum in terms of exports,” Ibrahim said. “Nigeria has to ensure that finished goods, which are value-added, have to be exported more rather than just raw materials.”
On 8 August 2022, the Government of the Republic of South Sudan officially launched its first development strategy for the fruits and vegetables sector to boost the country’s agricultural gross domestic product (GDP) and create jobs for youth and women.
The International Trade Centre (ITC) has provided technical assistance in designing the strategy as part of its Jobs Creation and Trade Development Project, an EU-funded project focusing on creating quick-win economic and employment opportunities for micro, small and medium-sized enterprises in the fruits and vegetables value chains. The strategy will ultimately foster vibrant, resilient and sustainable food systems, inclusive growth, and job creation.
“This strategy provides a clear market-oriented vision, a framework for collaborative action and pragmatic and realistic recommendations. But it is only the first step: a good strategy is one that gets implemented and generates results,” said Darius Kurek, Senior officer for export strategy at the International Trade Centre.
The global production of fruits and vegetables has increased consistently over the last few years to cater to the growing world demand. In 2020, the worldwide production of fruits was estimated at approximately 887 million tonnes, while the production of vegetables was estimated at approximately 1.14 billion tonnes. With South Sudan’s conductive climatic and soil conditions for fruit and vegetable cultivation, the sector has potential for development, offering market opportunities in the region and globally, especially for women and youth who are forced to move to urban areas in search of jobs.
He made these remarks while delivering a speech during the joint launching of two agricultural projects held recently at Sir Dawda Kairaba Jawara Conference Centre. Organised by Central Project Coordinating Unit (CPCU) under the Ministry of Agriculture, the total for the two projects is valued at US$56 million and is to be implemented within five years across the country.
The duration of the Gambia Inclusive and Resilience Agriculture value chain development project GIRAV is from 2022-2026 and funded by the World Bank at a tune of US$40 million grant while the Global Agriculture and Food Security Programme otherwise known as Global GAFSP receives funding of the Gambia Agriculture and Food Security Project (GAFSP) to the tune of US$16 million with the African Development Bank (AfDB) as the Supervising Entity. The objective of the projects is to support and promote the development of inclusive, resilient, and competitive market oriented agricultural valued chains with specific focus on smallholder farmers and agri-business.
Among the expected results, is to contribute to improved market access, increase sales and competitiveness and also increase productivity and resilience to climate change.
Liberia experienced a strong economic recovery in 2021. Growth is expected to soften to 3.7 percent in 2022, largely due to heightened global uncertainties and commodity price shocks, which are pushing inflation into the double-digits. Liberia ‘s COVID-19 vaccination program has accelerated in recent months, but pandemic-related risks, including a potential outbreak of new variants, remain. The upcoming political cycle with presidential and parliamentary elections, scheduled for September 2023, is another source of uncertainty.
Berbera port is the main overseas trade gateway of the breakaway Republic of Somaliland. The port city is located on the Gulf of Aden – one of the globally most frequented seaways connecting the Indian Ocean and the Mediterranean. Only a few years ago, Berbera port was a dilapidated runway, originally built by the British empire, and then modernised first by the Soviet Union and later the US. The port is the lifeline of Somaliland, which imports most of what it needs, from food to construction material, cars and furniture. Its main export is livestock to the Arabian Peninsula. This picture changed considerably after the Emirates-based Dubai Ports World (DP World), a leading global port operator and logistics giant, took over the port management in 2017. It expanded the quay by 400m, established a new container terminal, designed a free zone, and started to manage the port’s operations.
Lined up alongside the quay are the latest crane models, which have become operational since June 2022. DP World employees practise operating the cranes every day. The hope is that the port will attract 500,000 TEU (unit of cargo capacity) per year, about one third of the capacity of neighbouring Doraleh port in Djibouti. This would allow Somaliland to become a logistical hub on the Gulf of Aden competing with other ports in the region such as Djibouti, Mogadishu and Mombasa.
The cranes are crucial for the speedy handling of cargo required in a modern port. The staff training, however, takes place in a port that is yet to get busy. So far, container ships arrive only infrequently.
Africa’s food import bill has more than tripled, reaching an average of US$40 billion a year. Much of this imported food could be produced locally, creating much-needed jobs and incomes for the nations’ youth and smallholder farmers as well as improving food security on the continent. However, if Africa reversed the trend, the US$40billion that goes out of the continent is said to be able to bridge different gaps within the continent’s agricultural sector.
Trade wars: Farmers in Namibia, Botswana rejoice (Food for Mzansi)
The Southern African Customs Union (SACU) has taken a silent stance on Botswana and Namibia closing its borders to a number of fruits and vegetables imported from South Africa. But while South African farmers are pleading for intervention, farmers across the two borders say it will remove some unfair disadvantages they’ve had to contend with. The two countries, who form part of the SACU umbrella along with South Africa, says their respective bans are to protect local producers and form part of a bigger attempt to become self-sufficient in food security.
In an interview with Food For Mzansi, SACU spokesperson Kungo Mabogo states that the matter can only be addressed by the three countries bilaterally. “SACU only has a position when all SACU member states are involved, and they must form a common opinion. We cannot speak for Botswana, Namibia or South Africa as they are independent governments and have their structures,” he explains.
This comes after Christo van der Rheede, Agri SA’s executive director, appealed to agricultural minister Thoko Didiza and trade, industry and competition minister Ebrahim Patel. Van der Rheede has requested the ministers to intervene and to help ensure compliance with the SACU agreement.
Central banks in the East African Community (EAC) are not achieving the targets the community set on the roadmap for a monetary union in 2024. Without such a monetary union which introduces a single currency, the likelihood of a regional Central Bank Digital Currency (CBDC) that has been discussed in the past is thrown into doubt. In April 2021, the community secretariat indicated that it was consulting on the feasibility of a CBDC as it sought enhancements for the upgrade of the East Africa Payments System (EAPS).
According to a report by the East African publication, the East African Community Monetary Affairs Committee (MAC) has indicated that several challenges exist that could still impede the timely implementation of its common monetary protocol for the 6 countries despite some progress.
Among the major achievements made by the respective central banks include the creation of key institutions of the East African Monetary Union (EAMU), and harmonization of monetary and exchange rate policies
Annual COMESA Women Trade Fair starts in Kampala (New Vision)
Women in business from 21 countries across Africa have joined their counterparts in Uganda to participate in the 3rd Annual COMESA Women Trade Fair that started Wednesday at the Uganda Museum in Kampala. Speaking during the opening ceremony, Connie Kekihembo, the Chief Executive Officer, Uganda Women Entrepreneurs Association Limited (UWEAL) noted that the trade fair and exhibition comes at a time when women like their male counterparts are recovering from the impacts of COVID-19 which ravaged businesses across the country. ”We are glad that this year the trade fair is taking place, of course as you all know we were interrupted by COVID-19 but now we are focusing on the road to recovery. We are offering our women a platform for policy dialogue on strategies to address barriers constraining women and youth entrepreneurs from maximizing opportunities for regional and cross-border trade.’’
The three-day event started with a panel of experts discussing the role of government, civil society and financial institutions in positioning Women SMEs to benefit from the African continent. The trade fair will be officially opened on Thursday by Vice President Jessica Alupo.
‘Optimise $13bn trans-Saharan gas pipeline project’ (New Telegraph)
The Major Oil Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) have urged the Federal Government to optimise the opportunities inherent in the $13 billion trans-Saharan gas pipeline project that could send up to 30 billion cubic metres a year of supplies to Europe.
The Executive Secretary and Chief Executive Officer of MOMAN, Mr Clement Isong and the National President, IPMAN, Alhaji Debo Ahmed, in separate interviews with New Telegraph, said the trans-Saharan gas pipeline project was a welcome development. They added that if maximised, it would transform Nigeria and the international community. According to them, the project will provide an international market for Nigeria’s abundant gas resources and increase the country’s foreign exchange earnings. Nigeria, Algeria and Niger signed a Memorandum of Understanding (MoU) to build a natural gas pipeline across the Sahara Desert.
Sylva recently said the value of Nigeria’s proven gas reserves of about 206.53 trillion cubic feet was over $803.4 trillion and a potential upside of 600TCF of gas, adding that Nigeria has the most extensive gas resource in Africa. Isong described the $13 billion trans-Saharan gas pipeline project as an ambitious project, adding that such was needed to pull Nigeria out of its present economic doldrums.
Russia to Supply Nigeria, Others Major Agricultural Products (Business Post Nigeria)
Russian Agriculture Ministry’s Agroexport Federal Center for Development of Agribusiness Exports in close partnership collaboration with Trust Technologies and the business expert community drew up a concept for the development of exports of major agricultural products (grain, dairy, butter, meat and confectionery products) to promising markets of African countries. The goal of the project is to prepare a practice-oriented model for increasing supplies and enhancing the competitiveness of Russian agricultural goods in the African market.
According to the business concept report, nine African countries have been identified and chosen as target markets for the delivery of agricultural products. These are Angola, Cameroon, Ethiopia, Ghana, Kenya, Mauritius, Nigeria, Tunisia and South Africa.
These countries account for 40% of the continent’s population and one-third of all African imports of agricultural products. According to ITC Trade Map, the total volume of imports of agricultural products in these countries in 2021 amounted to almost $33 billion.
In recent weeks the spotlight has fallen on Africa, with Russia and America choosing to renew ties with the continent via official visits to key states. As part of his second tour of Africa since taking office, US Secretary of State, Antony Blinken, gave a speech to students at the University of Pretoria, South Africa on 8 August, in which he outlined the Biden administration’s foreign policy, declaring that “Africa is the future.” As the world’s youngest continent, with a median age of 20 years and 60 % of the population under the age of 25, Africa has the potential to shape geopolitics and world economics in the decades to come.
For one, it signals major opportunities for economic growth. However, it could point to greater economic challenges and more political uncertainty if key problems such as famine, climate change, and infrastructure problems are not addressed.
With commodities like food and energy resources scarcening in the face of climate change and the Ukraine-Russia conflict, all eyes are turning towards Africa as a possible solution.
Recognising this, Blinken said that America’s strategy is centred around five key aims: To enhance US-Africa trade ties; Halt climate change; Help the region get a handle on COVID-19; Promote democracy Help build more peace and security across the continent
Aside from issues such as global food security, which have been exacerbated by the Russia-Ukraine conflict (Africa imports a large proportion of its staple grains from the region). Many believe that America’s desire to increase trade with the continent may be related to energy (Nigeria is a major oil-producing nation).
China investment supports African supply chain development: report (Capital Business)
The China-Africa Business Council (CABC) released a new report about China’s investments in African countries on Tuesday and said the two sides have made great strides in all-around, multi-level and wide-ranging cooperation over the past 22 years. Senior officials at the Council said Chinese companies have been a positive and productive part of the African market.
This year’s report shows that Chinese companies are committed to investing in the five key drivers of the African supply chain: production, inventory, location, transportation and information. It also gives 12 examples of how Chinese and African firms support African supply chain development.
According to the report, China’s engagement with Africa has risen rapidly in recent decades. China is Africa’s fourth largest investor and has been Africa’s largest trading partner for 13 years.
“Africa is highly dependent on the rest of the world. And in terms of its own supply chain, it’s just not developed enough,” said Hannah Ryders, CEO of Development Reimagined, adding that “we have the African continent free trade area, which came in 2021, which is a great development despite COVID-19.”
“Of course, there is an opportunity for China-Africa trade to continue to grow if there is investments in supply chains,” stressed Hannah.
Experts and scholars said Wednesday that China’s Belt and Road Initiative (BRI) has contributed immensely toward transforming Africa’s developing economies through infrastructure development, unemployment reduction and improved trade, among others. They made the remarks while speaking at a one-day virtual forum, titled “The importance of China’s Belt and Road Initiative to Africa.”
“China is not here to exploit Africa as the western world perceives, because looking at the African infrastructure development side, the BRI is helping Africa to transform itself. China comes with the help Africans need,” said Frederick Golooba Mutebi, a Ugandan independent researcher and analyst.
“China through Belt and Road Initiative has come at the right time when Africa is in critical need of infrastructure development and improved global trade opportunities,” said Mutebi.
Mustafa Hyder Sayed, executive director of the Pakistan-China Institute said: “Through Belt and Road Initiative, roads, railways, bridges, hospitals, schools and airports among others, have been constructed in Africa, which has boosted trade, increased job creation, improved transport services and education and health among African countries,” he added.
Zha Daojiong, professor of international political economy at the School of International Studies and Institute of South-South Cooperation and Development with Peking University, China
“China’s Belt Initiative has provided a platform to low and middle-income economies in Africa to register significant growth in terms of infrastructure development, job creation and improved trading opportunities,” he added.
China locks out Kenya from new debt relief deal (The East African)
The elevation of Kenya to the middle-income status saw China lock the country out of a new list of African nations that will receive a Beijing debt relief this year, under a plan by the world’s second-largest economy to help 17 poor states in the continent saddled with its huge loans forego their repayments.
The deal announced last week will see Beijing forgive 23 matured interest-free loans for 17 unnamed African countries, which are classified as least developed countries.
Beijing made the announcement during the Forum on China-Africa Cooperation that seeks to boost ties between China and its African allies. Chinese Foreign minister Wang Yi said at the forum the debt relief plan “demonstrates China’s commitment to fostering stronger economic ties with the African continent”.
Chinese authorities in Nairobi said Wednesday Kenya was left out of the deal as it is classified as lower-middle income, which the new Beijing scheme does not apply to.
Kenya, which is East Africa’s largest economy, joined the league of the world’s lower middle-income nations in 2014, having crossed the United Nations’ $1,045 gross domestic product (GDP) per capita threshold after rebasing its economy. China, which accounts for about one-third of Kenya’s 2021-22 external debt service costs, is the nation’s biggest foreign creditor after the World Bank.
Kenya faced a deteriorating cash-flow situation, marked by falling revenues, worsening debt service obligations, and the effects of the Covid-19 pandemic. The debt burden has recently been compounded by the economic turmoil unleashed by the war in Ukraine but Kenya has never defaulted on its obligations.
Africa recorded US$4.2 bln surplus in trades with Japan in 2021 (Ecofin Agency)
Trade between Japan and African countries rose by 74% year-on-year in 2021. The feat was achieved thanks notably to border re-openings after Covid-19. With the eighth Tokyo International Conference on African Development just days away, Japan and Africa seek ways to build on this momentum. In 2021, Africa recorded a US$4.2 billion trade surplus in its dealings with Japan. This is the conclusion from the foreign trade statistics published by the Japan External Trade Organization (JETRO).
According to the statistics seen by Ecofin Agency, trades between Japan and Africa reached US$23.5 billion, up by 74% compared with the US$16.5 billion recorded in 2020, at the height of the Covid-19 pandemic. Africa’s exports from Japan reached US$13.9 billion while its imports were estimated at US$9.6 billion.
Although Japan’s trades with Africa have grown tremendously during the period under review, it is still moderate compared with African countries’ trades with countries like China (US$137 billion in H1-2022). To improve its relations with Africa, in the past few years, Japan has taken several initiatives to gain more shares from China, which is currently Africa’s leading trade partner. From August 27 to 28, it will organize the eighth Tokyo International Conference on African Development (TICAD-8), which will bring together African business leaders and decision-makers in Tunisia.
At a time when foreign partners, including Russia, the USA, and the UK, have renewed actions to conquer market shares in Africa, the Japan International Cooperation Agency (JICA) has announced talks with the AfCFTA secretariat to maximize the benefits of this trade agreement.
With its stated purpose to “create a sustainable world together”, Japan on Saturday kicks off its aid conference for Africa, where rival China has invested heavily in recent years. The eighth Tokyo International Conference on African Development (TICAD8) comes against the backdrop of China’s rising influence, cemented on the continent by its “Belt and Road” infrastructure initiative. A “complex” international environment caused by issues including “the situation in Ukraine” surrounds the meeting in Tunisia’s capital, the Japanese foreign ministry said.
With a view to “accelerating Japanese investment in Africa”, the conference will focus on three pillars: economy; society; and peace and stability, according to the official presentation. With more than $130 million already set to be delivered in food aid, Japan will also provide assistance for “rice production and food security” in view of the food crisis worsened by the Ukraine war.
UK-backed Africa Infrastructure Fund plans to raise $500m (Engineering News)
Emerging Africa Infrastructure Fund plans to raise as much as $500 million over the next three years to invest in infrastructure projects on the continent. The EAIF needs the new capital to embark on its next growth phase, said Martijn Proos, director at London- and Johannesburg-listed firm Ninety One, which manages the fund. “We are open to Africa, we are open for business where there are good opportunities,” he said in an interview.
Regional liner trades are being squeezed further with the impact of higher freight rates on consumer prices five times stronger in many less well connected countries. “It is obvious that carriers have continued to shift relatively small vessels from regional trades to East West or big North South services to take advantage of the high freight rates,” Alphaliner stated in its most recent weekly report, returning to a topic that has been covered repeatedly over the past two years.
Jan Hoffmann, head of the trade logistics branch at the United Nations Conference on Trade and Development (UNCTAD), said the shift of tonnage to the bigger tradelanes was hurting smaller and developing countries. Capacity, price and service quality of regional trades is highly dependent on what happens in other trades and jurisdictions. “As capacity is redeployed, small island states and least developed countries are confronted with higher freight rates and lower connectivity,” Hoffman told Splash.
UNCTAD calculations show that the impact of higher freight rates on consumer prices is five times stronger in small island states than the world average. UNCTAD’s simulation shows a 1.6% increase of global consumer prices caused by the higher container freight rates, vis-à-vis an 8.2% increase in small island developing states.
Zakharenko reminded participants that all landlocked developing countries in Eurasia acceded to TIR several decades ago and keep benefiting from cross-border trade and transport facilitation, while improving the resilience of their supply chains and maintaining the required level of security for transport operations. “IRU encourages LLDCs from Africa and South America to ratify and make full use of the existing UN conventions, such as TIR and its digital tools and e-CMR, which have been identified by the UN Secretary General as important instruments to address the challenges and impacts of the pandemic,” Zakharenko added. Key recommendations and outcomes of the conference have been summarised in the Awaza Statement adopted by the delegates.
The battle for fertiliser, a vital commodity for food production, has emerged as one of the by-products of the Russia/Ukraine conflict, leaving states in Europe and elsewhere scrambling for alternative suppliers. Though alternatives exist there is no obvious quick fix. “Gas is a major raw material for fertiliser’s production, and Europe imports almost 40% of the latter from Russia” Jacob Hansen, Director General of Fertilizers Europe, told EURACTIV. Hansen’s association represents mineral fertiliser manufacturers in the EU.
One of the few viable alternatives to Russian fertiliser is Morocco, which already accounts for 40% of Europe’s imports of phosphate. That could increase substantially in the coming months and years. During the first quarter of 2022, Morocco’s state-owned OCP group, the country’s phosphate rock miner and phosphoric acid manufacturer and fertiliser producer, recorded a turnover of €24bn – up by 77% compared to last year, over the same period, OCP officials have indicated that production could increase by 50% over the next four years.