tralac Daily News
The South African Revenue Service (SARS) today releases trade statistics for July 2022 recording a preliminary trade balance surplus of R24.76 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 31 July 2022) preliminary trade balance surplus of R156.71 billion is a deterioration from the R285.13 billion trade balance surplus for the comparable period in 2021. Exports increased by 24.3% year-on-year whilst imports increased by 41.6% over the same period.
South Africans look abroad as supply chain challenges increase (Engineering News)
Local container shipments for export declined by 17.5% year-on-year during the second quarter of the year as port activity was impacted by international supply chain disruptions, load-shedding and flooding in KwaZulu-Natal, PwC South Africa’s ‘South Africa Economic Outlook’ report for 2022 states. In the eighth edition of the ‘South Africa Economic Outlook’, the firm focused on local companies finding growth opportunities abroad, ranging from exports to direct investment deals.
‘Unfair’ trade bans threaten agriculture jobs in South Africa (Farmer’s Weekly SA)
The lack of action taken to have agricultural import bans imposed by Botswana, and more recently Namibia, lifted is creating a feeling among South African fresh produce farmers that government has failed them. The bans included South African exports of tomatoes, potatoes, beetroot, cabbages and peppers, among other commodities. Christo van der Rheede, executive director of Agri SA, told Farmer’s Weekly that these bans did not stem from any wrongdoing on the part of South African farmers, but rather because these countries wanted to “protect their own local production”, even as they continued to export their produce to South Africa.
As such, the trade bans were in direct violation of the Southern Africa Customs Union Agreement, aimed at facilitating free trade among countries in the region.
The Department of Trade, Industry and Competition (DTIC) provides support to small, medium-sized and microenterprises (SMMEs) in terms of export readiness, export development and export promotion as part of efforts to drive industrialisation, development and competitiveness. The DTIC hosted a webinar on August 30 to brief SMMEs about the support the department provides and the benefits available to companies developing exports, including improving the resilience of enterprises, supporting diversification of markets and products and building competitiveness.
“We have accepted that trade is an important engine of economic growth and development. We are mindful that many regions in the world have been able to lift many people out of poverty through the development of trade and exporting,” said DTIC export development, promotion and outward investments deputy director-general Lerato Mataboge. “In driving industrialisation, it is clear that an exporting economy and export-led growth are needed. Trade and exporting generate jobs and income opportunities, and help to build competitiveness in participating enterprises that have to compete on a global stage,” she said.
Warning over meat prices in South Africa (BusinessTech)
The Bureau for Food and Agricultural Policy (BFAP) has published its food inflation brief for July 2022, highlighting the food items that have recorded the biggest price hikes in South Africa. While food price inflation outstripped headline inflation again in July, the group said that it expects price increases to slow towards the end of the year. However, if measures put in place to curb foot and mouth disease in cattle are extended, meat prices could shoot up, it said.
Kenyan tea farmers and traders should embrace modern technology to boost production, African experts said Monday. Ebrima Sall, the executive director of Trust Africa, said that all stakeholders stand to reap maximum profit from the cash crop once modern technologies are adopted. “It has reached the time that old machinery that has been used for centuries be abandoned to help stakeholders improve efficiency in tea production and be able to supply the market in good time,” Sall said at a forum in Nairobi, the Kenyan capital.
Sall noted that with the adverse effects of climate change, players in the tea value chain must embrace sustainable agricultural systems. He called upon key stakeholders to borrow and implement good practices that have been adopted by tea producers in the Asian continent.
INDUSTRY and Commerce Minister, Dr Sekai Nzenza, has said the African Continental Free Trade Area (AfCFTA) presents huge opportunities for the agro-industrial sector and called on it to ramp up output for that market. In a virtual address on Friday during a United Nations Industrial Development Organisation (UNIDO) Forum on Building Resilient and Sustainable Agro-Industries to enhance Africa’s growth potential, the minister said a strong regional agriculture processing base was critical in transforming the continent. She said Zimbabwe, guided by the National Development Strategy (NDS1), was already forging ahead in building a resilient economy by prioritising value chain development with agriculture given critical focus.
The sector is the mainstay of the country’s economy and provides up to 60 percent of raw materials for the manufacturing sector. In 2021, the agricultural sector contributed 17 percent to the gross domestic product (GDP) and the Government expects the growth of the sector to aid import substitution.
Insecurity, congestion, dredging, others listed as challenges to port investments (The Guardian Nigeria)
Insecurity, infrastructural deficiency, dredging, and congestion have been listed as factors halting seaport investments in Nigeria. This was disclosed in a statement by Welcome2Africa International (W2AI) on the Nigeria Seaports Investment Forum (NSIF2022), which would be held in Lagos on September 28 – 29. In an effort to improve Nigeria’s global trading ecosystem, W2AI, in partnership with Zenith Carex International Limited in the summit, themed “Repositioning Nigeria’s Seaports for Investment and Trade Attractiveness”, would address major bottlenecks like congestion, technological advancement, infrastructural deficiency, dredging, port equipment, security, logistics, and training that represent opportunities for investors at the seaports.
It would also address issues on policy, investment, international trade with Europe, and the African Continental Free Trade Agreement (AfCFTA).
‘Local manufacturing still dominated by food, beverages sector’ (The Guardian Nigeria)
Worried by the dominance of a segment of the productive sector in the economy, the Manufacturers Association of Nigeria (MAN) has emphasised the need for government intervention in other critical subsectors to diversify the country’s manufacturing base. Indeed, the President of the Manufacturers Association of Nigeria (MAN), Mansur Ahmed, while speaking at a forum for the media, charged the government to adopt necessary measures to diversify the manufacturing sector.
Ahmed explained that while the Federal Government was taking measures to diversify the economic base of the country, using the proceeds from oil and gas, additional efforts should also be made to focus on the manufacturing sector to produce what is needed.
“As the government is diversifying from oil and gas to agriculture, the manufacturing sector needs to diversify to produce goods that are required. The government must look at the entire sectors of the economy and also encourage new investments. There is no doubt that the Nigerian manufacturing sector is not producing enough even though we are in a position to do so. Our manufacturing is not positioned to produce for export hence the need for encouragement. So, while we are thinking about diversification, we must do it horizontally and vertically.
“As we go into the Africa Continental Free Trade Area Agreement, it is an opportunity for Nigeria because when you go around Africa as a whole, apart from South Africa, maybe Egypt and Morocco, there is a lack of capacity. Therefore, we need to build the capacity of our manufacturing sector to produce more and improve the quality of our products.”
The Botswana-South Africa freight rail link to be revamped in 24 months (Construction Review)
The Botswana-South Africa freight rail link is to be rehabilitated in the next 24 months in order to enable landlocked Botswana to transport mineral resources to the Ports of Richards Bay and Durban. The 126 kilometer Botswana-South Africa freight rail link rehabilitation project will be carried out by the rail companies of South Africa and Botswana, Transnet Freight Rail and Botswana Rail.
Minister of Transport and Communications, Dorcas Makgato confirmed the reports and said the project is aimed at linking coal deposits in both areas with South African heavy haul lines and also become a gateway to South African ports for the coal market and link Botswana’s mines to the Transnet Freight Rail network. “In order to unlock regional growth, a corridor approach is a must. The proposed link between Mmamabula in Botswana and Lephalale in South Africa would stimulate the economies of Botswana and South Africa,” said Dorcas Makgato.
Despite the hues and cries about Nigeria being an import-dependent economy over the years, and importing goods worth over N20 trillion last year alone, economists say that Nigeria is importing too little compared to its African and Asian peers. Nigeria’s imports were worth N20.84 trillion in 2021, representing an increase of 64% compared to N12.7 trillion recorded in the preceding year, with Nigeria’s Petrol exports being the largest at N3.97 trillion, followed by Durum wheat – N1.29 trillion and used vehicles – N770.13 billion. But imports make up less than 10% of GDP, and Nigeria’s largest import being refined Petroleum (which should reduce significantly once the Dangote Refineries and Port Harcourt refinery renovation come onboard).
According to Wale Smit, Nairametrics Columnist and Financial Analyst, “Nigeria’s import relative to the size of the economy is not large, relative to our export earnings which we need to finance those imports is not enough.” Olumide Adesina, Financial Market analyst at Quantum Economics said, “The major challenge is that the biggest economy in Africa lacks significant purchasing power for large imports and production potential to increase exports.
While it is evident that the recent government and central bank reshuffle will lead to profound changes in the economy and in government policies, it would be premature to commit to their sound and effective implementation. Egypt has never been short of plans and strategies, but they have often ended up hitting the wall of implementation.
The state has set specific objectives and clear indicators for the next three years and is hastening to implement them. These goals include doubling the role of the productive activities of the private sector, planning for a boom in exports to reach $100 billion a year by 2025, and increasing foreign direct investment (FDI) to $40 billion. These three objectives, closely interrelated, require a series of difficult and interdependent measures that will represent challenges to their achievement.
The European Union is planning a five-fold increase in financial support to an African military mission in Mozambique, an internal EU document shows, as Islamist attacks threaten gas projects meant to reduce the EU’s reliance on Russian energy. The energy squeeze due to the Ukraine war has added impetus to Europe’s scramble for gas off Mozambique’s northern coast, where Western oil firms are planning to build a massive liquefied natural gas (LNG) terminal.
Mozambique has been grappling with militants linked to the Islamic State in its northernmost gas-rich province of Cabo Delgado since 2017, near LNG projects worth billions of dollars.
A southern African military mission and a separate intervention by troops from Rwanda have between them managed to contain the militants’ spread since being deployed last year. But “the situation remains very volatile and smaller-scale violent attacks have continued in various districts,” the EU document dated Aug. 10 said.
The paper prepared by the European External Action Service (EEAS), the EU’s de facto foreign ministry, recommends 15 million euros ($15.3 million) of EU funding to 2024 for the mission of the Southern African Development Community’s (SADC), a bloc of 16 African nations of which half a dozen sent troops to Mozambique.
Export Trading Companies (ETCs), when established in Africa, are expected to assist in ameliorating the varied issues that make exports from this region uncompetitive. Speaking on Eye on Port, some trade experts believe the establishment of ETCs will provide solutions to major supply chain issues that make trade expensive. “ETCs will be expected to focus on the export of diverse, non-traditional value added goods and services to many markets. ETCs engage in other ancillary functions, warehousing, local transportation, shipping, insurance and consciously engage SMEs and other suppliers in the production and manufacturing value chain. They will provide much needed support to these value chain producers in terms of production know-how, risk management and many more. Due to the fact that ETCs by design are large institutions, they will be able to leverage on economies of scale to reduce impact of high transactional cost thus increasing competitiveness,” Kayode Sufiano, an ETC Specialist and Organizational Strategist from Nigeria averred.
Dr. Olufemi Adebiyi, an SME Specialist and Organizational strategist, also from Nigeria stated that the domination of trade landscape by primary commodities and aggregate level of output remains why Africa’s contribution to global trade is low. He said the promotion of manufactured goods and stimulation of production will be the contribution of ETCs.
On 25th and 26th July 2022, the AfCFTA Council of Ministers met in Accra, Ghana for the 9th Meeting of the AfCFTA Council of Ministers responsible for trade. During this meeting, the AfCFTA Secretariat reported major strides towards making trade under the AfCFTA fully operational. The key highlights of the meeting included: The AfCFTA Rules of Origin Manual was drafted in accordance with Article 42 of Annex 2 of the Protocol on Trade in Goods; The AfCFTA e-Tariff Book was introduced as part of the AfCFTA Secretariat’s digitalisation and trade facilitation efforts; The AfCFTA Initiative on Guided Trade aims to gather countries among the 29 that have already submitted their tariff schedules to commence trading with the direction of the Secretariat.
Dr Mmatlou Kalaba’s IFPA Cape Town conference presentation on the as yet little-understood Africa-wide free trade system, drew much interest coming as it did in the same week that Botswana’s closure of its borders to South African vegetables (a practice also followed by fellow Southern African Customs Union member Namibia to protect its domestic industry) made national headlines.
The mostly South African delegates know the intra-African trading environment well, as one conference-goer and apple exporter shared during Dr Kalaba’s presentation. Apples will be amongst the top fresh produce from SA to benefit early or upon entry into force, Dr Kalaba said, because South Africa already has a presence in most markets on the continent, including those maintaining high tariffs.
“Our exports into Africa could have doubled but instead we’re decreasing our exposure in Africa due to currency: we cannot get access to enough Euros and US Dollars from central banks,” the exporter maintained. Dr Kalaba agreed on the difficulties of the different monetary systems on the continent, a matter on the mind of the AfCFTA Secretariat too, he noted.
Speaking at the 8th Tokyo International Conference on African Development (TICAD) in Tunis, DG Okonjo-Iweala noted that Africa is a large, growing and — thanks to the African Continental Free Trade Area (AfCFTA) — increasingly integrated market of 1.4 billion consumers and entrepreneurs. However, the COVID-19 pandemic has set Africa back several decades on poverty reduction, education, and job creation and brought back familiar problems related to debt distress, she said.
DG Okonjo-Iweala urged global solidarity with Africa in the form of financial support and debt restructuring but also by encouraging investment and improving trading conditions, including through free trade agreements and special and differential treatment.
Africa received its highest proportion of private sector investment in infrastructure in 2020, sending an important signal to governments and investors. African Development Bank Vice President for the Private Sector, Infrastructure and Industrialization, Solomon Quaynor, underlined this point during a webinar organized by the African Development Bank and the Japan International Cooperation Agency (JICA) on 24 August.
Quaynor said the greater private sector investment came as most African governments contended with the Covid-19 pandemic, limited fiscal space and high debt-to-GDP ratios. “Private sector investment into Africa’s infrastructure rose to $19 billion in 2020, representing 23%, the highest since 2016. This counter-cyclical role played by the private sector shows the importance of its growing role in infrastructure financing in Africa,” he said in remarks at the close of the webinar, themed Private Sector Infrastructure Development Opportunities in Africa.
The Japanese government and African Development Bank have signed a USD 5 billion financial cooperation agreement to support Africa’s private sector. The agreement, announced on 28 August during the Eighth Tokyo International Conference on African Development (TICAD8) in Tunis, forms part of the fifth phase of the Enhanced Private Sector Assistance for Africa (EPSA) initiative, developed by Japan and the bank, between 2023 to 2025 (EPSA 5).
EPSA 5 will concentrate on the three areas of electricity, connectivity and health, further recognising the significance of food security by adding agriculture and nutrition as a fourth priority area for Africa.
The Conference of Heads of State during the 60th Summit held in December 2021 approved the ECOWAS Regional Infrastructure Master Plan. The Master plan is for the timeframe 2020-2045 and comprises 201 regional projects at an estimated cost of 131 billion USD.
Consequently, the ECOWAS Commission organized a sensitization workshop from 29th – 30th August, 2022 in Accra, Ghana to present the Master plan to the Ministries in charge of Transport from ECOWAS Member States as well as Development Partners such as ECOWAS Bank for Investment and Development and Spanish Co-operation for International Development (AECID) to reflect on resource mobilization, coordination and implementation of the Masterplan, in particular, in the transport sector.
From August 25 to 26, 2022, the 5th Forum on China-Africa Media Cooperation was held in Beijing, China, in a combined online/offline mode. This year marks the 10 anniversary of the Forum on China-Africa Media Cooperation. In deep appreciation to look back upon the fruitful results, both sides have achieved over the past decade. Government departments of both sides have established regular effective communication channels to enhance understanding of each other’s policies and ideas.
The media on both sides have been upholding the spirit of friendly cooperation and working continuously to safeguard fairness and justice, telling stories about China-Africa cooperation in the new era and shouldering responsibilities to advance global development, promote common values of mankind and actively create an international public opinion atmosphere of cohesive development and cooperation.
Chinese and African media will also promote innovation convergence and deepen cooperation in areas of digital technology and digital economy to strengthen exchanges, share opportunities, and improve digital governance capabilities.
China’s strengthening economic recovery is an important development as the world struggles to emerge from the economic hardships caused by rising prices, eroding food supplies, and uncertainty amid the Ukraine crisis, a leading Italian global business and management expert has said. The impact of China on the world’s economy is of the utmost importance and should absolutely not be underestimated, “especially for economies like those in Italy and Germany, which are major exporters,” he said, adding “it’s the same for Europe in general.” The latest news from China has been positive. The NBS said that China’s economy in July “sustained the momentum of recovery” despite the “increasingly complicated and challenging international environment as well as frequent and sporadic domestic outbreaks of Covid-19.”
As fossil fuel subsidies are expected to swell following rapidly rising energy prices, IISD offers a background note on the rationale and international initiatives for reforming fossil fuel subsidies. In addition to providing an overview of the environmental and trade effects of fossil fuel subsidies, it also examines international pledges and steps already taken by governments aiming to rationalize and reduce such support, including through the initiatives that take place through the G7, G20, Asia-Pacific Economic Cooperation, United Nations Framework Convention on Climate Change, and the new trade and environment initiatives at the World Trade Organization.