tralac Daily News
South Africa’s economy is ‘almost unfixable’ (BusinessTech)
Despite recent moves to cut red tape – especially for small and medium businesses – analysts and trade experts say the Department of Trade and Industry and Competition (DTIC) is actively ‘kneecapping’ investment in South Africa by trying to force businesses to do things its way. Chief executive of consultancy and advisory group XA Global Trade Advisors, Donald MacKay, told the Sunday Times that the department’s meddling in all aspects of trade and business has effectively deterred investment in the country at an unknown scale, leading to an economy that is “almost unfixable”.
He said that the government wants investment, to boost the economy and create jobs, but refuses to compromise – trying to force businesses into impossible contracts when seeking tariff relief or agreements that would benefit a business.
The government at least seems to be aware of this particular stumbling block at some level, with recent moves from the department cutting back on some of these requirements. The department this week published new regulations for public comment to cut back – or rather, provide exceptions – on restrictions on horizontal and vertical practices for small and medium businesses. This was in response to president Cyril Ramaphosa’s announcements that his administration would cut red tape for certain businesses in sectors that are struggling post-Covid-19. However, the department recently published new proposed regulations seeking to tighten up the country’s scrap metal trade.
Legitimate dealers in scrap metal – which stolen metals are ultimately exported as – would be burdened with more red tape, and the entire industry would suffer as a result. Meanwhile, the European Union has also taken issue with the plans, saying that they do not abide by the World Trade Organisation’s rules.
Over the last three financial years, 139 women-owned enterprises operating in manufacturing, retail and services industries were supported and R1.1 billion was disbursed to fund these businesses. This was said by the Chief Operating Officer of the Industrial Financing unit at the Department of Trade, Industry and Competition (the dtic), Ms Susan Mangole during the Women’s Month Seminar hosted in Sandton.
“The total amount to these women-owned enterprise is R1.1 billion of which 55% was grants and 45% loans through partnership funds, 83 % of these enterprises are located in Gauteng, KwaZulu-Natal and Western Cape. 5 431 jobs were supported through these measures,” said Mangole. According to Mangole, the dtic, through its various sector master plans strives to support women enterprises. She said the support was offered as both financial and non-financial to unlock economic participation of women in the economy.
The launch last Wednesday of a modernised Beitbridge Border Post marked a high point in the Second Republic’s vision of overcoming limitations of geography to make Zimbabwe a land-linked Economy. This goal behoved that we look at improving transport infrastructures, principally those to do with road, rail and air transport, so these talk to each other, and to systems in neighbouring countries. A key component of that thrust involved addressing inefficiencies and bottlenecks at all our ports of entry, with the goal of facilitating movement of people, vehicles, goods and services between borders. The transformation of Beitbridge thus has to be seen in that broad, sub-regional context. What makes Beitbridge’s upgrade especially significant is that it combines sub-regional, national and community objectives.
Zimbabwe, Botswana, Mozambique railway line on cards (Bulawayo24 News)
ZIMBABWE, Botswana and Mozambique are working on plans to establish a railway line to connect the three countries with a gateway to the sea, President Mnangagwa has said. Further, Zimbabwe and Botswana are working round the clock to establish a One-Stop Border Post at Plumtree-Ramokgwebana. This comes as Zimbabwe — under the Second Republic — is pushing to rejoin the Kazungula Bridge across the Zambezi River which will contribute to regional growth through increased traffic along the North-South corridor. The planned development will facilitate trade through reduced transit time for freight and passengers, reduced time-based trade and transport costs as well as improved border management operations arising from a one border facility.
EU double-edged sword for Kenya’s horticulture (Business Daily)
In the last couple of years, Kenya’s exports of major crops have come under threat over increased cases of chemical residues on horticulture produce that has seen Europe impose stricter checks, posing a threat to the country’s foreign earnings.
The European Union (EU) has lowered the requirements on residues to a bare minimum, meaning that any level found on the consignment whether high or low will be treated in the same way.
An increase in the number of exports intercepted not only subjects exporters to losses but also places the country at risk of being banned from shipping its produce to the EU until a corrective measure is taken.
“All the relevant bodies must come together to address the challenge of residues as increased checks on our export produce pose a risk of more products being intercepted and is risky for our exports,” said Kephis managing director Theophilus Mutui.
Trials on flowers are ongoing at the moment but they will be implemented next year. The move poses a major risk, should they be found to have high chemical residues given that flowers are the leading segment in terms of income on horticulture earnings. Flowers alone raked in Sh37 billion in six months to June this year out of the Sh48 billion that the horticulture sector realised in the review period.
Why upward review of agric budget in 2023 is imperative (The Guardian Nigeria)
A dismal 1.7 per cent was allocated to the Agriculture sector in the 2022 annual national budget – a far cry from the 10 per cent benchmark recommended at the Malabo Declaration on Accelerated Agricultural Growth and Transformation for Shared Prosperity and Improved Livelihoods. The declaration was the significant highlight of the 23rd Ordinary Session of the African Union Assembly in Malabo, Equatorial Guinea in 2014. Although the AU Heads of State and Government committed themselves to the declaration, majority of the countries, including Nigeria have failed to implement the deal.
Worried about this development, which has been linked to the increasing food crisis across the country, especially this year, stakeholders in the sector have girded their loins to influence the upward review of the sector’s national budget allocation across the various strata of government.
The Chairman of the Senate Committee on Agriculture, Bima Muhammad Enagi, said despite the challenges facing the sector, agriculture remains the largest contributor to the country’s GDP in the second quarter of 2022 at 23.3 per cent; beyond the contributions of Trade (16.8 per cent), Telecommunication (15 per cent), Manufacturing (8.7 per cent) and the Oil and Gas sector (6.3 per cent).
He said: “The agricultural sector has the largest potential to lead millions of Nigerians out of poverty. Thus, the sector should be given utmost priority in national economic policies and national and sub-national budgets.
Nigeria to pay $496m to settle claims over steel plants (Engineering News)
Nigeria has agreed to pay $496-million to settle a multi-billion dollar claim from Global Steel Holdings Ltd following the termination of a contract to upgrade the country’s steel plants, the presidency said on Saturday. Global Steel, which is linked to India’s Mittal family, had between 2004-7 acquired rights to Nigeria’s entire state steel industry via five major concessions and share purchase contracts. The deal also included access to Nigeria’s iron ore reserves and the central railway network.
Ethiopia and China have a comprehensive strategic partnership, which has been cemented on a principle of win-win and mutual cooperation, a senior Ethiopian government official has said. Ahmed Shide, Ethiopia’s Minister of Finance, recently told Xinhua that the two friendly nations have been working to create a “community of shared destiny” amid establishing a strong relationship between their leaders. “Over the last decade, China and Ethiopia have worked together on many fields wherein China has been availing significant financial support to implement many great projects in Ethiopia like the Addis Ababa-Djibouti Standard Gauge Railway,” Shide said.
Highlighting that China helped Ethiopia carry out many roads, energy, industrial parks and water supply development projects, the finance minister emphasized that the Addis Ababa-Djibouti Standard Gauge Railway, also known as the Ethiopia-Djibouti railway, has served as a testimony of the early harvest of the Belt and Road Initiative.
According to the minister, China has been investing in existing industrial parks and setting up manufacturing plants both for domestic and international markets as more Chinese investors have been playing a visible role in Ethiopia’s economic development.
Mrs Selma Ashipala-Musavyi, the Namibian Ambassador to Ghana, has called on Africans to enhance personal relationships across the Continent to advance the ideals of the African Continental Free Trade Area Agreement (AfCFTA). She said socialising across the continent would help in the appreciation of iridescent culture and build synergy for the development of trade and industry. “For meaningful intra-Africa trade to be sustained and beneficial, Africans must interact and visit one another’s countries. In so doing, we shall embrace one another and build confidence among ourselves,” Mrs Ashipala-Musavyi said. “We shall be exposed to and take pride in our rich and diverse African culture. Most importantly, we shall and begin to consume what we produce, and create jobs for our young people. This should be the content of intra African tourism.”
The East African Community (EAC) Secretary General, Hon (Dr.) Peter Mathuki, is set to lead a delegation comprising the Heads of EAC Organs and Institutions and eminent regional business leaders, to the bloc’s newest Partner State, the Democratic Republic of the Congo (DRC) from 6th September to 9th September, 2022.
The forum will provide a platform for heads of EAC Organs and Institutions to enhance awareness and understanding of the various commitments in the integration pillars and the governing instruments that are in place at the EAC level, to DRC government officials.
On 8th - 9th September, the private sector leaders accompanying the Secretary General will hold Business-to-Business (B2B) meetings with DRC entrepreneurs.
“Since the DRC joined the EAC, the entire bloc now is about 300 million people offering the region a tremendous market, with massive partnership and investment opportunities across sectors such as mining, agriculture, ICT and health. Equity BCDC is here in the DRC to help support finance these activities as a trusted partner to both the East African Business Council (EABC) and the EAC,” he added. The forum will also provide an opportunity for regional business leaders to deliberate on the challenges facing the private sector with the EAC Secretary General.
Somalia bids to join East African Community (Independent)
Just eleven days after the Democratic Republic of Congo ratified the East African Community Treaty on July 11, the bloc’s leaders agreed to fast-track the verification of Somalia’s application to join the community. Sitting on July 22 in Arusha, Tanzania, where the East African Community Secretariat is based, the East African Community Heads of State Summit agreed to fast-track the verification of Somalia’s application which it first sent in 2012. The Summit directed the Council of Ministers to expeditiously carry out the verification exercise in accordance with the EAC procedure for admission of new members into the EAC and report to the 23rd meeting of the Summit. This followed Somalia’s President, Hassan Sheikh Mohamud, formally requesting the Summit consider his country’s application to be the eighth partner state of the East African Community.
Zim moves to remove Comesa trade barriers (The Herald)
ZIMBABWE is one of only four members of Common Market for Eastern and Southern Africa (Comesa) member countries that have received capacity building support aimed at eliminating Non-Tariff Barriers on trade of common goods. This is in line with the requisite regulations of Comesa, a 21-member economic bloc whose population exceeds 583 million, entails a Gross Domestic Product of $805 billion and sees export/import trade in goods worth US$324 billion per year. Comesa forms a major market place for both internal and external trading.
The training follows an earlier decision by the Comesa Council of Ministers to provide technical support to member States to implement national NTBs elimination programmes which are premised on sound national NTBs elimination strategies. Comesa regulations for the elimination of NTBs provide legally constituted tools for reporting, monitoring and addressing NTBs, the institutional arrangements to manage the NTBs elimination process as well as procedures followed to tackle situations that create NTBs.
Africa is a Key Region for Sustainability (Mercados Africanos)
According to Deputy Secretary General of the UN, Amina Mohammed, the international community must change its perception of Africa from a dependent continent to a key region on the global stage, with the same rights and position as other continents. More than 1,2 billion people live in Africa. Approximately 60% of the African population is under 35 years of age. Rapid urbanization in African countries promises new opportunities, including in the field of industrialization on the continent. Amina Mohammed believes the continent can benefit from the Sustainable Development Goals and the 2063 Agenda for Africa moving forward.
The UN representative stressed that, in order to achieve these goals, the international community must jointly reduce the consequences of the numerous crises.
The UN Deputy Chief also spoke about the African Free Trade Area, which contributes to the industrialization, diversification and digitization of the economies of the countries in the region, as well as helping to strengthen regional cooperation.
INDUSTRY and Commerce minister Sekai Nzenza says financial inclusion for farmers is critical in modernising African agriculture. Speaking at the United Nations Industrial Development Organisation (Unido) forum last week, Nzenza said African farmers face difficulties in accessing credit, leading to a lack of investment in agricultural technologies. “Access to credit has a significant effect on the farmer’s decision to adopt modern technologies. Financial inclusion for farmers is critical for modernising African agriculture. In many African countries, farmers face difficulties in accessing credit, leading to lack of investment in new agricultural technologies,” she said.
Zimbabwe is implementing a five-year economic blueprint called the National Development Strategy 1, which prioritises value chains development. Agriculture is the mainstay of the Zimbabwean economy and manufacturing companies source 60% of their raw materials from the sector.
“A targeted strategic intention to ensure the growth of the agricultural sector which contributed 17% towards gross domestic product and accounts for US$302 million in the first half of 2021 through sector specific strategies,” she said. “More specifically, a contribution of the agricultural sector to industry through a robust local content strategy focusing on manufacturing for manufacturers looking at home grown solutions to reduce the import bill.”
Amina Mohammed called on the international community to work on three fronts that would benefit African economies and help achieve the Sustainable Development Goals.
Experts urge new model for Africa’s infrastructure growth (The Guardian Nigeria)
With the global infrastructure shortfall expected to reach $15 trillion by 2040, the World Forum for Africa (WOFA) and other experts have called for improved dialogue towards integration of labeling and certification ahead of infrastructure development in the continent. The experts, who said there is enormous need for infrastructure, noted that the move would boost long-term capital flows for projects and their sustainability. According to them, while public sector funding would continue to be important for infrastructure development, mobilisation of private sector investment will be critical to achieve global infrastructure investment goals effectively and efficiently. Some of these initiatives are FAST-Infra and Blue Dot Network.
Addressing the forum, the convener of WOFA, Abi Haruna, said the need for adequate representation of Africa in the global initiative for labeling and certifications for infrastructure projects cannot be over emphasised. According to him, the essence of the forum was to explore areas of cooperation in establishing an African inclusive labeling and standards for major infrastructure projects on the continent with the aim of de-risking, having sustainable, and environmentally considerate infrastructure.
Pan-African airline plans fly into headwinds (The East African)
The quest to create a pan-African airline through a joint venture between Kenya Airways and South African Airways by June next year is facing early turbulence after both carriers sought exemption from clauses on the competition. Kenya Airways (KQ) last week said it is seeking exemptions from the clauses in Kenya and regional trading blocs, several months after South African Airways (SAA) raised the same plea back home. The move means it will be difficult to implement the Single African Air Transport Market (SAATM) and the Africa Continental Free Trade Area (AfCFTA) initiatives that are key in having a continental airline.
The clauses about competition, among others, include sharing of resources and key information about the sector including hubs. This means KQ would have to seek exemptions from the Competition Authority of Kenya as well as the Common Market for Eastern and Southern Africa Competition Commission.
African countries must chart their unique paths toward achieving a just transition, experts during a session said, to assess the needs, challenges, and opportunities of implementing a just energy transition in Africa at Africa Climate Week. The event, titled The Just Transition in the African Context, was jointly organized by the African Development Bank and the African Climate Foundation. Laura Becerra of Neyen Consulting moderated. Faten Aggad, African Climate Foundation’s Senior Advisor on Climate Diplomacy, said: “Just transition is a process. It may take time to secure consensus among domestic actors and ensure inclusivity.” Speaking on the issue of scale, she said that while leapfrogging was possible at the household level, the transition could take longer for industry and other commercial sectors. There are significant gaps between financing commitments and disbursement in Africa, Aggad added.
Gareth Phillips, African Development Bank Manager for Climate and Environmental Finance, emphasized the need to view just transition from an African perspective and to ensure its relevance for all Africans.
The AfriCaribbean Trade and Investment Forum 2022 (ACTIF2022) successfully concluded in Bridgetown, Barbados, with a commitment by participants to remove the scars of the past and build a commercial bridge towards forging a prosperous future for Africa and the Caribbean. In the communique presented at the end of the Forum, the partners pledged the concrete implementation of strategic partnership between the business communities in Africa and the Caribbean with the objective of fostering bilateral cooperation and engagement in trade, investment, technology transfer, innovation, transport, tourism, culture and other services.
The signing of the Partnership Agreement between Afreximbank and seven Caribbean States will usher in investments to concretise the commercial relations between the two regions, with an immediate focus on establishing an air bridge , and business to business match-making through the newly established African-Caribbean Business Council.
Ambassador Muchanga who was making a statement at the Opening Ceremony of the Africaribbean Trade and Investment Forum held at Bridgetown, Barbados said the African Union would after the event, avail a comprehensive report to the African Union Member States with a strong recommendation for them to become a strategic partner of future editions. Albert Muchanga, African Union Commissioner for Economic Development, Trade, Tourism, Industry and Minerals has hinted that Africa and the Caribbean will strike a strong partnership in trade and investment.
The signing of partnership agreements and Memoranda of Understanding (MoU) by representatives of corporate entities that attended the maiden AfriCaribbean Trade and Investment Forum in Bridgetown, Barbados has raised hope for the integration of the Caribbean into African trade. According to the agreement signed by CBB Governor, Mr. Cleviston Haynes; CBB Business and Finance Strategist, Mr. Ian Colleymore; and the Executive Vice President, Inter-African Trade Bank of Afreximbank, Dr. Kanayo Awani, Afreximbank will work with the CBB to promote its instruments of intervention with public and private enterprises to provide financing (funded and unfunded) to Caribbean entities to grow the volumes of trade and investment.
It’s full steam ahead for China-Africa trade flows (The Star Online)
On Aug 23, a ceremony in Beijing commemorating the arrival of the first batch of avocados from Kenya also served as a launchpad to welcome more African produce into the vast Chinese market. This follows the arrival of some 20 tonnes of fresh Hass avocados from smallholder Kenyan farmers in Shanghai on Aug 2. That same day, the China-Africa Business Council released a report on China’s investments in African countries and said the two sides have made great strides in all-around, multilevel and wide-ranging cooperation over the past 22 years. The report showed that Chinese companies are committed to investing in Africa’s supply chain.
Humphrey Moshi, director of the Centre for Chinese Studies at the University of Dar es Salaam in Tanzania, said China’s rise as one of Africa’s leading trade partners is owed to the fact that China’s investment portfolio in Africa is very diversified, covering a broad range of sectors. “In assessing the feasibility of China’s trade trajectory in Africa, we note that China does not apply the narrow Western assessment criterion of economic viability alone, but a much broader and more comprehensive criterion of socio-economic development,” Moshi said.
TICAD: Survey shows Japanese countries still cautious on Africa (African Business)
The promised explosion of Japanese investment in Africa remains more wish than reality, according to a Japanese government survey shared with delegates at the eighth instalment of the Tokyo International Conference on African Development (TICAD 8) in Tunis last weekend.
The number of Japanese companies in Africa with plans to expand in the continent was up more than 6% on the year before, to 49%.This contrasts with 45% of companies that expect to remain stagnant, and a 4% fall in the number of companies that expect to shrink their African operations, to just 5%. Moreover, almost 50% of surveyed companies report that the importance of Africa to their business has increased over the preceding five years, with 60% expecting that Africa will become even more important over the next five years. Yet while prospects are increasing, the total value of Japanese investment in Africa remains miniscule. Compared to the UK and France, which lead the way with 2021 FDI totalling $65bn and $60bn respectively, the US with $44bn and regional rival China with $43bn, Japanese FDI into Africa has fallen from a high point of $12bn in 2013 to just $5.8bn last year.
2nd Illicit Trade Forum (UNCTAD)
Following the inclusion of illicit trade as the only new area of work in the outcome document of UNCTAD15, the Bridgetown Covenant, UNCTAD will host the second iteration of the Illicit Trade Forum in September 2022. The event will be organised in collaboration with the Transnational Alliance to Combat Illicit Trade (TRACIT).
Illicit trade significantly endangers all aspects of the SDGs, creating a triple threat to the financing of development: crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services and increasing the costs of achieving the SDGs by eroding the progress already made. Further, identifying, quantifying and combatting illicit trade requires significant investments from member States and collaboration amongst international organisations, along with cooperative efforts from private sector stakeholders. To address these issues, the two-day Forum will hold interactive panel discussions on the following topics:
Without giving much away, the Chinese government recently revealed that it will write off 23 matured interest-free loans for 17 Least Developed Countries (LDC) in Africa. The classification rules out Kenya and Tanzania who are lower-middle-income countries as per the World Bank. The World Bank recently confirmed that Uganda is still in the LDC classification as President Museveni appeared to indicate otherwise. “The President was very clear. He never declared Uganda a middle income; it is not his business,” Mr Ramathan Ggoobi, Uganda’s Secretary to the Treasury, said at the Economic Growth Forum in August.
What isn’t in dispute is that Uganda is saddled in debt. Its public debt currently stands at approximately Shs74 trillion ($19.5 billion), with Shs47 trillion ($12.3 billion) of it external. While any debt cancellation will remove a millstone round the country’s neck, past precedents indicate that it will not be a silver bullet.
A recent policy paper by United States Agency for International Development (USAID) and Southern and Eastern Africa Trade Information and Negotiations Institute (Seatini) indicated that Uganda has already exceeded thresholds on the present value of debt-to-revenue and is closer to the thresholds of other indicators except for debt service-to-exports ratio.
Regional authorities in Egypt, the host country of the 2022 UN climate conference (COP27), are ramping up initiatives designed to improve the country’s environmental credentials, and speed up its transition to a low carbon economy. The event will begin on 4 November, in the Egyptian resort city of Sharm El-Sheikh.
Several COP27-related initiatives are underway in Egypt: they include projects related to sustainable transport, waste recycling, women’s health, the transition to clean energy, sustainable cities, adaptation measures in the water and agriculture sector, and the links between peace and climate. Beyond COP27, Egypt is working towards a 2050 national climate strategy, which is based around the reduction of emissions in all sectors, and adaptation to potential changes in the climate – in agriculture, water resources, coastal areas, and health.
The barometer for world food commodity prices declined for the fifth consecutive month in August, as quotations for most benchmark items dropped, according to a new report released today by the Food and Agriculture Organization of the United Nations (FAO). The closely watched FAO Food Price Index averaged 138.0 points in August, down 1.9 percent from July although remaining 7.9 percent above its value a year before. The Index tracks monthly changes in the international prices of a basket of commonly traded food commodities.
FAO also today issued its updated cereal production forecast for 2022, with a significantly lower outlook. Global cereal production is anticipated to decline by 38.9 million tonnes, or 1.4 percent, from the previous year, according to the new Cereal Supply and Demand Brief. World trade in cereals is predicted to decline by 1.9 percent in 2022/2023 (July/June) from the year-earlier period, to 469.6 million tonnes.
G7 Finance Ministers statement on Russia’s war of aggression against Ukraine (GOV.UK)
We, the G7 Finance Ministers, met on 2 September 2022 to discuss our united response to Russia’s war of aggression against Ukraine and the war’s harmful impact on the global economy. We continue to condemn the brutal, unprovoked, unjustifiable and illegal war of aggression against Ukraine by Russia and aided by Belarus. Russia’s war of aggression is causing global economic disruptions and is threatening the security of the global supply of energy and food. The economic costs of the war and consequent price increases are felt disproportionately by vulnerable groups across all economies and particularly by those countries already facing food insecurities and fiscal challenges.
We confirm our joint political intention to finalise and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally – the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the broad coalition of countries adhering to and implementing the price cap. The price cap is specifically designed to reduce Russian revenues and Russia’s ability to fund its war of aggression whilst limiting the impact of Russia´s war on global energy prices, particularly for low and middle-income countries, by only permitting service providers to continue to do business