tralac Daily News
Trade Statistics for August 2022: South Africa records surplus of R7.18 billion (South African Revenue Service)
The South African Revenue Service (SARS) has released trade statistics for August 2022 recording a preliminary trade balance surplus of R7.18 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN). The year-to-date (01 January to 31 August 2022) preliminary trade balance surplus of R163.36 billion is a deterioration from the R325.06 billion trade balance surplus for the comparable period in 2021. Exports increased by 11.9% year-on-year whilst imports increased by 44.9% over the same period.
The R7.18 billion preliminary trade balance surplus for August 2022 is attributable to exports of R175.37 billion and imports of R168.19 billion. Exports decreased by R1.83 billion (1.0%) between July and August 2022 and imports increased by R15.80 billion (10.4%) over the same period.
SA hosts women economic assembly (SAnews)
The second Women Economic Assembly (WECONA) is expected to bring together the private sector, including businesswomen, government and civil society to transform the economic landscape in South Africa. WECONA, which is held for the second time this year, will take place in Pretoria on 5 and 6 October 2022.
The assembly will be held under the theme, ‘Unlocking gender-responsive value chains for a resilient economy’, with a focus on showcasing how the public and private sectors have implemented their commitment towards gender transformation in industry value chains.
The theme of WECONA 2022 talks to South Africa’s economic recovery, which is at risk of becoming a futile exercise if women are deliberately excluded from participating in value chains in various sectors.
Namibia’s domestic debt increases to 68.2 percent (News Ghana)
Namibia’s debt stock rose over the year to the end of June 2022 where the total as a percentage of GDP stood at 68.2 percent, accounting for a yearly increase of 0.4 percentage points, the Bank of Namibia said Friday. In a statement in the bank’s September quarterly bulletin, Strategic Communications and International Relations Director Kazembire Zemburuka said the yearly increase was driven by a rise in the issuance of both Treasury Bills (TBs) and Internal Registered Stock (IRS).
Namibia’s total debt as a percentage of gross domestic debt (GDP) breached the Southern African Development Community (SADC) benchmark of 60 percent in 2021 where at the end of June 2021, this figure stood at 63.2 percent.
He said the stock of international reserves rose to a level of 2.56 billion U. S. dollars at the end of the second quarter of 2022, equivalent to 5.1 months of import cover, mainly due to inflows over the past year in the form of an IMF Special Drawing Rights allocation, asset swaps, and revaluation gains. The level of foreign reserves further increased to 2.6 billion U. S. dollars at the end of August 2022, partly due to revenue and revaluation gains of the Southern African Customs Union (SACU).
The Zimbabwe government will pay wheat farmers in U.S. dollars to preserve value of their earnings, according to Minister of Lands, Agriculture, Fisheries, Water and Rural Development, Dr. Anxious Masuka. Dr. Masuka’s announcement comes two weeks after it emerged that the country projects to harvest 380,000 tonnes of wheat in the ongoing harvest season, which would be the first time ever the country’s production of the cereal exceeds demand. “The wheat flour producer price is US$620 per tonne for ordinary wheat, which gives the farmer a 15 percent return on investment and the flour producer price is US$682 per tonne for premium grade wheat,” The Herald newspaper quotes Dr. Masuka.
The Zimbabwe government has been seeking ways of plugging the holes left by a disruption in food imports, partly caused by the ongoing conflict in Ukraine.
Zimbabwe: Sanctions increase cost of doing business (The Herald)
ILLEGAL sanctions imposed on Zimbabwe by the West hamper the free movement of funds across international borders, and therefore can raise the cost of doing business, or at least make investors worry about the cost, businesspeople have said. Zimbabwe has been grappling with sanctions imposed by the West in 2001 in retaliation for the land reform programme that sought to correct colonial land ownership imbalances.
The country would have moved forward faster without these financial sanctions and been able to have access to multilateral finance while the private sector would have had access to more banking finance.
In an interview, Zimbabwe National Chamber of Commerce chief executive Mr Takunda Mugaga said sanctions affect investor appetite as some of them fear an extra cost of doing business. “They (sanctions) increase both perception and country risk, which in turn raises cost of credit as well as demand for cash business, with credit sales being frozen, movement of funds by business across the borders is also difficult than ever before. “For a business to transact with an international bank, it is difficult if not impossible and in the process, increasing the cost of doing business,” said Mr Mugaga, who is an economist.
Euro zone cuts spend on Kenya flowers as inflation bites (Business Daily)
Consumers in Europe have cut spending on Kenyan flowers amid a cost of living spike in the western world that has forced households to drop essential purchases such as food and drinks, threatening thousands of jobs locally. Inflation in the Eurozone — a group of 19 countries which use the euro as a common currency — rose to a fresh record of 10 percent in September from 9.2 percent in the prior month.
The decline in exports is a blow to Kenya as the industry faces the sharpest earnings fall in a decade. Horticulture is a major source of foreign exchange for Kenya alongside tea, tourism and remittances and the industry employs over 150,000 workers.
“We were optimistic at the beginning of the year and we were looking at full recovery in 2022 because we had seen good signs in 2021 in terms of sales,” KFC chief executive Clement Tulezi told the Business Daily. “But when the Russian war came, we were subjected to high prices of fuel and other inputs coupled with inflation in Europe and weakening of the currency we use for international trade.”
Europe is the largest market for Kenya’s fresh farm produce, accounting for 70 percent of the country’s cut flower exports.
Rwandan exporters incur losses as euro, pound dip (The New Times)
Rwandans exporting products to European countries are incurring losses as a result of the declining value of the euro and the British pound (£), The New Times has learnt.
“The crashing of UK [pound] and euro against a dollar and local currency has negatively affected the contracts previously established by exporters in the business,” Robert Rukundo, Managing Director of Almond Green Farm Ltd, a local horticulture export company, told The New Times. “This comes at a time when we have issues of high freight charges and high fuel cost that has also increased cost of operations,” added Rukundo, who is also the Chairman of Horticulture Exporters Association of Rwanda.
The Transport Minister, Mu’azu Jaji Sambo, has said that a greener and sustainable maritime industry is achievable through partnership and a determination to achieve synergy in the formulation and implementation of a roadmap for the maritime sector in Nigeria.
The Minister who made this known in Lagos at the 2022 World Maritime Day Celebration with the theme “New Technologies for Greener Shipping” stated that as the world transits to higher levels of artificial intelligence and green technology, the need for a new technology to drive the maritime sector has not only become necessary but imperative as nation. “As a country, we must not lose out on the future race which will require a workforce of new skills and competencies of maritime institutions particularly the Maritime Academy of Nigeria, Oron and the Nigeria Institute of ⁿTransport Technology to begin to recalibrate the curricular to address this requirements of the future.
“New Technologies for Greener Shipping” Sambo, said “Comes with the responsibility of training and retraining our workforce in order to prepare them for the inevitable innovation and transformation of the future that will certainly impact on jobs and skills”.
Ships offload N4.87trn cargoes at Lagos, Tincan, Onne ports (New Telegraph)
An average of 1,000 ships with 30 million tonnes of goods offloaded N4.87trillion cargoes at Lagos, Tincan Island and Onne ports in the first three months of year 2022. Most of the imports, which came from China, Netherlands, Belgium and United States include motorcycles and cycles fitted with auxiliary motor, petrol fuel, capacity, used vehicles with diesel or semi-diesel engines, of cylinder capacity, and machines among others. Of the N4.87 trillion cargoes, Lagos Port handled ₦3.59 trillion of the total imports as Onne Port accounted for goods valued at ₦865.93 billion or 14.67per cent, while Lagos Free trade zone recorded ₦416.99billion or 7.07per cent of total imports.
Also within the period, Foreign Trade Statistics (FTS) that showed that N1.51trillion of the cargoes were from China, noting that ships ferried N618.7billion from Netherlands, while cargoes from Belgium and United States were N563billion and N337,3billion respectively. The exports goods accounted for 92.28per cent of total exports in all the ports in the period.
Nigeria-China bilateral trade hits $12bn – Envoy (Businessday)
Chinese Ambassador to Nigeria, Cui Jianchun says that the China-Nigeria trade volume has recorded a great rise of 7.1 per cent in the past one year to hit $12billion. Cui made this known in Abuja during the Nigeria-China Cultural week, one of the activities lined up to commemorate the 2022 National day celebration of Nigeria and China. He said that Nigeria has continued to be China’s number one trading partner in Africa as he strongly urged Nigeria to produce more commodities to be exported to China to ensure balance of trade.
The envoy also expressed optimism of a bigger economic boom in Nigeria with the ongoing projects like the Lekki deep sea port, Zungeru Hydroelectric Power projects, Dangote refineries amongst others set to be commissioned in 2023.
“Trade really is important not only to improve the quality of life, it is very important for the country’s economy. Trade is very important for development. “So we are encouraging more businesses in Nigeria to produce a lot of commodities to export to Chinese market and China are the number one consumer market.
DRC rare earth minerals to accelerate economic growth (The Exchange)
The Democratic Republic of the Congo (DRC) joined the East African Community (EAC) in March 2022 in a development that has been largely feted as positive. This decision was reached by the heads of state of the other member countries. The BBC in a report that covered the development said that although the country had officially become a member of the regional bloc, not much would change right away. This is because at that time in March 2022 Congolese lawmakers still had to ratify the decision.
DRC’s motivation for joining the bloc was and remains to improve trade and political ties with its neighbours that constitute the bloc.
Since the advent of the transition to net zero rare earths, minerals like lithium and cobalt have become en-vogue. These minerals are part of what are collectively known as critical minerals. They have earned this moniker because of their importance in helping the world transition to clean renewable energy and the departure from fossil fuels. The DRC has vast deposits of rare earth minerals whose applications are just as vast.
The Council adds in article they published titled, “Why Cobalt Mining in the DRC Needs Urgent Attention”, demand for cobalt will increase fourfold by 2030 because of the electric vehicle boom. More than 70% of the world’s cobalt is produced in the DRC through methods that can be best described as artisanal. This means that there is scope for more meaningful minerals development of the cobalt mining industry in the DRC.
Afreximbank Trade Payment Services (AfPAY) launched (Afreximbank)
African Export-Import Bank (Afreximbank) is delighted to announce the commercial launch of Afreximbank Trade Payment Services – or “AfPAY” – an intervention designed to facilitate the settlement of international trade on open account terms on behalf of identified African financial institutions and their clients. Afreximbank developed the product specifically to address the banking challenges confronting African economies due to the withdrawal of many international banks from the continent – exits attributable to stringent regulatory and compliance requirements as well as costs.
AfPAY, which has been in a pilot phase for over a year now, currently facilitates over half a billion dollars in monthly payments across our member states. Notably, Zimbabwe has participated actively in the pilot, with twenty of its financial institutions using the solution. Mr Denys Denya, Executive Vice President, Finance & Administration, Afreximbank, commented: “African banks have, for at least a generation, been dogged by the limited access to dependable banking partners willing to support their cross-border trade transactions. We are pleased to introduce into the market a product which transforms this dynamic, which we believe will accelerate cross-border trade on this continent, connecting Africa with an international financial eco-system that will accelerate its development and economic growth.”
Key to unlocking Africa’s potential (Monitor)
Africa is on the cusp of an economic transformation. By 2050, consumer and business spending on the continent is expected to reach roughly $16.1 trillion. The coming boom offers tremendous opportunities for global businesses – especially US companies looking for new markets. But unless African policymakers remove existing barriers to regional trade and investment, the continent’s economy will struggle to reach its true potential.
Two major trade agreements – the African Growth and Opportunity Act (Agoa) and the African Continental Free Trade Area (AfCFTA) – will make it easier for African countries to trade with one another, and with the United States. Together, the agreements promise to remove longstanding impediments to industrialisation.
Value creation is critical to Africa’s economic transformation. In 2014, manufactured goods accounted for about 41.9 percent of the trade between African countries, compared to 14.8 percent of their exports to the rest of the world. Greater regional integration will provide Africa with a larger supply market, which will accelerate manufacturing specialisation and make African producers more competitive globally. More robust manufacturing industries will provide jobs for low-skilled workers – particularly those not currently integrated into the formal economy.
The real game changer is the AfCFTA. By removing tariffs for a wide range of products across the continent, it will lower production costs and shift foreign direct investment toward manufactured goods, while also reducing transit costs and shortening supply chains – major benefits in a globalised economy.
Uganda in fresh bid to ease the doing of business in EAC (Capital FM Kenya)
Uganda is lobbying for increased efforts to make doing business within the East African Community region easier. The country, in particular, will advocate for the harmonization of non-tariff barriers within the region in order to facilitate trade between the six-country block. Non-tariff barriers, among other things, impede free movement of goods and services within the region and have been blamed for the slow realization of the EAC dream.
Uganda, a landlocked country, is in the process of establishing Special Economic Zones (SEZs), and Ugandan Members of Parliament and senior government representatives have been touring Kenya to learn best practices in SEZ operationalization and to lobby for friendlier terms of doing business.
External investors looking for merger and acquisition deals in East Africa are facing challenges when conducting due diligence and valuing potential targets due to low-quality financial data, potentially costing the region valuable foreign direct investment inflows. Advisory firm Deloitte says in a macroeconomic outlook publication that underdeveloped target companies — in terms of revenue and profitability—are also forcing investors into a narrow band of sectors such as energy, fast-moving consumer goods and financial services, and leaving other small businesses facing a capital drought.
“Key challenges experienced in due diligence comprise tight deadlines, inadequacy in the skills in the finance function and low quality of financial information. Inadequate due diligence presents the risk of mis-assessment of the going concern of the target, resulting in an uninformed merger or acquisition,” said Deloitte in its East Africa Macroeconomic Outlook report.
“Although the East African region through the economic bloc EAC has been trying to implement a harmonised approach to regulation of M&A through the EAC competition regulations of 2010, the countries have yet to fully implement the regulation. This poses a challenge, particularly to cross-border deals,” said Deloitte.
Erratic weather, global crises push cost of food to record high levels (The East African)
Governments in East and Horn of Africa have rolled out food aid programmes to communities hit hard by inconsistent weather patterns and global crises that have pushed food costs beyond the reach of many. This week, Kenya launched a relief food programme for communities trapped in a cycle of four failed agriculture seasons, and Uganda had already been distributing relief food to people in Karamoja regions.
UN Office for the Co-ordination of Humanitarian Affairs (Ocha) is predicting the likelihood of a fifth failed crop season. Uganda, which has generally enjoyed above average food production from its arable fertile soils, having two harvest seasons annually, is now increasingly facing food challenges due to less erratic and less predictable rains and unprecedented prolonged dry spells.
The Horn of Africa, including parts of Kenya, is facing the worst drought with at least 20 million people in immediate need of food. This includes Somalia, Ethiopia, Sudan, Uganda and South Sudan, and Djibouti and Eritrea
As countries struggle to get cheaper grain from traditional sources like Russia and Ukraine, world prices and growing world demand is making the situation harder in the region.
Food, fuel price rise hands EA tough inflation lessons (Business Daily)
In mid-June, as Kenya battled maize scarcity and related production costs, the Tanzanian government asked its grain traders to get an export permit before shipping maize out. Though an unpopular decision, as it cut supplies to Kenyan grain millers and other East African countries who had ordered stocks from Tanzania, the policy helped Tanzania to keep inflation in check, exposing the rest of the region to expensive food.
Even before the dust settled, towards the end of June, Tanzania increased the export permit costs by 93 percent. In this directive, Dar es Salaam authorities increased the cost of acquiring export permits from the previous Sh27,000 per truck to Sh52,000. This meant that Tanzanian traders had to increase prices of their commodities, a scenario that discouraged export trade.
Kenya posted a 62-month high of 8.5 percent inflation in August, which rose to 9.2 percent in September, as the region races to double-digit inflation rates driven by runaway costs of consumer products, including cooking gas, fuel, food and cooking oil.
During the month, Kenyans experienced the sharpest rise in the cost of living recorded in more than five years, with the crisis largely hitting the energy, food, housing and transport sectors amid a weakening shilling.
Economies in the region have been on a steady decline owing to, among other factors, political instability, rainfall shortage that has resulted in reduced agricultural yields, and the aftermath of Covid-19.
Africa’s first verifiable emissions reduction platform, which uses a public decentralized ledger to track emission reductions, will start trading its first tokens this quarter. The platform, known as CYNK, will use the Hedera Hashgraph ledger, and trade tokens generated by Tamuwa, Kenya’s largest biomass company. It is also in talks to trade emissions reductions credits from a company that plans to practice regenerative agriculture on 50,000 hectares (123,550 acres) of land in the East African country and a blue carbon project. Regenerative agriculture refers to farming practices that help store carbon while blue carbon is stored by ocean and coastal systems that would otherwise be released into the atmosphere.
Food insecurity has been rising since 2018. Even before Russia’s invasion of Ukraine, the increasing frequency and severity of climate shocks, regional conflicts and the pandemic were all taking their toll, disrupting food production and distribution, and driving up the cost of feeding people and families. The situation took an even more dramatic turn with the war in Ukraine. This pushed the prices of food and fertilizers higher still—hurting importers and prompting several countries to impose export restrictions.
The impact of the food shock is felt everywhere. The suffering is worst in 48 countries, many highly dependent on imports from Ukraine and Russia—mostly low-income countries. Of those, about half are especially vulnerable due to severe economic challenges, weak institutions, and fragility.
“For some time now, the combination of climate shocks, the pandemic and regional conflicts has disrupted food production and distribution, driving up the cost of feeding people and families. Russia’s war in Ukraine has pushed the price of food and fertilizers even higher—hurting food importers and some exporters. As a result, a food crisis is spreading around the globe with a record 345 million people whose lives and livelihoods are in immediate danger from acute food insecurity.
“The IMF, working with partner institutions, is actively contributing to the international response to food insecurity, notably by providing policy advice and financial assistance. The newly established Food Shock Window will provide an additional line of defense after grants and concessional financing.
The Director-General noted that more than a third of the world’s 1.8 billion young people live in fragile and conflict-affected states, where opportunities for education and jobs are extremely limited. She stressed that trade can play an important role in breaking the vicious circles of poverty, frustration and conflict in these countries and in increasing opportunities for young people. DG Okonjo-Iweala added: “Poor countries that depend heavily on exports of primary commodities are typically at higher risk of conflict. … To the extent we are able to make trade an instrument to drive growth and diversification, we would be giving peace a better chance.”
How shipping can contribute to a more sustainable future (Modern Diplomacy)
Tiny internet-connected electronic devices are becoming ubiquitous. The so-called Internet of Things (IoT) allows our smart gadgets in the home and wearable technologies like our smart watches to communicate and operate together. IoT devices are increasingly used across all sorts of industries to drive interconnectivity and smart automation as part of the ‘fourth industrial revolution’.
The fourth industrial revolution builds on already widespread digital technology such as connected devices, artificial intelligence, robotics and 3D printing. It is expected to be a significant factor in revolutionising society, the economy and culture. These small, autonomous, interconnected and often wireless devices are already playing a key role in our everyday lives by helping to make us more resource and energy-efficient, organised, safe, secure and healthy.
There is a key challenge, however – how to power these tiny devices. The obvious answer is “batteries”. But it is not quite that simple.
Closing the digital divide to facilitate equitable connectivity, which is vital to support the economic transformation of Ghana, is our primary objective. We are of the opinion that we can transform Covid19 from a global crisis to an opportunity through digital technology.
Our Government has also introduced initiatives to narrow the digital divide and empower citizens to embrace the use of ICT. We are implementing a Rural Telephony project to connect over 3 million people. These previously unconnected people now have equal access to the innovations introduced by the Government in Ghana’s digital transformation journey. They include:a) mobile money interoperability which has brought over 15 million previously unbanked persons onto the financial digital platform; b) The National Identity Card as a single purpose e ID for all digital transactions to prevent identity theft and cyber fraud.c) Digital skills development offered through a nationwide network of Digital Transformation Centres to benefit over 20,000 Women Entrepreneurs, Master Trainers, Youth and Children in Coding Clubs over the past 12 months.d) focused interventions to reduce the gender digital divide and create opportunities for the youth through the Girls in ICT program and nurturing of new businesses at Digital Incubation Centres.
The developing world is facing an extremely challenging near-term outlook shaped by sharply higher food, fertilizer, and energy prices, rising interest rates and credit spreads, currency depreciation, and capital outflows. Under current policies, global energy production may take years to diversify away from Russia, prolonging the stagflation risk discussed in the World Bank’s Global Economic Prospects report from June 2022.These shockwaves have hit development at a time when many developing countries are also struggling in other areas: governance and rule of law; debt sustainability; climate adaptation and mitigation; and limited fiscal budgets to counteract the severe reversals in development from the COVID-19 pandemic, including in health and education.
Facing these overlapping crises, a pressing danger for the developing world is that the sharp slowdown in global growth deepens into a global recession, as the World Bank discussed in a September report. Global GDP per capita in 2021 barely exceeded its pre-pandemic level, but many developing countries have not reached their pre-pandemic per capita income levels. The U.S. has experienced contractions in GDP in the first two quarters of 2022. The sharp decline in asset prices worldwide has consequences for weakened corporate and pension balance sheets and could dampen new investment. China’s economy has slowed sharply due to COVID-19-related lockdowns, pushing the World Bank’s 2022 forecast for China down to 2.8% from 5% in April. Europe is confronting the sudden spike in energy prices caused by Russia’s invasion of Ukraine and market rigidities. The weakness of the euro and high inflation increase the likelihood of a European recession and further constrain the eurozone’s longer-term growth outlook.
Looking beyond this sharp cyclical downturn, developing countries face the risk that these trends in advanced economies –inflation, slow growth, lower productivity, the drain on global energy supplies, and higher interest rates – persist beyond 2023. If current fiscal and monetary policies become the new “normal,” it implies heavy absorption of global capital by advanced governments, prolonging the under-investment in developing countries and hampering future growth.
Embedding Development in WTO Plurilateralism: A Commonwealth Developing Country Perspective (Commonwealth iLibrary)
Trade is widely accepted as an essential tool for economic growth and sustainable development, and has helped lift millions of people out of poverty (World Bank, 2018). It can also reduce the marginalisation of developing countries in the global economy, especially that of least developed countries (LDCs), small vulnerable economies (SVEs) and countries in sub-Saharan Africa (SSA).Most of these countries depend on trade for their growth and development, especially on exports in a narrow range of goods and services.
This issue of Trade Hot Topics reflects on some of the key trade and development issues of interest to LDCs, SVEs and SSA countries. It then highlights the need to explore possibilities for prioritising their development interests, individually and collectively, in a changing global economic and trading landscape, by transforming plurilateral discussions of interest to them into more openended and inclusive multilateral discussions.
Ahead of the next UN climate change conference (COP27), UNCTAD has underscored the growing urgency of shoring up investment to combat the existential threat facing humanity. A special edition of UNCTAD’s Investment Policy Monitor released on 29 September calls for effective measures to mobilize private sector investment and foreign direct investment (FDI) in key sectors related to climate mitigation and adaptation.
“Innovative ways and means are needed to foster public and private partnerships, improve the enabling policy frameworks and build capacity for preparing pipelines of bankable and impactful projects in developing countries,” the report says.
Previous estimates indicate that annual climate adaptation costs in developing countries could reach $300 billion in 2030 and, if mitigation targets are breached, as much as $500 billion by 2050.