tralac Daily News
The Finance Bill 2023 which was signed into law on 28 May 2023 by former President, Muhammadu Buhari imposes an 0.5% levy on goods imported into Nigeria from outside Africa. This is in addition to current custom duties and other approved charges.
Beyond the additional import levy of 0.5%, the bill has amendments to the following tax laws, among others: Customs, Excise Tariff, Etc (Consolidation) Act, Petroleum Profits Tax Act (PPTA), Value Added Tax Act (VATA), and Public Procurement Act. The Act seeks to provide support for the funding of the 2023 budget through an improvement in the tax administration.
The country’s fiscal position remains constrained due to poor revenue generation capacity, especially oil revenue. Non-oil revenue projections for 2023 will likely be surpassed in our view especially with the provisions of the finance act.
Despite the growing concerns about the multiplicity of taxes, the new Finance Act 2023 introduces new taxes while increasing some of the existing tax rates. The penalty for various infractions and tax offences for companies operating within the downstream petroleum sector was also increased.
Mozambique is making significant progress towards achieving the Sustainable Development Goals (SDGs) by prioritizing gender data collection. The government recently hosted a series of workshops and meetings aimed at strengthening gender statistics in the country.
The primary objective of the CB-GenSMS project is to improve the availability of reliable data, which is crucial for designing evidence-based policies that promote gender equality and women’s empowerment across Africa.
Recognizing the importance of comprehensive data for policymaking, the Mozambican government has taken proactive measures to ensure its availability. This includes the publication of the report "Men and Women in Mozambique" and the upcoming release of the Demographic and Health Survey (DHS).
To assess progress, identify challenges, and inform policy formulation, Mozambique produces periodic reports aligned with important frameworks such as the Beijing Platform for Action and the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW).
Despite these advancements, the country still faces gender data gaps in crucial development areas, requiring targeted policies and focused attention.
AfFCTA cannot prosper without vibrant Zim: AfDB (The Herald)
African Development Bank (AfDB) president Dr Akinwumi Adesina believes development partners need to “walk with” Zimbabwe at the time the country is reeling under the heavy burden of illegal economic sanctions.
Dr Adesina revealed this at a meeting to discuss Zimbabwe’s arrears clearance and debt resolution held during the AfDB’s annual meetings in Sharm El Sheikh, Egypt.
During the session, Zimbabwe’s Government, led by President Dr Emmerson Mnangagwa, briefed the bank group’s governors on the ongoing Structured Dialogue Platform with the country’s s creditors and development partners.
Why digitalisation is crucial to Nigeria, Africa’s supply chains (The Guardian Nigeria)
To meet increasing demands for goods and services in Nigeria and other African cities, Regional Head of Integration and Business Growth, Maersk, Mr. Darryl Judd, has charged the Nigerian government and leaders across the continent to improve investment in modern digital solutions to tackle emerging inefficiencies in supply chains.
Judd, who spoke, yesterday, on ‘Logistics 4.0: Accelerating Africa’s Digital Revolution’, on the sidelines of the Africa CEO Forum in Abidjan, explained that with COVID-19 disruption of the market in Nigeria and others, there was need to build resilience through integration of digital solutions to help supply chains function.
Africa contributes about $2.7 trillion to the global economy from 54 countries that are part of the African Continental Free Trade Area (AfCFTA).
However, intra-African trade only corresponds to 14 per cent of the total trade, owing to high tariff and non-tariff trade costs. For instance, agriculture contributes to 15 per cent of Africa’s Gross Domestic Product (GDP) and 60 per cent of Africa’s employment. The use of mobile apps, digital payments and an increase in e-commerce are levers that could improve intra-African trade from agricultural produce and substitute imports.
Findings show that it is more expensive to ship goods from South Africa to Nigeria due to supply chain complexities. A major challenge in Nigeria and the continent’s logistical sector is delay, due to various customs regulations, poor road networks, slow processing and clearance of goods, and inadequate storage. But Judd said these could be eliminated through improved digital technology.
He said digital solutions, like block chain initiatives, trade lane, artificial intelligence and others would provide needed visibility of the market.
Moscow has embarked on soliciting full-fledged support for its ‘special military operation’ in neighbouring Ukraine by offering ‘no-cost delivery’ of grains and fertilizers promised by Russian President Vladimir Putin. Putin has reiterated that deliveries to ear-deafening applause during the last inter-parliamentary conference Russia-Africa held in March.
Foreign Minister Sergey Lavrov made this one of the core content of his speech during his last trip to South Africa through Kenya to Burundi and Mozambique in southern Africa. Malawi and Kenya have recieved their consignments. Moscow intends to deliver a shipment of Russian fertilizers to Nigeria free of charge in the near future, Foreign Minister Lavrov said at a press briefing in Burundi.
“Last September, President Vladimir Putin announced that we were ready to deliver 300,000 tons of our fertilizers, illegally seized in EU ports, to African countries free of charge. Fully in line with colonial practices and habits, the EU leadership blocked this initiative. It took us 6 months to get, at least, the first shipment of 20,000 tons to Malawi, and just recently another shipment of a similar amount of fertilizer was delivered to Kenya. The same shipment is scheduled to go to Nigeria soon,” he stressed in his speech in Bujumbura, capital of Burundi.
Russia, Algeria To Agree “Expanded Strategic Partnership” (Russia Briefing News)
Abdelmadjid Tebboune, the Algerian President is currently on a state visit to Russia, that is expected to culminate in the signing of an “Expanded Strategic Partnership” between the two countries. Algiers has been showing an interest in working more closely with Moscow and other leading non-Western players, and has confirmed its readiness to join the BRICS group later this year. Algeria could become Russia’s outpost in North Africa and a partner in the global gas market.
In terms of market size, Algeria has the tenth-largest proven natural gas reserves globally, is the world’s fourth-largest gas exporter, and has the world’s third-largest untapped shale gas resources. It also ranks sixteenth in proven oil reserves and exports about 60% of its total energy production.
Stanislav Mitrakhovich, of Russia’s Financial University and the National Energy Security Fund, said that “Algeria is one of the largest gas suppliers to the EU, and European politicians have been trying to convince it to increase gas supplies. However, domestic consumption in Algeria is also growing and increased production demands large-scale investments. Algeria will increase LNG [liquified natural gas] supplies but the situation is more complicated with pipeline exports:
Mitrakhovich added that “Under current conditions, Russia could offer Algeria, if not complete market sharing, at least assistance in coordinating issues concerning priority export destinations and counteracting attempts by Western countries to introduce gas price limit mechanisms, as well as in handling discrimination by European politicians against gas as an energy resource. Russia also has proposals for Algeria on nuclear energy and agriculture.”
Current Russia-Algeria bilateral trade is worth about US$1.65 billion with the vast majority of that being Russian exports to Algeria, although that, in light of enhanced energy cooperation, may change.
Consumers and industrialists may get relief if Parliament approves a proposal to shelve a new excise tax charge on sugar and confectionery.
The Treasury, in its Finance Bill 2023, has proposed to charge a Sh5 excise tax per kilogramme of sugar and Sh42.1 per kilogramme of locally manufactured confectionery, which could increase the consumer prices of the sweetener.
The Finance and Planning Committee of the National Assembly, however, proposes that the excise taxes would only apply to imported sugar and confectionery, shielding consumers from higher prices of the commodity and safeguarding the competitiveness of millers and manufacturers of sugar-based products.
"The proposal to impose excise duty (Sh42.1 per kilo) on locally-manufactured confectionery will drive several local companies out of business as it will make them uncompetitive and their products unaffordable. This move will eliminate the competitiveness of the local confectionary industry against imports as the retail prices will increase due to the excise duty cost that will be passed on to the consumers," said the KAM in reaction to the Finance Bill 2023.
"It will also erode the competitiveness of locally produced confectionery products in regional export markets such as Tanzania and Uganda, where similar proposals to make local confectionary excisable were rejected after lawmakers assessed the negative impact on the industry."
EAC launches campaign to promote agricultural exports (The Standard)
The East African Community (EAC) has unveiled a new campaign aimed at raising awareness about trade opportunities in agricultural exports through the EU-EAC Market Access Upgrade Programme (MARKUP).
The campaign, titled MARKUP: Growing Agri Export Markets, will provide valuable information and resources to small and medium-sized enterprises (SMEs) in the agricultural value chain, co-operatives, farmers, and government entities across the region.
Speaking at the campaign launch, the acting director of trade at the EAC Flavia Busingye highlighted the significant trade prospects for agri-SMEs. She emphasised the campaign’s objective of showcasing that international markets are within reach for East African exporters.
Ms Busingye acknowledged the challenges faced by SMEs in the agriculture sector, including limited access to market information, cumbersome customs procedures, and poor connectivity, particularly when it comes to accessing markets outside the EAC.
The Economic Community of West African States (ECOWAS), in collaboration with the United Nations Development Programme (UNDP) and the International Trade Centre (ITC), organized a regional capacity building workshop for Master Trainers from Business Associations on the African Continental Free Trade Area (AfCFTA) from 6 – 8 June 2023 in Abuja – Nigeria.
In her remarks, Madame Massandjé TOURE-LITSE, the ECOWAS Commissioner for Economic Affairs and Agriculture, highlighted the need for West African businesses to take advantage of the opportunities provided by the African continental market. She reiterated the commitment of the ECOWAS Commission to support the Private Sector to unlock investment, boost production and promote business linkages. Finally, she urged network of Trainers to accompany Micro, Small and Medium Enterprises (MSMEs), especially women and youth entrepreneurs, to start trading under the AfCFTA.
During the 3-day workshop, participants from Business Associations were trained on key elements of export readiness, including export market research, export strategy, as well as operational tools of the AfCFTA. The Masters Trainers were empowered to sensitize businesses on the benefit of the AfCFTA and help them start trading in the continental market.
Africa unbanked population threatens eco-stability (Tanzania Daily News)
Over 350 million adults in Africa are unbanked and primarily excluded from the formal economy, relying heavily on cash or informal providers for their financial needs, which is costly, risky and leaves them vulnerable to economic instability. This is according to AfricaNenda annual report, an African-led institution that is working to unlock the potential of inclusive digital financial services on the continent.
The institution’s interventions aim at reducing vulnerability to economic shocks by those excluded from the financial system, particularly women in rural areas.
AfricaNenda Chief Executive Officer (CEO), Dr Robert Ochola, said the need for a more inclusive society is becoming increasingly urgent. “…One of the fastest ways to achieve this is by putting in place systems that expand access to financial services and leave no one behind. Instant and inclusive payment systems can play a pivotal role in creating universal access to financial services for all Africans,” he said.
AfricaNenda launched the first State of Instant and Inclusive Payment Systems in Africa (SIIPS) report last year. The report offered a comprehensive view of Africa’s current instant payment systems landscape, revealing that more intentional and dedicated focus is needed to build the inclusivity of instant payment systems in Africa.
UN Climate Change High-Level Champion for Egypt Mahmoud Mohieldin speaks during a session on positioning Africa as a global hub for green hydrogen held at the Africa CEO Forum in Abidjan on Wednesday.
Mohieldin, who is also the UN special envoy on financing the 2030 Sustainable Development Agenda, made the remarks on Wednesday during a session on positioning Africa as a global hub for green hydrogen held at the Africa CEO Forum in Abidjan, Ivory Coast.
The climate champion noted that African countries have promising national and regional initiatives in the field of green hydrogen, but regulatory frameworks and working principles are needed to overcome related challenges.
Mohieldin emphasized the importance of increasing demand for African green hydrogen from neighbouring countries and regions, particularly Europe. He added that Africa must also enhance the quality of green hydrogen production infrastructure, increase storage capacity and support supply chains.
The findings of this year’s report capture major themes and developments impacting the industry, especially the impact of the energy transition, which will shape the industry over the coming two decades. Miners will have to navigate the increasing role governments — and new players like automobile companies — are playing in the sector, while simultaneously ensuring they are well-positioned for the clean energy transition — which requires access to resources.
“Mining is playing a fundamental role in underpinning the global transition to clean energy, but the path ahead is rocky," says Paul Bendall, global mining leader, Mining & Metals, PwC Australia.
Critical minerals dominated deal activity in 2022 as miners raced to capitalise on the global transition towards clean energy, driven by two forces. First, the role many of these minerals play in the clean energy transition technologies, such as batteries, electric vehicles, and solar and wind generation. Second, the role of critical minerals in national defence, technologies and weaponry.
When we examine the energy and resources sector on the African continent, there are two fascinating dynamics unfolding. If they both come to fruition, it will have a massive multiplier effect for the prosperity of the continent.
The first is the rise of battery metals or green minerals that include the likes of lithium, nickel, cobalt, copper, manganese and graphite, inter alia - all of which are abundant on the continent. Mozambique, South Africa, Tanzania, Zimbabwe, and the DRC are rich in these minerals and potentially provide a significant windfall for local miners and governments.
For context, South Africa holds 80% of the worlds manganese deposits, was the second largest producer of world palladium (at 80MT) in 2022, to date SA has supplied over 75% of the world’s platinum, and to date has supplied over 40% of the world’s gold, amongst other minerals. Zimbabwe is estimated to have the world’s seventh largest lithium deposits, while Mozambique, Madagascar, and Tanzania are all in the top 102 global reserves for graphite.
Importantly, discussions have recently moved beyond extracting for short-term profits to beneficiation for longer-term benefits. This includes employment, skills development, local shareholding, and support of corporate and social investment initiatives that uplift surrounding communities and shared value.
If one considers that the United Nations Economic Commission for Africa (UNECA) recently highlighted that nearly 70% of Africa’s exports are unprocessed commodities, it is a non-negotiable that there is a focus on creating an enabling environment to encourage mineral beneficiation and processing.
The announcement was made by Visa Executive Chairman Alfred F. Kelly Jr. at the event organized by Bloomberg New Economy Gateway Africa in Marrakech, Morocco.
The Visa Africa Fintech Accelerator will enable up to 40 startups per year to accelerate and grow through a three-month intensive learning program focused on business growth and mentoring. The launch of the Africa Fintech Accelerator program follows Visa’s recent pledge to invest $1 billion in Africa’s digital transformation and its long-term commitment to advancing Africa’s economies and driving inclusive growth.
Fintech startups across Africa can become part of the programme through an annual application process, beginning July 2023, that involves two phases.
“Africa has one of the most exciting and admired fintech ecosystems in the world, bringing outstanding entrepreneurial talent to a young digital-first population that is growing fast”, Kelly noted
Some twenty Tunisian companies operating in the trade and industry sectors will be taking part in the third China-Africa economic and trade expo, to be held from June 29 to July 2 in Changsha, in central China.
African and Chinese businesspersons, experts and representatives of international financial institutions and chambers of commerce will be taking part in this event, which aims to strengthen Chinese-African cooperation, the Ministry of Commerce and Export Promotion said on Wednesday.
A China-Africa trade index will be published for the first time during this third expo. It will serve as a barometer for companies engaged in business and trade cooperation with their African partners.
How the Mena region is reshaping trade for the future (Global Trade Review)
The Middle East and North Africa (Mena) is undergoing a transformation, reclaiming its historical position at the heart of global commerce while simultaneously embracing the digital, sustainable and inclusive future. As corporates seek support from their banking partners to navigate this changing landscape, cutting-edge solutions are emerging to cater to their evolving needs.
Trade in Mena has long been synonymous with hydrocarbons, with the region’s vast natural resources underpinning its rapid economic growth for decades. However, recent years have seen a significant shift in the trade landscape, as governments embark on ambitious economic diversification initiatives to spur the development of new industries, such as technology, manufacturing, and renewable energy.
This transformation is driving a wave of innovation and entrepreneurship, as businesses across the region look to capitalise on emerging opportunities and adapt to the changing demands of global markets.
Union Minister of Commerce and Industry Piyush Goyal, while addressing the 18th CII-EXIM Bank Conclave on India-Africa growth partnership today in Delhi, said that India never works with any country with an expansionist approach. Instead, he said that India treats countries like a brother. Speaking at the event, Goyal said, "India is the 5th largest investor in Africa and we don’t intend to take over your ports, railways, etc. We don’t follow expansionist approach.”
He also highlighted the strong India-Africa trade which stands at around $100 billion. "India-Africa trade is growing at a healthy 9-10 per cent rate," Goyal said. Moreover, the commerce minister stressed on the need to ensure that trade between India and Africa is able to reach its true potential.
Highlighting the goal of taking India-Africa trade to $200 billion, Goyal said that Indian companies are looking for many more opportunities in Africa. "We will be delighted to partner with our African friends in helping develop your economies and create more jobs," Goyal said.
The EU’s landmark carbon tool presents major catch-22 for Africa (African Arguments)
To turn the tide on climate change, it is essential that high-emitting regions of the world take urgent action. However, not all climate action is made equal. Poorly designed policies can end up doing more harm than good.
We recently conducted a study into the European Union’s Carbon Border Adjustment Mechanism (CBAM), which will enter into force in its transitional phase in October 2023. The aim of the regulation is to reduce the risk of so-called “carbon leakage” whereby EU-based companies relocate their emissions-intensive operations to countries with weaker climate policies.
This is one of the EU’s landmark climate policies. Yet a study by the UN’s trade and development body UNCTAD that modelled the effects of CBAM found that the policy would reduce global emissions by a mere 0.1% (at a carbon price of $44/tonne) to 0.16% (at a carbon price of $88/tonne).
Our study found that CBAM’s economic repercussions will be far-reaching – and most strongly felt in Africa. Based on a carbon price of €87 ($94) per tonne (at the time of writing, the EU price of carbon was €88 per tonne), our modelling forecasts that the CBAM could reduce the continent’s GDP by 0.91%. This is equivalent to a fall of $25 billion at 2021 levels of GDP. Some of Africa’s least developed countries – including The Gambia, Mauritania, and Mozambique – will be especially hard-hit according to our projections.
Related tralac infographic: The European Union’s Carbon Border Adjustment Mechanism
In less than three years, the European Union will require importers of certain carbon-intensive goods to pay for their products’ embodied carbon emissions. The policy, known as the Carbon Border Adjustment Mechanism (CBAM), could have a significant impact on the competitiveness of countries that export these goods to the EU – developing countries in particular. To help them prepare, the World Bank developed the CBAM Exposure Index.
When it takes full effect in January 2026, the CBAM will cover a limited number of the most carbon-intensive goods – including aluminum, cement, electricity, and iron and steel. Some developing countries export large quantities of these goods to the EU. Zimbabwe, for example, is a major exporter of iron and steel to the EU, and Ukraine sells large quantities of fertilizer to the bloc. In later years, the CBAM will likely be expanded to cover additional carbon-intensive goods.
Director-General Ngozi Okonjo-Iweala welcomed the Prime Minister of Togo, H.E. Ms. Victoire Tomegah Dogbé, to the WTO on 15 June. They discussed the ongoing work of the WTO, Togo’s economic diversification, and how trade can deliver for the African continent, especially in the context of the Africa Continental Free Trade Area (AfCFTA).
The Director-General also urged the Prime Minister and her Government to quickly deposit Togo’s instrument of acceptance of the Fisheries Subsidies Agreement, noting that Africa is a victim of the illegal, unreported and unregulated fishing. The benefits of the new Agreement include, amongst other things, the combatting of illegal, unreported and unregulated (IUU) fishing and fishing of overfished stocks whilst at the same time safeguarding the livelihood of artisanal fisherfolk. Those subsidies would be prohibited once two-thirds of the WTO’s membership has accepted the Agreement.
New tariff scheme for imports from developing countries to go live on Monday – and other updates (Institute of Export and International Trade)
A new set of tariffs for imports from developing countries into the UK will enter force on Monday (19 June).
The Developing Countries Trading Scheme (DCTS) replaces the UK Generalised System of Preferences – the continuity system that was put in place following the country’s departure from the EU.
The government has issued an FAQ document to support traders prepare for the requirements that will be introduced as part of the new scheme, including those relating to the documentary evidence that needs to be provided to claim lower duty rates on imports under the scheme.
Groundwater is vital to economic activity and growth, food security, socioeconomic development, and adapting to the impacts of climate change. But the sustainability of this critical resource is at risk in many regions, partly because it is not valued appropriately and is taken for granted. In the context of global pressures on food systems and water supply, policymakers need to act now to ensure groundwater is managed responsibly across sectors depending on this resource.
Groundwater is our most important freshwater resource—particularly in times of drought. As climate change advances, policymakers need to understand better and manage this critical asset. A new World Bank report considers the economic value of groundwater, the costs of misusing it, and the opportunities to leverage it more effectively.
The report, titled The Hidden Wealth of Nations: The Economics of Groundwater in Times of Climate Change, demonstrates how groundwater can safeguard food security while boosting economic growth and job creation. However in most cases, this resource has been undervalued and overexploited, with insufficient regard for its long-term sustainability.
the new report offers fresh data and evidence that with the right policies in place, we can maximize the benefits of groundwater harvesting—both now and long into the future.
At its meeting on 6 June, the Committee on Rules of Origin (CRO) considered initiatives to address the concerns of least developed countries (LDCs) regarding the use of preferential rules of origin, transparency in the use of non-preferential rules of origin, and improvements to the functioning of the committee.
Members considered a submission from the LDC Group setting out a proposed report that the committee would submit to the General Council ahead of the WTO’s 13th Ministerial Conference, due to take place in February 2024, describing the work of the CRO.
As drafted, the report could describe progress, lessons learned and best practices on use of preferential rules of origin from the point of view of LDCs, and possibly note areas of divergence with preference-giving members. The report would cover the different paragraphs of the 2015 Nairobi Ministerial Decision on Preferential Rules of Origin for Least Developed Countries by drawing and distilling from the previous and future LDC submissions.
The world food import bill is forecast to reach a new record this year, though it is predicted to grow at a much slower pace compared to last year, as rising world prices, driven by higher quotations for fruits, vegetables, sugar and dairy products, dampen demand, especially in the most economically vulnerable countries, according to a report released today by the Food and Agriculture Organization of the United Nations (FAO).
FAO’s Food Outlook estimates that the global food bill will rise to $1.98 trillion in 2023, up 1.5 percent from 2022. It rose by 11 percent in 2022 and 18 percent in 2021.
While food imports by advanced economies continue to expand, the import bill for the group of Least Developed Countries (LDCs) is predicted to decline by 1.5 percent this year and that for net food-importing developing countries (NFIDCs) to decline by 4.9 percent, according to FAO.
“The decline in food import volumes is a concerning development in both groups, suggesting a decline in purchasing capacity,” the biannual report from FAO’s Markets and Trade Division warns. “These concerns are amplified by the fact that lower international prices for a number of primary food items have not, or at least not fully, translated into lower prices at the domestic retail level, suggesting that cost-of-living pressures could persist in 2023.”
In case you missed it
This report highlights developments and status of the regional integration process in COMESA since the 21st Summit held in November 2021, Cairo, Egypt. The report covers key achievements, challenges & constraints and proposed way forward.
It notes that under trade liberalization, membership to the COMESA Free Trade Area remained at 16 states with the four countries the DR Congo, Eritrea, Eswatini and Somalia at different stages of full liberalisation.
The value of COMESA’s total exports to the world significantly increased by 56% from US$ 100 billion in 2020 to US$ 156 billion in 2021. The sectors that contributed to this increase were manufactures, fuels, ores and metals and food,” she said.
The value of Intra-COMESA total exports increased by 28% from US$ 10 billion in 2020 to US$ 13 billion in 2021. Key exports include palm oil, cement, copper ores and concentrates, beet/cane sugar, live animals and petroleum oils.
A new study by the Transnational Alliance to Combat Illicit Trade (TRACIT) shows that illicit trade is one of the biggest threats to stability and economic growth in South Africa. While the country has taken steps under President Ramaphosa to root out illegal trade and associated activities like corruption and money laundering, the scope and depth of the illicit economy poses a significant threat to the health and wellbeing of South African citizens and a persistent drain on the overall economy.
It is critical that the South African Government prioritizes efforts to combat illicit trade and the underlying conditions that facilitate it,” said TRACIT Director of Programs Esteban Giudici. “Left unaddressed, illicit trade and its associated criminal activities will continue to rob the government of essential tax revenue and deter investments in the country.”
To encourage an effective policy response to illicit trade, the TRACIT report Organized Crime, Corruption and Illicit Trade: Spotlight on South Africa calls for strengthening interagency and inter-departmental cooperation between South African law enforcement agencies; strengthening criminal penalties; appointing an Interagency Anti-Illicit Trade Coordinator; ramping up implementation of enforcement measures; and increasing transparency and cooperation between the public and private sector to improve enforcement actions.