Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

South Africa’s ageing infrastructure hinders economic growth potential, but DUCAT Trading paves the way for optimised logistics solutions (ZAWYA)

Inadequate and ageing infrastructure remains a significant obstacle towards Africa achieving its full economic growth potential. According to the Infrastructure Consortium of Africa (ICA), poor road, rail and harbour infrastructure adds 30-40 percent to the costs of goods, which is borne by consumers and is a significant factor in the inflation-driven cost of living crisis. For South Africa, there are particularly acute challenges in this regard. A recent study by the World Bank showed the poor state of infrastructure reduced national economic growth by two percentage points every year and cut business productivity by as much as 40 percent.

Once hailed as the gateway to the rest of Africa, South Africa’s port infrastructure is in dire straits, with inefficiencies due to ageing infrastructure, poorly maintained equipment, and a misallocation of human resources. The country’s ability to supply essential goods to the rest of Africa has suffered and a significant turnaround needs to restore its reputation, as the country has lost competitive ground against other rapidly emerging African markets, such as Maputo, Dar es Salaam, and Walvis Bay.

DUCAT is however optimistic about the opportunities presented in the logistics sector in South Africa. The group is committed to supporting the South African industrial value chain by applying targeted capital investments of up to R300 million in physical dry bulk and cross-dock infrastructure with technical know-how to existing underutilised assets. By doing so, it aims to deliver immediate practical solutions to its customer base.

“Trade flows rely on logistics arteries, and we are committed to developing new capacity while also repurposing and upgrading existing capacity in the dry, wet, and dirty goods sector. Last year, DUCAT successfully acquired Senzomix, a warehousing operator based within the Port of Cape Town. This strategic acquisition allowed the company to establish a physical footprint in Southern Africa and strengthen its position in the warehousing and bulk logistics industry,” says Rory Clark, Managing Director of DUCAT Senzomix.

Potential Agoa expulsion would add to South Africa’s growing chicken price problems (Engineering News)

Food importer Hume International logistics and operations director Roy Thomas stresses that the looming threat of South Africa‘s expulsion from the African Growth and Opportunity Act (Agoa) trade agreement with the US threatens to push the industry over the edge, risking meteoric rises in local chicken prices.

This comes in addition to the fact that South Africa‘s chicken supply and its crucial import industry are already in a tenuous position as a result of the global bird flu outbreak.

But US lawmakers’ recent request to move the upcoming Agoa Summit out of South Africa hints at the country potentially being excluded from the Agoa agreement before it reaches its next renewal date in 2025. This is an event which could prove catastrophic, warn experts.

Govt developing critical minerals strategy to support green industrialisation – Mantashe (Engineering News)

Mineral Resources and Energy Minister Gwede Mantashe reports that government is in the process of developing a critical minerals strategy for South Africa, which will seek to support green-economy value chains domestically and abroad.

Speaking at the Northern Cape Mining and Energy Investment Conference, Mantashe reported that government was monitoring global developments around critical minerals, which he termed a “new theatre of global economic struggle” to ensure that the strategy supported South Africa‘s industrialisation aspirations.

“It is no secret that our country is well endowed with these critical minerals and can use them not only for beneficiation but also to position our country to be a strategic partner,” Mantashe said.

Minister Naledi Pandor: Eleventh Meeting of the South Africa-Germany Bi-National Commission (South African Government)

Our relationship with Germany is one of the most important and most strategic that we have with any country and our Bi-National Commission one of the most substantive that we have. It is not difficult to see why that is so. South Africa is Germany’s largest trading partner in Africa. At the same time, Germany is the third largest export market for South African products, most of which are value-added. The German economy is export-focused and yet we have a healthy trade surplus. Your country is a major investor in South Africa and an important development partner.

Mozambique: African Development Bank adopts new Country Strategy Paper covering 2023-2028 (AfDB)

The Board of Directors of the African Development Bank Group has endorsed the Bank’s 2023-2028 Country Strategy Paper for Mozambique on 13 June 2023. The new strategy aims to promote the country’s structural transformation by improving fiscal stability, creating decent jobs and generating inclusive growth. The strategy has two priority areas: fostering improved economic governance and the business environment to facilitate private sector investment and mobilize resources and transforming agricultural value chains by strengthening infrastructure sustainably.

This strategy is the culmination of efforts by the government, development partners, civil society, the private sector and technical experts on the country’s most critical economic reforms to implement in the coming years.

Implementation of the strategy is expected to lead to (i) greater private sector involvement to boost international trade; (ii) improved investment flows, and (iii) job creation—especially for women and young people. This is expected to have a knock-on effect of raising foreign direct investment to 30% of GDP from 22.7%.

With support from the Bank, Mozambique will stimulate the green economy and transform agriculture to increase the number of competitive industries capable of creating jobs and reducing poverty and inequality. The Bank’s engagement will also help improve livelihoods through investments in the agricultural sector based on a holistic, cross-sectoral approach and the development and modernization of Mozambique’s energy system.

The 2023-2028 Country Strategy Paper for Mozambique envisages establishment of a productive special agro-industrial processing zone by 2028 through the creation of 50 new companies and 200 new cooperatives or groups of external producers. It also projects that new investments will total $100 million. Mozambique’s electricity exports to southern Africa are expected to equal over five gigawatt-hours.

Nigeria: LNG facility to boost gas-based processing economy (ESI-Africa)

Nigeria’s first indigenously owned floating LNG facility with a nameplate production capacity of 1.2 million metric tons per year is to be built in Akwa Ibom State. The African Export-Import Bank (Afreximbank) and UTM Offshore Limited recently signed a project preparation facility agreement to develop, design and construct the facility.

Under the agreement, Afreximbank is to part-finance project preparatory activities that will de-risk the project and advance it to bankability “in a timely manner.” The Bank said it is leveraging its diverse product suite to provide end-to-end solutions to the project.

“Through its financial advisory mandate, Afreximbank has been playing an instrumental role in structuring the transaction to ensure optimal returns and debt sizing, as well as identifying equity investors to invest in the project on favourable terms. “Moreover, this project has economically transformative potential – establishing trade-enabling infrastructure which will allow Nigeria to pivot from a crude oil export-based economy to a gas-based processing industrial economy.” This, in turn, will unlock significant development impacts, it said. The project will also contribute to the reduction of flaring of natural gas.

Uganda, Mauritius reach new deal on double taxation (The East African)

Uganda and Mauritius have agreed on changes to their 2015 bilateral double taxation agreement (DTA) after months of talks. Among the changes are exclusive taxing rights for all hydrocarbon-based transactions in favour of Uganda, according to Uganda’s Finance Ministry. “The changes are awaiting ratification by the partner states,” said Moses Kaggwa, Director for Economic Affairs at the Ministry of Finance, Planning and Economic Development.

However, talks over a double taxation treaty with the Netherlands failed over technical services with the latter suggesting five percent withholding tax while Kampala insists on 10 percent.

The 2006 DTA between the two does not provide for taxation of technical services, accounting, property valuation, engineering and information and communications technology consultancy. Sources cite the country’s $10 billion commercial oil production programme and establishment of offshore subsidiaries by players involved in the oil and gas industry, as the rationale for taxing technical services.

Traders protest as Tanzania blocks 200 Uganda-bound rice, maize trucks (The East African)

The Government of Tanzania through its ministry of agriculture has temporarily suspended issuance of permits to Ugandan traders who export rice and maize flour from the country. As a result, about 200 heavy trucks loaded with rice and maize seeds have been barred from crossing to Uganda through Mutukula one-stop border post. The ban, according to a circular from the ministry, took effect on June 13.

Currently, the Tanzania Ministry of Agriculture in conjunction with the Tropical Pesticides Research Institute and Tanzania Fertilizer Regulatory Authority are conducting an assessment exercise on seasons, the availability of corn foods and manufacturing conditions of foods in their country for 2023/2024 financial year.

‘‘Permits for exportation for corn, corn flour and rice have been temporarily suspended until the government completes the assessment exercise, availability of crop seasons, shipping of corn foods and manufacturing conditions,’’ the circular reads in part.

The government of Tanzania has also reminded all traders dealing in cereal seeds to acquire all documents required to do the business.

‘‘The action by Tanzanian authorities is a non-tariff barrier aimed at pushing Ugandan traders out of business, yet Tanzania continues to import products from here [Uganda] ,” he said.

Northern Corridor truckers warn of fee increase on VAT doubling (The East African)

Kenyan long-distance transporters have said transport costs will increase starting July 1, after parliament voted to double value added tax (VAT) on petroleum products to 16 percent on June 21.With the uncertainty in the transport sector in the coming days, some transporters have announced plans to downsize staff to reduce the cost of operations to remain in business.

Transporters say increasing costs and non-tariff barriers on the Northern Corridor will increase the cost of doing business and, if not checked, it will benefit the Central Corridor, where the Tanzanian government is working to cut transport costs and improve infrastructure.

With the passing of the Finance Bill 2023, the current cost of transporting goods will increase from the current minimum of $2.35 per kilometre for transit goods and $2.25 for local cargo. High costs, increasing road tolls, multiple border charges, and bad road conditions have already been identified as factors that cause cost escalations for transporters on the Northern Corridor, which Dar is taking advantage to have a slice of Mombasa’s cargo throughput share.

Reopening Seme Border: An End To Economic Strangulation (iBrandTV)

President Bola Tinubu’s decision to fully reopen the Seme land border has resonated well with many who have applauded him for making economic policies geared towards improving the lives of many Nigerians.

At a time like this when the nations’ economy is at it’s lowest, reopening Seme border has been considered as a good strategy because it would allow businesses to access more markets.

With this, a major end has come to economic strangulation that has relegated the manufacturing industry in Nigeria. Manufacturers can now begin to source for raw materials from neighbouring countries easily while exploring options for expansion.

An open border enables the free movement of people and goods between jurisdictions with no restrictions on movement.

The manufacturing sector in Nigeria is at the brink of a collapse occasioned by the rising cost of production. Lack of infrastructure, FX shortage, huge tax burdens, Naira devaluation, and the Naira redesign policy of the Central Bank of Nigeria, among other issues add to the manufacturers woes.

AfDB to throw weight on SGR projects (Tanzania Daily News)

THE African Development Bank (AfDB) has expressed interest to finance the implementation of Standard Gauge Railway (SGR) project in Tanzania.

Recently, the governments of Tanzania and Burundi applied for financing from the AfDB toward the cost of the construction of the Tanzania/Burundi (Uvinza – Musongati – Gitega) SGR section. In May this year, the government announced an invitation for the initial selection work of the same.

This will be the phase one of the Tanzania – Burundi – DR Congo SGR project and intends to apply part of the proceeds from the loans to make payments under the contract for works for construction of SGR under Design and Build Arrangement.

In the meeting yesterday, Dr Mwigulu also noted that the AfDB has also expressed its intention to cooperate with the government in increasing capital to Tanzania Agricultural Development Bank Limited (TADB), which is the catalyst for the implementation of agricultural projects in terms of irrigation and value increment.

SACU Summit Communiqué, 29 June 2023

The 8th Summit of the Southern African Customs Union (SACU) Heads of State or Government took place on the 29th June 2023, in Mandvulo, Kingdom of Eswatini.

In the area of the Trade Facilitation and Logistics Programme, which includes customs cooperation, border coordination, behind-the-border measures, transport and logistics, support for trade agreements, and cross-cutting policy imperatives, the Summit noted the completion of an Operational Plan to guide its implementation.

The Summit noted with appreciation that all SACU Member States have ratified the Agreement establishing the African Continental Free Trade Area (AfCFTA). The SACU Provisional Schedule of Tariff Concession (PSTC) to the AfCFTA, which includes products with a full tariff reduction (90 percent) over a ten-year period, was adopted on the 31st May 2023. Additionally, all Revenue Administrations in SACU have completed the necessary documentation for the implementation of the AfCFTA.

Zambia creditors agree to restructure debt (The East African)

Zambia’s lenders, including major creditor China, have agreed to restructure the country’s public debt, officials said Thursday, providing financial relief to the first African nation to default after the Covid pandemic.

The agreement on $6.3 billion of Zambia’s debt was confirmed by a French official on condition of anonymity, on the sidelines of a summit aimed at revamping the international financial system to better tackle climate change and poverty. Zambia, Africa’s biggest copper producer, with a population of nearly 20 million people, defaulted on its $18.6 billion external debt in 2020 but negotiations had stumbled over differences between China and Western creditors. The United States had accused China of delaying the debt agreement.

DRC gets $203m IMF loan to boost dwindling forex reserves (The East African)

The Democratic Republic of Congo has received a $203.3 million loan from the International Monetary Fund (IMF) to boost the country’s foreign exchange reserves which have fallen to $4.5 billion, covering only two months of imports. The loan is part of the extended credit facility (ECF) arrangement with the multilateral lender reached in July 2021, which will see DRC get a total of 1.066 special drawing rights (SDRs) or about $1.52 billion by 2024.

The disbursement brings the total amount received under the arrangement to $1.02 billion.

“The current account deficit deteriorated to 5.3 percent of GDP, as higher export growth only partially compensated for higher imports and a more deteriorated service account,” IMF said in a statement on Wednesday. Kinshasa continues to grapple with a high trade deficit, currently at 5.3 percent of GDP, which has contributed to the continued drop in forex reserves, compounded by other internal and international economic shocks.

Ghana agrees restructuring deal with banks on some domestic debt (Reuters)

Ghana has reached an agreement with banks to restructure 15 billion Ghana cedi ($1.36 billion) of locally issued U.S. dollar bonds and cocoa bills, three sources close to the negotiations have told Reuters. The West African nation is seeking new terms for the restructuring of its domestic debt by the end of June to be able to meet an International Monetary Fund (IMF) deadline, and focus attention on negotiations with external creditors.

Ghana concluded the first phase of its domestic debt exchange in February, with 85% of eligible bondholders participating, but needs new terms for another 123 billion Ghana cedi ($11.18 billion) to qualify for the next tranche of a $3 billion IMF loan to address its worst economic crisis in a generation.

The gold-, cocoa- and oil-exporting country, which defaulted on most external debt in December, aims to reduce its external debt interest repayments by $10.5 billion over the next three years under an IMF bailout secured in May.

Evolution Of Debt Landscape Over The Past 10 Years In Africa (Africa.com)

Keynote Speech by Dr. Akinwumi A. Adesina, President, African Development Bank Group, Delivered at the Paris Club on June 20, 2023

The total external debt of Africa was estimated at $1.1 trillion in 2022. This is expected to rise to $1.13 trillion by 2023. This is due to several factors: the carry-over effects of the Covid-19 pandemic on economies and their fiscal space which led to downgrades of several countries; the rising costs of energy and food prices from the Russian-Ukraine war; and the rising costs of adapting to climate change.

The structure of Africa’s debt has changed dramatically in the past decade or more, accentuating a trend that started in the mid-2000s. I would like to discuss five trends.

USAID’s Power Africa, African Development Bank broaden cooperation on fighting energy poverty and climate change in Africa (AfDB)

The United States Agency for International Development (USAID), through the Power Africa Presidential Initiative, and the African Development Bank, have signed an extension and expansion of their existing Regional Development Objectives Agreement (RDOAG) on the margins of the Africa Energy Forum in Nairobi.

The move deepens the strategic partnership and expands the basis for cooperation in developing innovative and sustainable solutions to combat energy poverty, climate change, and strengthen energy systems in sub-Saharan Africa. Specifically, the agreement, targets ending energy poverty by 2030; accelerating the Just Energy Transition in Africa; and strengthening the enabling environment for clean energy.

The United States Agency for International Development (USAID), through the Power Africa Presidential Initiative, and the African Development Bank, have signed an extension and expansion of their existing Regional Development Objectives Agreement (RDOAG) on the margins of the Africa Energy Forum in Nairobi.

The five-year extension, running through September 2028, paves the way for up to $500 million in future contributions from the United States to further RDOAG’s objectives. To date, about $388 million has been channeled through the RDOAG, including direct support for the African Development Bank-managed Sustainable Energy Fund for Africa (SEFA) and the Bank’s Desert to Power initiative.

China-Africa trade index debuts, indicating strong growth (Xinhua)

The China-Africa Trade Index, based on trade-indicator data between China and African countries, was released for the first time at the opening of the third China-Africa Economic and Trade Expo on Thursday in Changsha, capital of central China’s Hunan Province. The index, which was released by the General Administration of Customs, shows strong growth in trade over the past two decades and indicates that trade between China and Africa has become increasingly close, with trade potential continuing to grow, said Lyu Daliang, director of the statistics and analysis department of the administration.

In the first five months of 2023, China’s total import and export volume with Africa reached 822.32 billion yuan (113.5 billion U.S. dollars), up 16.4 percent year on year, according to the administration’s data.

Trade facilitation cooperation to bring more African agricultural, food products to China (Xinhua)

China and African countries on Thursday proposed the establishment of a liaison mechanism for sanitary and phytosanitary (SPS) cooperation to strengthen the docking of inspection and quarantine standards and rules, which is key to facilitating African exports of agricultural and food products to China.

The China-Africa SPS cooperation information website was also launched at the event. Wang Lingjun, deputy director of China’s General Administration of Customs, signed agricultural and food product market access agreements with representatives from Madagascar and Zimbabwe at the meeting.

Strengthening SMEs and entrepreneurs key to a strong, resilient economy (OECD)

SMEs remain under pressure due to the combined effects of economic uncertainty stemming from Russia’s continuing war of aggression against Ukraine, the lingering effects of the COVID-19 pandemic and other geopolitical tensions that have weighed heavily on SMEs and entrepreneurs, which account for a critical 99% of all firms and employ two-thirds of private-sector workers. Large-scale, temporary government support played a critical role in protecting the livelihoods of entrepreneurs and SME workers. However, as monetary conditions tighten and fiscal support unwinds, firm bankruptcies are rising, and SMEs again find themselves at risk.

The new OECD SME and Entrepreneurship Outlook 2023 shows that many SMEs are struggling to recruit in a tight labour market and must also cope with higher levels of debt following the pandemic. The struggle to access finance for much-needed investment could have critical implications for the green and digital recovery, underlining the importance of the new OECD Recommendation on Financing SMEs in unlocking alternative forms of finance – including venture capital, crowd funding and other sources of investment capital.


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010