Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

South Africa: SARS’s Authorised Economic Operators Programme (Global Compliance News)

Today’s global economy demands that businesses expand beyond borders, but they face hurdles from customs, as well as regulatory barriers in different countries and regions that make this expansion challenging. The South African Revenue Service Authorised Economic Operators (AEO) programme offers numerous benefits for businesses trading within the regional market of the Southern African Custom Union and internationally.

In May this year, Botswana, Eswatini, Lesotho, Namibia and South Africa, the Member States of the Southern African Customs Union (SACU), signed the Mutual Recognition Arrangement to recognise SACU importers and exporters that have been granted AEO status. The SACU Revenue Administration is also committed to facilitating cross-regional trade and being alert to all its risks to reduce poverty, inequality, and unemployment.

For South African businesses involved in trade within the regional market of the SACU and internationally, there is an opportunity to achieve AEO status. AEO status is available to businesses such as manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors and freight forwarders. In addition, Small, Medium, and Micro Enterprises (SMMEs) within the same trade zone are eligible for the AEO programme. However, SARS Customs approval is necessary before AEO status can be achieved. The AEO programme is divided into different accreditation levels, as explained below.

Manufacturing production increased by 2.5% y/y in May (Engineering News)

Statistics South Africa has reported that manufacturing production increased by 2.5% in May this year compared with May last year. The largest contributions were made by the motor vehicles, parts and accessories and other transport equipment (15.1% and contributing 1.4 percentage points) and the basic iron and steel, non-ferrous metal products, metal products and machinery (5.8% and contributing 1.2 percentage points) sectors.

South African Business Groups Concerned as US Reviews Trade Program (VOA)

South African business groups are pushing the government to make strong diplomatic efforts to ensure the country is not stripped of its duty-free access to the U.S. market.

A group of U.S. senators recently questioned South Africa’s status under the African Growth and Opportunity Act, citing Pretoria’s ties with Moscow. South Africa has invited Russia President Vladimir Putin to an August summit despite his invasion of Ukraine and his being wanted by the International Criminal Court.

Relations between Pretoria and Washington have so deteriorated in recent months that South African business groups are now scrambling to try and make sure the country isn’t kicked out of an important U.S. tariff-free program.

The U.S. Congress is beginning to review the renewal of the African Growth and Opportunity Act, known as AGOA, with a decision expected by the end of the year. Some U.S. senators recently wrote a letter saying South Africa should no longer host an AGOA forum set for later this year. They also raised the prospect that the country could lose access to its trade benefits entirely.

Busisiwe Mavuso, CEO of Business Leadership South Africa, an independent association of some of South Africa’s largest businesses, said she was preparing a submission urging the U.S. to renew South Africa’s participation in AGOA.

Mavuso said South Africa is the largest single beneficiary country under AGOA, with 25% of the country’s exports going to the U.S. and nearly a billion dollars’ worth of exports to the U.S. in the first three months of this year alone.

How Kenya and the EU can close the loop on textiles (ECDPM)

The costs of green technologies are going down, which creates opportunities for green industrialisation in Kenya and beyond. European foreign direct investment can contribute to such a journey, in line with the EU’s ambition to promote European private sector engagement for sustainable development worldwide, as outlined in its Global Gateway strategy. The Kenyan government could seek closer collaboration with the EU and its member states, including their private sector.

Traders shift from Northern Corridor to rail on high fuel costs (The East African)

Increasing cost of fuel in Kenya after enactment of the Finance Act 2023 will increase transport cost along the Northern Corridor by more than 30 percent, with some traders already opting to use rail to ferry cargo from the Port of Mombasa to the hinterland.

The Shippers Council of Eastern Africa (SCEA) has already shown more interest in using railway to cut cost of transportation as rail charges remain unchanged since the standard gauge railway freight train was introduced five years ago.

In March last year, long distance transporters increased transportation charges by five percent and the announcement to increase charges further will make the corridor one of the most expensive routes in the region.

According to latest traffic cargo report, Naivasha ICD recorded a sharp increase in usage by conventional cargo compared to containerised, with grain and fertiliser boosting throughput – an indication of a shift resulting from high cost of transporting cargo using trucks.

FG moves to scale up production of electric vehicles (Businessday NG)

Nigeria’s post-fuel subsidy era appears to be heading the way of electric as the federal government, through the National Automotive Design and Development Council (NADDC), has acquired locally-assembled electric vehicles with their charging infrastructure from Nigerian mobility technology company, Jet Motors, a move that may signal the future of mainstream mobility in the country.

Jelani Aliyu, director general of the NADDC, informed that government is set to put a policy in place to scale up the production of Electric Vehicles working in partnership with local automotive companies and other relevant stakeholders.

He informed that the NADDC will in the next two weeks, ratify Electric Vehicle Development Plan, which is a set of fiscal and non fiscal incentives and other programmes such as training of mechanics to support local production of electric vehicles.

Vibrant private sector crucial to economic growth in Africa (EAC)

Kenya’s Cabinet Secretary for East African Community and Arid and Semi-arid Lands, Hon. Rebecca Miano, has underscored the importance of a vibrant private sector in promoting economic growth at the national, regional and continental levels in Africa. Hon. Miano said that the Private Sector accounts for 80 per cent of Africa’s total production, two-thirds of investment and three-quarters of credit in addition to employing 90 per cent of the continent’s working-age population.

Ms. Miano said that a robust private sector was indispensable to the realisation of Africa’s sustainable and economic transformation. “The success of Africa’s economic integration is premised on the role of the private sector in achieving growth objectives of Africa’s economies, and by extension, creating greater wealth and expanding employment opportunities,” said the CS.

“Regional value chains are essential for promoting intra-African trade, economic integration, and industrial development. They offer opportunities for countries to leverage their comparative advantages, enhance productivity, create jobs, and increase their share of value-added activities within the global economy,” said Ms. Miano.

The CS was giving the keynote address during the opening session of the 14th African Union High Level Private Sector Forum at the Kenyatta International Convention Centre in Nairobi, Kenya.

EAC unveils an online Tool to measure performance of One Stop Border Posts (EAC)

The East African Community (EAC) has unveiled an online tool to measure the performance of the 22 One Stop Border Posts (OSBPs) across the region. The EAC Secretary General in charge of Customs, Trade and Monetary Affairs, Ms. Annette Ssemuwumba, unveiled the One Stop Border Post Performance Measurement Tool on behalf of the EAC Secretary General, Hon. (Dr.) Peter Mathuki, during the opening session of the 14th African Union High Level Private Sector Forum that is taking place in Nairobi, Kenya this week.

Ms. Ssemuwemba announced that the tool is now ready for use and that Partner States and stakeholders will embark on data collection, sensitisation on use and full roll out.

Customs administrators in the EAC region will use the data generated by the measurement tool to assess OSBP performance and institute improvement strategies. Specifically, the tool has been developed to provide the necessary mechanism to measure the performance of OSBPs on six fronts, namely: Time, Cost, Volume/ Throughput, Infrastructure, Inter-Agency Coordination and User Satisfaction.

Seychelles considers joining Single African Air Transport Market (Seychelles News Agency)

Seychelles is still evaluating whether or not to sign an agreement to be part of the Single African Air Transport Market (SAATM), an initiative of the African Union (AU), said a top government official on Tuesday.

The Single African Air Transport Market seeks to promote connectivity, boost intra-African trade and tourism, and enhance economic integration among African countries. “One of the reservations we have is that we are protecting our aviation industry, including Air Seychelles. We want to ensure that when we do sign this agreement, we will protect Air Seychelles, and at the same time we will do all that is necessary to expand as a regional airline,” said the Minister for Transport, Anthony Derjacques, at the opening of a two-day workshop.

AfDB, WAMI Advocate Capital Markets Integration To Boost Cross Border Investment (Leadership)

The African Development Bank(AfDB) and West African Monetary Institute (WAMI), have called for capital markets integration to boost cross border investment in the West African region. This will be done through West African Monetary Institute Capacity Building/Sensitisation Programme on West African Capital Markets Integration (WACMI) Phase II Project holding on July 11 to 12, 2023 in Lagos.

The director-general of WAMI, Dr. Olorunsola Olowofeso said, integrated capital markets will foster cross border investment, stimulate and deepen the regional financial markets through a series of activities aimed at harmonising capital market operational rules, while providing aggregated financial markets information.

Olowofeso stated that, “the project emphasises knowledge transfer and capacity building through workshops and technical training sessions to build the capacity of market operators, regulators, asset managers, financial infrastructure providers and other capital market participants on a range of financial market issues including regulations, supervision, innovative financing, cross-border investments and settlements.”

US-Africa Business Summit kicks off (Mmegi Online)

The US Africa Business Summit took off today in Gaborone, with over 1,200 delegates registered and the promise of deals being made across various economic sectors.

The summits, organised by the Corporate Council on Africa – a trade association focusing on strengthening commercial relationships between the United States and Africa – are the premier platforms for bringing together African heads of state and other senior US and African government officials with top African and American senior business executives.

On Monday, Botswana Investment and Trade Centre CEO, Keletsositse Olebile told media that the organisation is ready to capture the attention of an array of institutional investors seeking to channel capital investments into Botswana.

“Our value proposition is simple as we engage investors, pick Botswana as a landing pad for investments, and position Botswana as an investment hub for your capital,” he said.

“The recently ratified AfCFTA agreement strengthens our communication and should excite investors to come to the mainland so that they can launch into the rest of Africa from a stable jurisdiction,” he said.

Inside EU battle for resource-rich eastern Africa (The East African)

The European Union’s battle for influence in East Africa is taking shape with increasing private investment and funding across the region. This follows a €150 billion ($170 billion) pledge for investment pledge made in February last year at the EU-Africa Summit in Brussels, Belgium.

While Europe maintains that it is not in competition with China for influence on the continent, its priority sectors now include building infrastructure, including rapid bus transit systems, which have been dominated by China. It also targets health, education, and climate change adaptation.

The EU’s Global Gateway strategy, which has largely been seen as an answer to China’s Belt and Road Initiative, plans to mobilise up to €300 billion ($331 billion) in public and private investments by 2027, with half of it designated for African countries.

Leaders push for new global financing model that fits Africa (The East African)

Rising interest rates, inflation and commodity shocks have raised the likelihood of an overlap of debt crises in Africa. The International Monetary Fund estimates that 30 percent of emerging markets and 60 percent of low-income countries could face difficulty paying their debts.

Additionally, there has been a marked change in the global credit landscape over the past decade, with China and private bondholders -- who are the main creditors for the low-income economies – making the traditional structures less effective for present-day debt challenges.

At the Shareholders General Meeting of infrastructure lender Africa50 early this week in Lome, Togo, African financial and political leaders looked at different ways of enhancing financial and credit access and all agreed that a fundamental shift is required. The leaders have taken up the push for a re-engineering of the global financial architecture, seeking a model that works for the continent.

“It is failing the world,” said Dr Akinwumi Adesina president of the African Development Bank (AfDB). “It is not able to mobilise the capital that the world needs to meet all of its development needs.” “It is also failing developing countries because you can see that even after Covid, Africa still needs about $250 billion to recover. We need $277 billion a year to deal with climate change, plus you still have to deal with Africa’s debt: today countries have to pay a lot in terms of repayment and service of debt,” he added.

India ups lending to Africa in bid to counter China’s dominance (The North Africa Post)

Africa has become the second-largest recipient of credit from India while over the past decade 18 of the 25 new Indian embassies or consulates were opened in the continent, as the South Asian powerhouse tries to catch up with China’s massive sway in the resource-rich continent.

Many African nations received about $12 billion or 38% of all credit extended by India in the past decade, just a few percentage points below its neighbors, according to Harsha Bangari, Managing Director of India’s Export Import Bank. The bank is an instrument of India’s “economic diplomacy,” Bangari said, adding that the South Asian nation has also opened up 195 project-based lines of credit across Africa, three times the number it has in its own region in the last decade. These credit lines have been utilized for crucial projects in healthcare, infrastructure, agriculture, and irrigation, driving a steady increase in demand from Africa.

Despite these impressive figures, India has lagged behind its bigger and wealthier neighbor in making inroads in Africa. While China’s loans to Africa have dipped since 2016, overall between 2010-2020, it pledged $134.6 billion, or more than 11 times more than which India has offered, to African nations, according to data from Boston University’s Global Development Policy Center. China has also made an early move to tap mineral resources in Africa, including new centers of lithium supply, helping it navigate a tight market for a key metal for electric vehicles.

Cross-border e-commerce brings more opportunities for China-Africa trade cooperation (Global Times)

The traditional model for trade, which often involves manual placement of orders, is now unable to satisfy the growing trade demand between China and Africa, with cross-border e-commerce becoming another driving force for bilateral trade, which is facilitating booming growth in economic ties.

Mouhamadou Bassirou Pouye, a Senegalese businessman who is engaged in cross border e-commerce has witnessed a rising volume of business over recent years. With the help of e-commerce platforms, he brought popular agricultural products in his country, including peanuts and coffee, to China, while also shipping goods from Yiwu, the world’s largest commodities hub located in East China’s Zhejiang Province, to his country.

DRC will take advantage of China’s export limits on rare metals amid global supply concerns (The North Africa Post)

Invoking national security concerns, Beijing on Monday (4 July) announced export limits on select gallium and germanium components, raising concerns about global supply chain disruptions for semiconductor and defense industries. With China’s dominance in the production of the two obscure yet crucial metals, other countries like Australia, Europe, and the United States are exploring opportunities to develop their own projects in order to reduce their reliance on Chinese supply. Experts warn that China’s move is only the latest stage of an escalating trade war on technology with the US and Europe.

Africa: Boosting energy transition – initiatives, funding and investment (Global Compliance News)

In Africa, 43% of the population does not have access to electricity, mostly in sub-Saharan Africa, according to a recent report by the International Energy Agency. Increasing access to a clean, decarbonized, and decentralized energy supply is therefore critical for the continent.

The growing focus on the energy transition can benefit Africa in numerous ways, including that the continent is already in the process of harnessing its vast supply of renewable energy to generate power and is also gearing up to increase trade in its large store of critical minerals, needed for the global energy transition.

To enable this transition, countries across Africa are implementing policies that take into account the energy crisis, the need for a renewable energy supply that addresses climate change and the commitments made under the Paris Agreement. In addition, many countries in Africa and other jurisdictions are launching initiatives and providing funding, investments and grants for African renewable energy projects.

What does Climate Risk really mean for African economies? (OECD Development Matters)

Discussions on green and climate finance in Africa often dwell on two issues. The first is why it’s so difficult to scale-up this type of financing on the continent. The second is the issue of layered risk: some are not keen to layer ‘ESG’ risk on top of ‘Africa’ risk in investments.

The first concern on scaling green and climate finance in Africa is understandable. From a demand perspective, the Africa Development Bank estimates that the continent will require an average of USD 1.4 trillion between 2020-30, yet in terms of supply, climate finance committed and mobilised for Africa is falling short. As it stands, there will be an estimated annual climate financing gap of USD 99.9–127.2 billion between 2020–30. It follows that meeting climate financing commitments already made is likely to be a challenge.

Compounding this dilemma, is the continent’s seeming inability to absorb green and climate investors already interested in Africa. For climate financiers, risks associated with informality and the dominance of SMEs on the continent mean that investments originate and are implemented in an environment dominated by small ticket sizes, data holes, information asymmetry, lack of standardisation, limited line of sight to impact, and concerns about verification and compliance.

Critical minerals market sees unprecedented growth as clean energy demand drives strong increase in investment (IEA)

The market for minerals that help power electric vehicles, wind turbines, solar panels and other technologies key to the clean energy transition has doubled in size over the past five years, according to a new report by the International Energy Agency.

The first annual IEA Critical Minerals Market Review, released today along with a new online data explorer, shows that record deployment of clean energy technologies is propelling huge demand for minerals such as lithium, cobalt, nickel and copper. From 2017 to 2022, the energy sector was the main factor behind a tripling in overall demand for lithium, a 70% jump in demand for cobalt, and a 40% rise in demand for nickel. The market for energy transition minerals reached USD 320 billion in 2022 and is set for continued rapid growth, moving it increasingly to centre stage for the global mining industry.

In response, investment in critical mineral development rose 30% last year, following a 20% increase in 2021. Among the different minerals, lithium saw the sharpest increase in investment, a jump of 50%, followed by copper and nickel. The strong growth in spending by companies on developing mineral supplies supports the affordability and speed of clean energy transitions, which will be heavily influenced by the availability of critical minerals.

Rapid poverty reduction in some countries, data missing in many others (UN News)

According to the updated global Multidimensional Poverty Index, revealed on Tuesday by the UN Development Programme (UNDP) and the Poverty and Human Development Initiative at the University of Oxford, progress was seen in India, where 415 million people exited poverty in just 15 years, as well as in China (69 million) and Indonesia (8 million).

“As we reach the mid-point of the 2030 Agenda for Sustainable Development, we can clearly see that there was steady progress in multidimensional poverty reduction before the pandemic,” Pedro Conceição, Director of the Human Development Report Office, said.

But the lack of data for most of 110 countries covered by the index restricts the understanding of just how deeply the pandemic has impoverished millions, highlighting the urgent need to strengthen data collection.

One year of the Black Sea Initiative: Key facts and figures (UN News)

Nearly one year into the agreement, more than 32 million tonnes of food commodities have been exported from three Ukrainian Black Sea ports to 45 countries across three continents. The partial resumption of Ukrainian sea exports enabled by the Initiative has unblocked vital food commodities and has helped reverse spiking global food prices, which reached record highs shortly before the agreement was signed.

Although global food commodity prices have generally fallen, many factors influence food affordability and domestic food inflation, including exchange rates. The Initiative has helped reconnect foodstuffs from Ukraine to global supply chains, contributing to lower prices on world markets.

Before the conflict, Ukraine was one of the leading grain exporters and the leading global exporter of sunflower oil. Its produce must continue to flow unhindered to supply markets and help to contain prices. A lack of food supplies produces knock-on effects for the lives of millions of people, particularly the poorest, hitting them hard in the areas of health, education, and social cohesion. The Initiative has allowed the partial resumption of vital food supplies into the market. It has given Ukrainian farmers some level of predictability in production and harvest and has revived key shipping lanes.

Twin transition for global value chains: Green and digital (UNCTAD)

The green and digital transitions have developed in parallel to date, especially in latecomer countries, but green and digital technologies are increasingly becoming intertwined. Future policies should focus on aligning green and digital strategies, developing digital competencies and strengthening financial support and international partnerships.


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