tralac Daily News
South Africa needs to embrace more 4IR technology or fall behind (Engineering News)
Professional services and auditing firm PwC says that South Africa’s competitors are all adopting 4IR technologies and developing their workforces and, if South Africa fails to follow suit, the country’s industrial manufacturing sector will continue to fall behind and deindustrialise.
PwC believes South Africa has positioned itself as a prime manufacturing hub on the African continent, with its industrial manufacturing industry serving as a crucial multiplier of economic growth, an engine of development and a significant contributor to the country’s gross domestic product (GDP). In 2022, the sector contributed 11.4%, or R3-trillion, towards the country’s GDP. Today, about 1.5-million people work in industrial manufacturing, and are witnessing progression at a rapid pace within the sector.
“New technologies are changing the face of manufacturing. Factories are becoming increasingly connected, as machines talk to one another and to humans, and automation reaches new milestones with robots becoming more independent. “This has understandably left groups of employees jittery over the Fourth Industrial Revolution’s (4IR’s) impact on job security and changing roles,” PwC South Africa smart manufacturing lead Vinesh Maharaj says.
GITFiC draws action plan for succeeding months (Ghana News Agency)
After successfully hosting the 7th annual Ghana International Trade and Finance Conference (GITFiC) at Senchi in the Eastern region they have followed up with an action plan that will guide their activities in the coming days. A statement signed by Mr Selassi Koffi Ackom, Chief Executive Officer of the GITFiC and copied to the Ghana News Agency in Accra named creation of African Single Currency, trade investment and dispute resolution, as major issues to be tackled for its success.
The plan according to the statement will include the involvement of Existing Monetary Unions, promote research into progress and lessons by existing Monetary Unions such as WAEMU and CEMAC, to facilitate unified Single Currency and to harmonise local financial rules with AfCFTA protocols.
It said the Regional Monetary Institutes would also deal with missed deadlines on implementation of single currency, develop National Programmes to meet macroeconomic convergence criteria within the shortest possible time and set time-bound targets on single inflation rate, budget deficit reduction towards an African single currency.
Intra-Africa trade offers tea farmers golden opportunity (The Standard)
Intra-Africa trade presents a big opportunity for Kenyan smallholder tea farmers to secure an additional market and improve their income. According to Central Bank of Kenya figures, Africa accounted for only 19.4 per cent of Kenya’s Sh827.2 billion total trade value in the first three months of 2023, a slight growth compared to 18.3 per cent in 2022.
With about 1.4 billion people, Africa presents a huge market opportunity for our tea. Better still, Africa’s population is projected to reach 2.5 billion by 2050. Since assuming office, President William Ruto and his administration have held engagements with several African nations on matters trade.
The President has taken a leading role in championing removal of trade barriers among African countries to ease movement of goods, services and labour. Kenya’s profile at continental level has since, improved immensely. This is good news to our smallholder tea farmer. Kenya’s tea subsector can tap into this improved visibility to market local tea within the continent.
East Africa’s textile industry falters on low investments (The East African)
Although East Africa has a massive capacity to produce cotton textiles and apparel given the availability of raw materials and human capital, the region scores relatively low in consumption of local textile products. Over 70 percent of apparel sold in East Africa is imported second-hand clothes, while apparel companies based in Kenya export a majority of their products, particularly to the US.
Kenya and Ethiopia are the leading exporters of textiles and apparel to the US under the African Growth and Opportunity Act (Agoa), but with raw materials sourced outside at the expense of locally produced cotton and yarn.
According to the Kenya Institute for Public Policy Research and Analysis (Kippra), 70 percent of Kenyan apparel companies sell about 80 percent of their products to US markets. Nairobi’s export processing zones (EPZs) host 21 apparel companies that manufacture garments primarily for export under Agoa.
Africa, which ranks among the highest producers of raw materials for textiles and garments including cotton globally, ranks last in consumption of its own textiles, thanks to a thriving second-hand clothing industry dominated by the US and China.
Mobile money wallet users growing in Tanzania (The East African)
Mobile money wallets are gaining traction as the preferred mode of payment for business and other financial transactions in Tanzania compared to other electronic options or even cash, according to two newly released study findings. In its analysis of trade trends in Tanzania over 2022, Standard Bank (Stanbic) said Tanzania differed from other countries in Africa where cash payments have taken the lead and mobile money hasn’t really caught on as fast.
“In terms of the financial behaviour of traders (in Tanzania), when it comes to methods of payment for sales there was a shift from electronic bank transfers to mobile money. This indicates that mobile money has become more popular, and EFTs are falling out of favour for payment received from sales,” Stanbic said in its Trade Barometer report for Tanzania which became available during the last week of June.
Stanbic’s analysis effectively supported FinScope Tanzania’s 2023 report which said an increased uptake of mobile money services among adult Tanzanians, from 60 to 72 percent since 2017, has contributed “significantly” to the expansion of financial inclusion levels in the country.
Car dealers protest increase of import duty to 35 percent (Business Daily)
Car importers have protested a decision to increase import duty to 35 percent on motor vehicles, saying the new rates were implemented without public participation. Car Importers Association of Kenya chairman Peter Otieno said implementation of the 35 percent import duty on Kenyan car buyers must be halted because industry players were not consulted before implementation, which is against the Constitution.
The new import tax, he said, means that vehicle importers must adjust their sale prices upwards by between Sh50,000 to Sh100,000 for small models of cars and by more than Sh500,000 for fuel-guzzlers as they factor in the tax when selling their vehicles.
“What we mean to say is that no public participation was conducted and we cannot accept these amendments whether they have been done through Kenya or East African Community,” said Mr Otieno in a letter to the Kenya Revenue Authority (KRA). “We believe that the Constitution is supreme and the public participation was necessary as the Constitution so dictates that anything touching on the livelihood of the other, the involvement of key stakeholders is paramount.”
FDI flows from Russia to Ethiopia (New Business Ethiopia)
In recent years, Russian investors have shown an increasing interest in investing in Ethiopia, a country located in the Horn of Africa. Investment opportunities exist in sectors such as energy, mining, agriculture, and manufacturing. However, various challenges need to be addressed to fully realize the potential for increased trade and investment between the two countries.
Russian Foreign Direct Investment (FDI) in Ethiopia has been primarily focused on sectors such as energy, agriculture, manufacturing, and infrastructure development. One notable example is the involvement of Russian companies in Ethiopia’s energy sector. Furthermore, Russian investors have also shown interest in Ethiopia’s agricultural sector. Russian investors have also explored opportunities in manufacturing and infrastructure development.
Realising the benefits and opportunities of the African Continental Free Trade Agreement (AfCFTA) requires proactive collaboration between all levels of government and businesses, says Director of Africa Bilateral Economic Trade at the Department of Trade, Industry and Competition, Calvin Phume. Phume was addressing the AfCFTA awareness workshop, which took place in Bloemfontein, in the Free State.
Phume said beyond the policy transformation and reforms, the AfCFTA seeks to ensure inclusivity of women and youth, including youth in the rural areas, development of SMMEs and overall industrialisation of the Continent.
Phume said the AfCFTA encourages innovation, fosters competition and promotes the development of value-chains, thereby spurring industrialisation and job creation across sectors.
Africa offers vast investment opportunities for Asian countries with the appropriate incentives for their private sectors, Prof. Kevin Urama, Chief Economist and vice president of the African Development Bank Group, has affirmed. Urama made the call during a webinar to discuss the 2023 edition of the African Economic Outlook report. The African Development Bank organized the session jointly with the Korea Institute for International Economic Policy (KIEP) in Sejong-Si, Korea.
The report shows that Africa has remained broadly resilient despite experiencing significant shocks, particularly from the Covid-19 pandemic, climate change, and the Russian invasion of Ukraine. From an economic growth of 3.8% in 2022, the continent is set to climb to 4.1% in 2023 and 2024, exceeding the global average by 2.9% and the European average by 1.1%, according to the report, which estimates that growth in Asia would be higher, at 4.3%.
Urama said, “Africa must play a key role in the green transition, given that it is home to 60% of the world’s unexploited arable land and the minerals needed for green growth.” He said these resources could stimulate sustainable development and investments. “This is virgin land, which can be easily used to build low-carbon infrastructure without large-scale expenditure.”
Sung-Chun Jung, vice president of KIEP, highlighted Africa’s vast potential for green growth, considering its fast-growing population and abundant renewable energy and natural resources. “The international community must provide strong support for the efforts by African countries to combat climate change, particularly through funding, technology transfers and capacity building,” he said, adding that the private sector must play a more significant role in covering the funding gap to tackle climate change.
The year 2023 has so far not been a good one for Africa. Conflict has erupted in Sudan, deepened in the Democratic Republic of Congo and spread southward from the Sahel. Extreme weather, often attributed to climate change, has triggered devastating droughts and floods in places like Kenya and South Sudan, deepening poverty. Many African economies are struggling under massive debt.
But the head of the African Development Bank, or AfDB, prefers to focus on the continent’s promise: notably, how to better harness its assets — from its massive natural resource wealth to its large and young workforce — to fight climate change, invest in sustainable development and green and grow economies.
“I’ve been pushing that we need to revalue our countries based on their natural capital,” the bank’s president, Akinwumi Adesina, told VOA during a recent trip to Paris. “This fundamentally for me is how we are going get a lot of capital going into Africa,” he added, “by the greening of African economies, by the proper valuation of carbon” that contributes to rising emissions but can also be stored and sequestered in areas rich in land and forests.
Adesina also denounced loans repaid by depleting Africa’s rich trove of natural resources — from timber and oil and gas to diamonds and rare earth metals, like cobalt, that are key for electric vehicles — with often disastrous environmental consequences.
“Natural resource-backed loans should stop completely,” said Adesina, without naming any particular country. “They should never be on the table. They are toxic, non-transparent debt, which mortgages the future of countries.”
The Regional Economic Communities (RECs) and the African Union Development Agency (AUDA-NEPAD) recently convened in Nairobi, Kenya to review the proposed programme for their joint resource mobilization campaign. This campaign is designed to accelerate the execution of the Agenda 2063 Second Ten-Year Implementation Plan (STYIP) and foster regional integration towards the African Economic Community (AEC).
H.E Ms. Nardos Bekele-Thomas, the CEO of AUDA-NEPAD emphasized the pressing need for coordinated collective action to tackle Africa’s development challenges. She stressed the importance of partnerships, aligning priorities, and harnessing and deploying resources effectively to accelerate the achievement of Agenda 2063.
The joint sitting highlighted the significance of the Agenda 2063 STYIP as the continental strategy guiding the joint resource mobilization programme document and its implementation. The need for a continental Project Preparation Unit covering all priority sectors was also discussed along with the establishment of a comprehensive project database similar to PIDA.
African Development Bank Group President Dr Akinwumi Adesina on Sunday, outlined the Bank’s significant achievements and commitments to Africa, underscoring the Bank’s determination to mobilise resources for driving economic transformation, climate resilience, and addressing the continent’s debt challenge, among other priorities.
Addressing the 5th Mid-Year Coordination Meeting of the African Union (AU) in Nairobi, Kenya, Adesina spoke about the Bank’s significant investments, including spending $44 billion in regional and national infrastructure projects over the past seven years.
Since last year, African leaders have been calling for an additional $100 billion in SDRs for the continent, and that a share of this be re-channelled through the African Development Bank, which is a prescribed holder of SDRs. The initiative, which won plaudits from United Nations Secretary-General António Guterres and other world leaders, would enable the African Development Bank to leverage the SDRs by a factor four and deliver significant resources for the continent.
“We must decisively tackle Africa’s rising debt challenge,” Adesina urged, expressing concern at the continent’s total debt stock, which stands at $1.3 trillion. The cost of debt servicing reached $22 billion in 2022 and is expected to rise this year.
However, the Bank President said Africa needed to change its approach to debt and called for an end to all natural resource-backed loans. He said: “They are not in the interest of Africa, as they are non-transparent. They undervalue resource assets, and pawn national assets.” He said natural resource-backed loans had led to “predatory creditor lending practices that are leaving borrowing countries worse off.”
El-Sisi made the remarks on Sunday during the Africa Blue Economy Strategy session as part of the Fifth Mid-Year Coordination Meeting (MYCM). The president highlighted the African needs for implementing economic transformation, redirecting sectors like energy, transportation and agriculture and preserving biodiversity and the ecosystems, while also achieving the sustainable development goals.
El-Sisi presented Egypt’s vision about what is needed to achieve economic transformation. Equity and justice must be the focus. The required transformation must take into consideration economic and social aspects. Unilateral measures that impact international trade flows must be avoided, especially with regard to exports of the developing and African states.
Regional cooperation must be enhanced to ensure the development of capabilities for preserving shared ecosystems and also to ensure that the states achieve integrated benefits and contain any negative transboundary effects.
President William Ruto has said it is possible to build a more integrated, prosperous, and stable Africa using the continent’s resources. He said this will be done by first reforming the African Union to empower it and enable its performance to align with its goals. “We must free the AU from constraints so that it can pursue urgent and critical interventions in the continent using internally generated resources,” he said.
He spoke during the 5th Mid-Year Coordination Meeting of the African Union, the Regional Economic Communities, the Regional Mechanisms, and the African Union Member States at the UN Complex in Gigiri, Nairobi. Ruto regretted that over five decades after independence, the continent still relies on external funding to drive its agenda. He frowned upon the financing of over 60 per cent of AU programmes by overseas partners.
“The chronic dependence on well-meaning partners is inconsistent with this aspiration,” he added. The President said African integration will open doors for unprecedented transformation, adding that the African Continental Free Trade Area (ACFTA) will be the world’s largest free-trade area, bringing together 54 countries.
President Bola Tinubu on Sunday in Nairobi, Kenya strongly rejected the notion of a new scramble for Africa as various countries including China, United States, Russia, France and Iran, are establishing new blocs between them and the continent.
Speaking at the Fifth Mid-Year Coordination Meeting (5th MYCM), he called for good governance to ensure a prosperous future for Africa, free from the exploitations of the past. “As Africans, we forge ahead no matter the barriers thrust before us. The world we inhabit is often unkind and uncertain. Past history and current global difficulties argue against our future success. “Lessons of the past few years teach us that the world economy can be disrupted in ways that halt progress and invite downturn. Our nations can suddenly find themselves in dire situations if we choose to be passive observers of our fate.
“We sit here in meaningful discussion of vital economic matters. Yet, it will be impossible to bring full meaning to what we attempt unless we give due consideration to the instability and conflict that now scar many of our nations. “The fullness of the integration we seek will elude us as long as several of our nations stand in the midst of violence and war. “The trade and commerce we talk of today refers to valued goods and services that improve life. The trade and commerce these nations suffer is of destruction and disorder that takes lives and steals opportunity.
Africa has the potential to become a major player in the global green hydrogen economy, with the potential to generate more than 1 000 GW of renewable energy and could produce up to 5 000 megatonnes of green hydrogen a year at less than $2/kg, says business advisory company Frost and Sullivan Africa energy consultant Patrick Prestele.
The growth potential of green hydrogen presents significant opportunities for Africa. With abundant renewable energy resources, such as solar, wind and hydropower, the continent can produce vast amounts of cost-competitive green hydrogen for various offtaker markets and industries. “This presents a tremendous growth opportunity for the continent, as green hydrogen is expected to play a crucial role in the global energy transition going forward,” Presele says.
Africa's strategic geographic location favours its position as a hub for green hydrogen exports to global markets. However, there are concerns about Africa becoming a "battery" for the rest of the world. “If the continent heavily relies on exporting green hydrogen alone, it could miss out on the benefits of local value addition and industrialisation. Therefore, African countries must strike a key balance between exporting hydrogen and developing local industries that can benefit from this renewable energy source in the long-term,” he emphasises.
Africa’s green growth market size is at $2.97 trillion (Nairametrics)
The African Development Bank (AfDB) has said that Africa’s green growth market size is at $2.97 trillion. Kevin Chika Urama, AfDB’s Chief Economist and Vice President of Economic Governance and Knowledge Management said this during his presentation at the Mobilizing Private Sector Financing for Climate and Green Growth in Africa to the South Korean Institute for Economic Policy (KEIP) in South Korea. Urama highlighted the fact that green growth positively correlates with real gross domestic product (GDP) growth, climate resilience, and readiness.
While addressing Africa’s lack of green investments, particularly from the private sector, Urama said that the continent needs up to $2.7 trillion cumulatively (that is $242.4 billion annually), over 2020–30 to implement its updated nationally determined contributions (NDCs). He also said that out of the cumulative green bonds’ issuance estimated at $2.2 trillion globally between 2006 and 2022, Africa accounted for only about 0.2% (or $4.7 billion), which is the lowest among world regions.
Africa should harness investment and tapping vast green energy resources to drive sustainable industrialization and trade across the continent, the Economic Commission for Africa (ECA), Acting Executive Secretary, Antonio Pedro, has said.
Addressing the 43rd Ordinary Session of the African Union Executive Council in Nairobi, Kenya Mr. Pedro noted that the African continent had significant resources to power a green and sustainable industrialization and make the African Continental Free Trade Area (AfCFTA) work, but these investments must be prioritized. Mr. Pedro stressed that enabling infrastructure, strong productive capabilities, expanding exports and intra-African trade through the AfCFTA must be accompanied by effective industrialization and trade policies to stimulate private sector investments.
In May, the International Energy Agency (IEA) released a special report: The State of Clean Technology Manufacturing – An Energy Technology Perspectives Special Briefing. The report offers an “update on recent progress in clean energy technology manufacturing in key regions”, says the IEA, with the aim of “keep[ing] decision makers informed of investment trends and the impact that recent industrial strategies are having in these highly dynamic sectors”.
For decades, experts have made the case that challenges around establishing industrial bases in Africa are too profound for it to be worthwhile. According to Amir Bahr, programme manager at UN Energy, the challenges include: “Limited access to finance, lack of supportive policy and regulatory environment, infrastructure constraints, limited local supply chains, and a lack of skilled workforce and technical expertise.”
Olumide Abimbola, from the Africa Policy Research Institute (APRI), agrees that “production factors, supply chain concerns, a lack of incentives, regulations, complex business environments” has made establishing renewable energy manufacturing capabilities complicated in many African nations. However, despite a complicated investment environment, manufacturing on the continent is growing fast. Manufacturing in sub-Saharan Africa has increased in value fourfold since the turn of the century – much faster than the rest of the world.
When it comes to solar manufacturing specifically, a recent report from the UN-backed international organisation Sustainable Energy for All finds that solar module manufacturing in some African countries is already cost competitive with equivalent manufacturing in China.
Leaders at the U.S.-Africa Business Summit in Botswana have urged renewal of the long-standing Africa Growth Opportunities Act (AGOA).The trade deal gives some African countries preferential or even tax-free access for their exports to the U.S. market. The agreement is due to expire in 2025, and African delegates at the summit want the deal renewed.
“It is also our earnest hope that in consonance with the letter and spirit of the U.S.-Africa Leaders Summit, the Biden administration will renew the African Growth and Opportunity Act initiative, which expires in 2025,” he said. “The AGOA renewal now, with expanded mandates, will give a strong signal and confidence to the markets and serve as a catalyst for Africa’s industrialization and inclusion into the global value chains.”
Florie Liser, chief executive and president of the Corporate Council on Africa, which organizes the U.S.-Africa Business Summit, said there is a need to examine AGOA in light of an agreement known as the African Continental Free Trade Area.”A lot has changed” in Africa and beyond since AGOA came into being, she said. “The advent of the African Continental Free Trade Area is fostering much closer economic and commercial integration on the continent, which will spur the creation of regional and continental value chains and increase value added across key sectors. In many ways, the question is how best we can support this development.”
With over 1300 delegates at the US-African Business Summit held mid-July in Gaborone, Botswana, the main focus was on mapping out strategies to strengthen trade and economic relations between the United States and Africa. Majority of the speakers emphasized reviewing and widening collaboration between governments, while others underlined the importance of the private sector as the key driver in achieving robust economic growth in African countries.
African leaders together with corporate business executives and majority of the participants called for extension of the Africa Growth Opportunities Act (AGOA) which grants African countries the freedom to export products tax free into American market. It is the traditional market from where most of them earn revenues for their national budget.
Chairman of the Board of Directors for the US Corporate Council on Africa (CCA), Dr. Jeffrey L. Sturchio, underlined the importance of collaboration between governments and private sectors, describing partnerships as vital ingredient for achieving robust trade and economic targets during the previous years.
The BRICS Business Council would like to even out some of the uneven trade patterns that exist, according to Stavros Nicolaou, the head of the council. Nicolaou said South Africa exported more raw materials and imported more finished manufactured goods.
“That is even with the BRICS countries. We would like to see more of our finished products being exported and less of the finished products being imported. We need to even out the trade imbalances that exist,” he said in an interview. “In the period 2017 to 2021, there has been a 44% growth in trade across the five BRICS countries,” he said.
The council’s mandate is to promote and enhance economic growth across the five BRICS countries and to improve trade and investment between the five countries. Nicolaou said the theme of the conference was Africa and BRICS: promoting multilateralism.
Following weeks of negotiations, the UN-brokered accord that facilitated the export of more than 30 million tonnes of Ukrainian grain to global markets via three Black Sea ports expired on 17 July. “Today’s decision by the Russian Federation will strike a blow to people in need everywhere,” said Mr. Guterres, speaking to journalists at UN Headquarters in New York.
The Black Sea initiative was agreed by Russia, Ukraine, Türkiye and the UN in Istanbul last July along with a parallel accord between the UN and Russia on grain and fertilizer exports from that country. By its decision, Russia has also withdrawn security guarantees for ships navigating in the northwestern part of the Black Sea.
The grain initiative and the Memorandum of Understanding with Russia were “a lifeline for global food security and a beacon of hope in a troubled world,” he said. “At a time when the production and availability of food is being disrupted by conflict, climate change, energy prices and more, these agreements have helped to reduce food prices by over 23 per cent since March last year,” he added.
“The abrupt termination of the implementation of the Black Sea Grain Initiative is a matter of grave concern. I share UN Secretary-General Antonio Guterres’s deep regret and disappointment. Global food security should not become a casualty of war. Ukraine and the Russian Federation are important suppliers of food, feed, and fertilizer to international markets. People in poor countries struggling with food and energy price inflation stand to be hit hardest by the termination of the initiative: prices for future delivery of wheat and corn are already rising. Therefore, I urge all parties to make every effort to come back to the negotiating table.”