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IMF Executive Board Concludes 2023 Article IV Consultation with Kingdom of Lesotho
Lesotho’s economy continues to face a number of challenges in the wake of the pandemic. Climate shocks, delays to infrastructure projects, high food and fuel prices, declining diamond prices, layoffs in the textiles sector, and weak regional and external demand are weighing on activity. High public expenditure also continues to distort incentives and hinder private sector development.
The government is prioritizing fiscal consolidation on the back of windfall transfers from the Southern African Customs Union (SACU), which have helped alleviate near-term pressures on financing and reserves. However, the fiscal deficit deteriorated to 7.7 percent in FY22/23, due to lower revenue and rigid expenditure, with public debt increasing to almost 60 percent of GDP.
Looking ahead, the outlook is subdued with real GDP projected to grow at 2.1 percent in FY23/24 and average the same over the medium term. In the absence of stronger consolidation, the fiscal position is projected to deteriorate over the medium term due to lower SACU transfers, wage bill pressures, and recapitalization of the pension fund. The government is encouraged to push ahead with upfront growth-friendly fiscal adjustment to ensure debt sustainability and safeguard the exchange rate peg, alongside broad-ranging structural reforms to support the transition from government-centric to private sector-led growth.
Nestlé building $4.5m South Africa plant to boost local production (Supply Management)
Nestlé is spending R79m (around $4.5m) to build a production plant in Babelegi, Hammanskraal to meet local demand and support economic development. The factory will produce a range of coffee mixes in a bid to meet growing demand for the drink in the region, streamline supply chain operations and reduce its environmental impact.
Nestlé, which owns brands including Nescafé and Häagen-Dazs, has seen demand rocket in South Africa since the onset of the pandemic, with three-quarters (75%) of its revenue from across southern and eastern Africa originating from the country.
Nestlé East and Southern Africa region business executive officer for coffee and beverages, Carl Khoury, said: “We are excited to officially open our Nescafé coffee mixes manufacturing plant and demonstrate our dedication to the local market.” He said the move follows national policies including South Africa’s Reconstruction and Recovery Plan to develop infrastructure and industry and enhance its energy and food security. “We take pride in our investment in this production plant as it reflects our dedication to nurturing the potential of the region and contribution to rebuilding the economy,” he continued.
Brics: ‘Farming can fix SA’s post-Covid economic ruin’ (Food For Mzansi)
South Africa’s post-pandemic economic recovery has been sluggish since plummeting in the second quarter of 2020 – when lockdown restrictions were at their most stringent. Supporting agriculture, some believe, is key to turning the tide for South Africa’s economy. This is because it accelerates the development of the agro-food system and creates broad-based welfare gains for all people, agri-economic consultant Tlale Matseke said. Matseke was speaking during a panel discussion at this year’s Brics Youth Summit.
“A key strategy for post-pandemic recovery is supporting growth led by agricultural productivity, because this accelerates the development of the agro-food system and creates broad-based welfare gains for all people,” he said.
Tanzania jumps seven positions in the 2023 ranking of most powerful passports (The Citizen)
In a significant leap, the Tanzanian passport has advanced seven positions in the latest 2023 Henley Passport Index, now securing the 69th spot among the world’s most powerful passports. This marks a substantial improvement from its previous ranking of 76th in 2022. According to the updated ranking, Tanzanian passport holders enjoy visa-free travel to 73 countries.
Within the African continent, South Africa boasts the most powerful passport, holding the 51st position globally, with visa-free access to 106 countries. Botswana follows at 58th place, granting its passport holders access to 89 countries visa-free, while Namibia ranks 62nd, providing visa-free access to 81 countries. Lesotho stands at 64th place, offering visa-free access to 79 countries, and Eswatini occupies the 66th position, granting visa-free access to 77 countries.
US guarded on Kenya trade deal past Agoa expiry (Business Daily)
The US is non-committal about when negotiations for a free trade deal with Kenya will be concluded despite Nairobi earlier saying the talks would be finalised by December. The United States Trade Representative Katherine Tai, who concluded her three-day tour in Nairobi on Wednesday, indicated the US negotiators do not have a deadline for concluding talks or signing the proposed US-Kenya Strategic Trade and Investment Partnership (STIP).
The proposed trade deal, which does not have clauses on tariffs, is expected to shield Kenya in the event that the US Congress chooses not to renew the African Growth and Opportunity Act (Agoa), which gives countries in the sub-Saharan Africa duty- and quota-free access to the American market, when it expires in 2025. Kenya’s Trade Cabinet Secretary Moses Kuria had in March said he expected the negotiators to finalise talks in December to pave the way for the signing of the deal by April 2024.
Global supply constraints bite as maize prices rise in June (KBC)
Kenya’s maize imports fell to 386,864 bags last month compared to a high of 1,169,072 bags reported in March this year according to latest data by the Ministry of Agriculture. The drop last month is despite the government granting importers a four month to bring in maize from outside COMESA and EAC duty-free in order to stabilize maize flour prices.
According to the Food and Nutrition Security Report for June by the ministry, millers attribute the reduction to low supplies in the global market coupled with reduced local demand on account of low consumer purchasing power. “It is further noted that although the government gave a duty-free import window for maize outside EAC and COMESA between April to August 2023, very little has been imported by the legible millers and traders as they report inadequate global supplies, higher freight and insurance costs as well as shortage of the dollar. The imported maize arriving at Mombasa is slightly more expensive compared to local supplies,” the ministry stated in the report.
Trade between UK and Nigeria rises by 78.2% in one year (Businessday NG)
Total trade in goods and services (exports plus imports) between the UK and Nigeria rose by 78.2 percent (or £3.3 billion) to £7.5 billion in the four quarters to the end of Q4 2022, from the four quarters to the end of Q4 2021, according to data from UK’s Trade and Investment Factsheet.
Britain’s export finance agency in 2018 said it would add the naira to its list of “pre-approved currencies”, allowing it to provide financing for transactions with Nigerian businesses denominated in the local currency. The naira will become one of three West African currencies that UK Export Finance has pre-approved for its programme of funding transactions that promote trade with Britain, it said.
Of this £7.5 billion, total UK exports to Nigeria amounted to £4.3 billion in the four quarters to the end of Q4 2022 (an increase of 58.8 percent or £1.6 billion in current prices, compared to the four quarters to the end of Q4 2021). Total UK imports from Nigeria amounted to £3.1 billion in the four quarters to the end of Q4 2022 (an increase of 114.4 percent or £1.7 billion in current prices, compared to the four quarters to the end of Q4 2021).
Equitable Trade Agreements, Regional Trade Will Drive Investment in Africa - Deputy Minister Wolokollie Addresses London Forum (FrontPageAfrica)
Equitable Trade agreements, transparent governance, and regulations driving regional trade are among the policies critical to stimulating trade and investment across Africa. Delivering the keynote address during the thematic discussion on investment and trade in Africa, at the African Achievers’ Awards Annual Lecture in London, United Kingdom, Deputy Finance Minister for Fiscal Affairs, Hon. Samora P.Z. Wolokolie, advanced strategies and partnerships to ensure the benefits of Africa’s vast natural resources for all.
He identified robust infrastructure that will connect the economies of Africa and facilitate regional trade; heralding the African Continental Free Trade Area (AFCFTA) as a vehicle to foster economic integration while enhancing Africa’s competitiveness on the global stage. The engine of the African economies will be led by qualified and trained manpower.
Minister Wolokolie insists that the regulatory framework is also critical for attracting Foreign and Direct investment. “African Governments can create an enabling environment for FDI by implementing transparent regulations, ensuring the rule of law, and providing incentives for investors.” He noted. He advanced public-private partnerships as another dynamic to accelerating economic transformation. He pointed to renewable energy, agriculture, healthcare as well as technology.
How can the East African Community fulfil its FDI potential? (Investment Monitor)
The East African Community (EAC) is a seven-nation bloc that comprises some of the most highly populated and resource-rich countries in Africa. Its combined population of more than 300 million (according to some estimates), its strategically advantageous location, and the access it offers to materials such as liquefied natural gas (LNG), copper, cobalt and nickel means that the bloc is very much on the radar of investors.
However, despite interest from the likes of the EU, the US, the UK and the EAC’s largest foreign investors, China and India, foreign direct investment (FDI) accounts for less than 3% of the EAC’s gross domestic product (GDP) and remains uneven among its members: Burundi, the Democratic Republic of Congo, Kenya, Rwanda, South Sudan, Tanzania and Uganda. Adding to this, sectors vital to EAC economies, such as agriculture, receive little to no foreign investment.
The 2023 Edition of the Africa’s Dynamic Development Report is now available. The latest edition offers a comprehensive overview of economic policies on the continent focusing on the five regions. Drawing from a wide range of data sources to analyse public, private, domestic and foreign sources of investments, the report proposes a new narrative assessing Africa’s economic, social and institutional performance aligned to the African Union Agenda 2063 targets, and explores innovative ways to attract investments that are economically, socially, and environmentally sustainable. It a resource document to inform decision makers, business analysts, private investors, journalists, and other stakeholders on the development trajectories of African countries.
The report whose overarching theme is “investing in sustainable development” shows that Africa’s sustainable financing gap until 2030 is about USD 1.6 trillion, and estimates that the continent needs additional financing of about USD 194 billion annually to achieve the Sustainable Development Goals by 2030. It further shows that the annual sustainable financing gap is equivalent to 7% of Africa’s gross domestic product (GDP) and 34% of its investments in 2021.
Sustainable investments are essential for Africa’s economic, social and environmental development. The report argues that when mobilising and allocating investments, African countries need to manage tensions between economic, social and environmental goals such as productive transformation, social inclusion and resilience to climate change.
Recognizing the fundamental role that agriculture plays in development, the African Union Member States established the Comprehensive Africa Agriculture Development Programme (CAADP), which is a continent wide framework for accelerating broad-based economic growth and progress toward poverty reduction and food and nutrition security through an agriculture-led growth within the decision made by the African Heads of State and Government for 10 year consecutive period made in Maputo (2003-2014) and in Malabo (2014-2025).
In his opening remarks, Dr. Godfrey Bahiigwa, Director of Agriculture and Rural development said that “We need to discuss the various intervention required, outcomes and how to operationalise these outcomes, using our comparative advantage to advance the process.” Dr. Bahiigwa also presented the draft roadmap and emphasized the need for advocacy efforts to improve the understanding of the CAADP value proposition, core principles and values, which in turn should allow member states and other stakeholders adopt and domesticate it widely across the continent, as the overarching policy framework for agricultural transformation.
The 5th AU-EU Agriculture Ministerial Conference convened on 30th June 2023 at the FAO headquarters in Rome, Italy. The Conference brought together representatives from the African Union and European Union Member States as well as the, private sector and civil society to take stock of the achievements made from the last Agriculture Ministerial Conference, and share their experiences towards more sustainable food systems, in light of the responses to the COVID-19 pandemic and to the food security crisis brought by the Russian – Ukraine crisis.
In her opening remarks, H.E Amb. Josefa Sacko emphasised the need to renew commitment to advance agriculture transformation in Africa and Europe, through promoting sustainable investment in agri-food systems, boosting trade and integration, fostering science and innovation, and building climate resilient food systems Trade. “Agriculture, as we all know, lies at the heart of both Africa and European economies and societies. As such, deepening the two continents’ partnership and cooperation in the sector, is of paramount importance for our shared future” she said.
The conference concluded with the announcement of the establishment of an EU-AU Joint Task Force on Fertilisers. This task force aims to address challenges related to fertilizer accessibility and affordability and propose solutions. The key recommendation and actions from the conference included; to strengthen cooperation and accelerate the implementation of AfCTA and global trade, this being the year of trade in Africa, to collectively shape the action and push joint leadership, to identify opportunities to strengthen this cooperation and promote innovative forms of EU-AU partnership in strengthening agri-food systems and to operationalize multilateralism, sustainable and inclusive development, and sustainable growth as key drivers for the achievement of the Comprehensive Africa Agriculture Development Programme (CAADP) Malabo Declaration, Agenda 2063 and the SDGs.
EU concludes Africa-Pacific treaty after Poland drops veto (EURACTIV)
More than two years of delay in ratifying the new EU treaty with African, Caribbean and Pacific countries ended on Thursday (20 July) after Poland confirmed its approval of the agreement. The treaty is set to be formally signed by leaders at a summit in Samoa in the coming weeks.
The Cotonou Partnership Agreement between the EU and 78 African, Caribbean and Pacific (ACP) countries should have expired in February 2020 but was extended until December 2021 after negotiations on a successor deal took longer than planned. Following the delays in ratification in Europe, Cotonou was rolled over until September 2023. The new treaty covers political and economic relations with the 79-member ACP but, unlike its predecessor, does not have an aid component or change EU-African trade relations.
The EU has struggled to finalise Economic Partnership Agreements with various states across the ACP, primarily over fears that they would force developing countries to open their markets to EU firms.
Brics nations considers new members ahead of summit (The East African)
More than 40 countries have expressed interested in joining the Brics group of nations, South Africa’s top diplomat in charge of relations with the bloc said on Thursday. South African Ambassador for Asia Anil Sooklal and officials from the Department of International Relations and Cooperation were addressing journalists in the main commercial city of Johannesburg, a day after South Africa confirmed Russia’s Vladimir Putin would not attend the Brics summit due to take place on August 22-24.
The question of how far and fast to expand the club - centred around Brazil, Russia, India, China and South Africa - is top of the agenda at the summit of nations seeking to offset the perceived hegemony of the US-led West in global affairs.
Aside from the 22 countries that had formally asked to join, Sooklal -- South Africa’s top diplomat in charge of relations with the bloc -- said there was “an equal number of countries that have informally expressed interest in becoming Brics members ... (including) all the major global south countries.”
Ukraine War Looms Large Over Russia-Africa Summit (VOA)
African leaders are to meet with Russian President Vladimir Putin in St. Petersburg at the end of this month for a summit, billed as strengthening cooperation in peace, security, and development. But the second Russia-Africa Summit comes as Moscow continues to wage war against Ukraine. Russia’s invasion has led to higher food and oil prices for many African nations – and prices could rise further after Russia this week pulled out of the Black Sea Grain Initiative, a U.N.-brokered deal that allowed Ukrainian food exports to reach international markets.
Steven Gruzd, who leads the Africa-Russia project at the South African Institute of International Affairs in Johannesburg, said: “They [Russia] are under a lot of pressure with what’s happening in Ukraine and the ramifications of the conflict there in terms of commodity prices, particularly for Africans — and also what’s happening with Wagner and so on — so this an opportunity for Russia to try to assert its place on the global stage as well.” Trade likely will be discussed. “I think there would be talk about trade ... Russia’s trade with Africa is really negligible. China and the EU are by far much bigger trading partners with Africa.”
Behind at halftime, but all still to play for in race to 2030 goals as top political forum closes (UN News)
Over the past ten days, world leaders, policymakers, and key stakeholders gathered to review progress, share experiences, and discuss strategies for advancing sustainable development. Focused on the theme of Sustainable and Resilient Recovery from the COVID-19 Pandemic, this year’s HLPF recognized the unprecedented challenges posed by the global health crisis.
Admitting that the world is “woefully off track” to achieve the SDGs by the 2030 deadline, the Forum discussed the ways to push forward the implementation of five out of the 17 SDGs. They put under scrutiny progress made so far in universal access to clean water, sanitation and power, and reviewed ways to take advantage of new technology, also discussing the crucial role of urban development.
Lachezara Stoeva, President of the Economic and Social Council (ECOSOC), who spearheaded the work of the Forum, emphasized the importance of innovation, technology, and high-impact partnerships. ”We are halfway to 2030 and yet nowhere near to achieving the SDGs. The bad news is we’ve lost seven years. The good news is, we still have seven years and victory is within our reach,” she said.
Trade’s role in climate action in the spotlight at COP28 (UNCTAD)
The Intergovernmental Panel on Climate Change (IPCC) – a body of the world’s leading climate scientists – warns that limiting global warming to 1.5°C will require achieving net-zero CO2 emissions worldwide by 2050. To achieve this, trade must play its part since the global production and distribution of goods and services contributes to roughly a quarter of all emissions.
The upcoming COP28 UN climate summit, slated for 30 November to 12 December in Dubai, will spotlight the role of trade in good and services and trade policy can play in bolstering and accelerating the clean energy transition. The conference, hosted by the United Arab Emirates (UAE), will dedicate an entire day to discussions on trade, the first of its kind within the context of a UN climate conference. “Trade Day” at COP28 will highlight trade’s potential as a catalyst for climate-smart development, focusing on issues like value-chain decarbonization and resilience.
UNCTAD estimates show that trade in environmentally friendly goods – those designed to use fewer resources or cause less pollution – increased by about 4% in the second half of 2022, reaching a record $1.9 trillion. Goods like electric vehicles, non-plastic packaging (+20%), and wind turbines (+10%) saw especially high growth. Trade can provide more countries with access to environmentally preferable goods and services, as well as facilitate the transfer of technologies and know-how to support mitigation and adaptation efforts in all countries.
DG Okonjo-Iweala calls on members to “narrow down realistic deliverables” for MC13 (WTO)
Speaking at a meeting of the WTO’s Trade Negotiations Committee on 20 July which she chairs, Director-General Ngozi Okonjo-Iweala called on members to use a senior government officials’ meeting to take place in October to “narrow down realistic deliverables” for agreement at the WTO’s 13th Ministerial Conference (MC13) in early 2024. Acceptance of the Fisheries Subsidies Agreement by two-thirds of the membership is an area where senior political push will be essential on the road to MC13, the DG told WTO members.
Wheat prices soar for a third day as Russia-Ukraine tensions stoke fears of major food crisis (CNBC)
Wheat prices rose on Thursday after Russia threatened to treat ships heading for Ukrainian ports as military cargo carriers, deepening fears of a global food security crisis. It marks the third consecutive day of price rises. The most actively traded wheat contract on the Chicago Board of Trade was last seen trading around 1.4% higher at 737.6 cents per bushel, notching a three-week high.
The rise follows the Kremlin’s decision Monday to pull out of the Black Sea Grain Initiative, a critically important wartime deal that provided a maritime humanitarian corridor for the export of Ukrainian grain. U.N. chief António Guterres said he “deeply” regretted Russia’s decision to terminate the initiative, which in effect ended a “lifeline” for hundreds of millions across the globe facing hunger, as well as those already struggling with spiraling food costs.
European Union foreign policy chief Josep Borrell said Thursday that Russia’s decision to pull out of the pact would imperil global food security. “What we already know is that this is going to create a big and huge food crisis in the world,” Borrell said Thursday ahead of an EU foreign minister’s meeting.
Food security work programme enters decisive phase (WTO)
The Committee on Agriculture’s food security work programme has entered a decisive phase, with the release of the coordinator’s report outlining his views on where there could be convergence among members. At a meeting on 19 July, members reviewed the report, which focuses on the needs of least-developed countries (LDCs) and net food-importing developing countries (NFIDCs), for the first time, welcoming its circulation and considering it a good basis for further discussions. The aim is to find agreement on recommendations by November 2023.
Third Fossil Fuel Subsidy Reform meeting discusses concrete next steps to advance work (WTO)
At an 18 July meeting, WTO members participating in the Fossil Fuel Subsidy Reform (FFSR) initiative exchanged views on three key areas where work in the WTO could contribute to efforts to advance FFSR, both in the run-up to the WTO’s 13th Ministerial Conference (MC13) in February 2024 and beyond.
