tralac Daily News
Duty-free maize imports plan flops on costly supplies (Business Daily)
Kenya’s plan to import about 900,000 tonnes of white maize by next month has run into headwinds on costly global supplies. The latest data from the Ministry of Agriculture and Livestock Development show barely one-third of the desired imports had landed in the country by the end of June, ahead of closure of the duty-free import window next month. Between February and the end of June, the ministry reported importation of a mere 259,470 tonnes of maize, which represents just 29 percent of expected imports.
Moreover, the bulk of imports has come from the region as opposed to being sourced from outside the East African Community and Comesa as earlier expected.
“All imports (in June) were from East Africa Community countries, mostly Tanzania. According to the Kenya Grain Millers Association, the reduced imports are due to a generally tight global market, coupled with reduced local demand which is attributed to lower purchasing power,” the ministry said in its latest food and nutrition security bulletin.
“It is further noted that although the government gave a duty-free import window for maize outside the EAC and Comesa, 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 a shortage of the dollar. The imported maize arriving at Mombasa is slightly more expensive compared to local supplies.”
Uganda’s dairy sector counting losses as Kenya blocks exports (The East African)
On June 23, 2023, Brookside Dairy Uganda sent home at least 200 workers saying it has been forced to cut production by 75 percent as it has been unable to export the milk produced since March. Kenya is Uganda’s largest market in East Africa and Brookside says Nairobi has declined its 116 export permit applications.
This development, which is blamed on the supremacy battle between the regime of President William Ruto and his predecessor Uhuru Kenyatta, whose family owns Brookside, has left Ugandan milk farmers and processors on the brink of economic ruin, and Kampala is now aggressively looking for markets farther outside the region.
An earlier milk export deal brokered by President Yoweri Museveni with Algeria seems to have fallen through, and on Wednesday this week, Museveni asked visiting Senegal President Macky Sall to allow Ugandan milk into his country. President Sall pledged to buy milk powder from Kampala, giving a glimmer of hope to the local producers.
“In Senegal, we import things from New Zealand and Brazil. We import powdered milk from these countries. We need to see how we can come and buy your milk,” the President said at State House Entebbe, where he was gifted samples of Uganda’s milk by his host.
Uganda’s Trade Balance with the East African Community indicates that the country registered a surplus of $127.3 million (Shs463,734,932,300) with the four countries. The Ministry of Finance Planning and Economic Development has revealed that Uganda registered trade surpluses with all the East African Community partner states except for Tanzania and Burundi, which implies that trading activities are steadily growing with other member states.
“The largest trade surplus was with DR Congo ($55.1 million), followed by South Sudan $51.0 million), Rwanda ($17.6 million) and Kenya ($3.6 million) respectively,” said the Ministry of Finance. The EAC remains Uganda’s main trading bloc in the continent because of regional integration. Regional integration helps countries overcome divisions that impede the flow of goods, services, capital, people and ideas.
Rwanda, Congo-Brazzaville sign deal to trade under AfCFTA (The New Times)
Rwanda and the Republic of Congo on July 22 signed an agreement to fast-track trade and economic cooperation under the African Continental Free Trade Area (AfCFTA).
The agreement was signed by Jean Chrysostome Ngabitsinze, Rwanda’s Minister of Trade and Industries, and Denis Christel Sassou Nguesso, the Minister of International Cooperation in Congo-Brazzaville. The deal’s signing was presided over by President Paul Kagame and President Denis Sassou Nguesso.
The Minister of Foreign Affairs and International Cooperation, Vincent Biruta, said the Congolese President’s visit was an opportunity to take stock of the progress made so far in terms of implementation and to identify strategic areas to focus on.
He said the signing of the memorandum of understanding on preferential trade to enhance economic cooperation between the two countries under the AfCFTA, will be based on key strategic areas. The latter include economic projects that reflect a commitment to sustainable development, responsible resource management, and economic growth.
Nigeria is not maximising AfCFTA opportunities - Experts (Businessday NG)
Nigeria has fallen behind its regional counterparts in harnessing the full potential of intra-African trade, despite signing the African Continental Free Trade Area (AfCFTA) agreement in 2019.
As intra-African trade remains sluggish, a key factor contributing to the stagnation is the limited information available to manufacturers and the bureaucratic hurdles hindering their participation in the ambitious trade pact. And although the first practical trade activity under the AfCFTA regime was held in September 2022, neighbouring Rwanda, Cameroon, Egypt, Ghana, Kenya, Mauritius, Tanzania, and Tunisia are already operating without Nigeria, having met the minimum requirements for trade under the Agreement.
“So far, the practical implementation of AfCFTA started in September 2022, with the export of coffee products from Rwanda to Ghana; and export of Exide Battery from Kenya to Ghana, under the Guided Trade Initiative (GTI) within the eight state parties that have met the minimum requirements for trade under the Agreement,” said Odiri Erewa-Meggison, Ag. chairman, MAN Export Promotion Group. “These countries are already operating on the GTI without Nigeria,” she added, during her opening speech at the two-day capacity-building training for members of the Manufacturers Association of Nigeria Export Promotion Group (MANEG).
Franca Achimugu, coordinator, strategy & planning, AfCFTA Nigeria Secretariat has said the government of Nigeria will have to set in more initiatives that will encourage people to produce for Nigeria, as export is more economically viable and will before long, have many manufacturers looking its way. “It’s going to be a lot of disservice to Nigeria if we do not saturate our domestic market and we head for other markets, because in the whole of Africa, we are the ones that have the population, and that means latent demand, and that means that other countries are looking at us to send their products here,” Achimugu said.
EAC currencies gain against dominant Kenyan shilling (Business Daily)
The Kenya shilling has lost nearly 20 percent of its value against regional currencies in under a year, weakening its dominant position in the region in a trend that is serving pain to traders importing goods from Uganda and Tanzania. The Kenyan currency is now priced at about 19.7 percent lower than the Uganda shilling when compared with mid-July last year while its value against the Tanzania shilling and Rwandese franc has also dropped by 12.1 percent and 4.4 percent respectively in the same period.
The continued weakening of the Kenyan shilling against the currencies of Uganda, Tanzania and Rwanda means that Kenyan exports into the region are fetching far much less than before. For instance, goods that used to cost Ugandan traders Sh1 million to import around March 2020 now cost less by about Sh292,000 thanks to the weakened Kenyan shilling. However, Kenyans buying from Uganda are disadvantaged since they now spend about Sh1.3 million to buy the same quantity of goods that they could get from the landlocked East African country for Sh1 million in March 2020.
“Importing goods in the region is becoming difficult for business. Many of us have had to cut on the volume of goods we are importing or have had to increase money to get the same volume of goods we used to get say a year earlier,” said Mr Karanja in a phone interview.” And since selling prices for these goods are not changing that much here in Kenya, our profit margins have been dropping. We are worried that reversing this free fall of the shilling is going to be difficult.”
EA ministers approve $4m Northern Corridor budget (The East African)
Northern Corridor Council of Ministers has approved $4.35 million budget for the next fiscal year, some $1.18 million less than it did in the past fiscal year. The executive committee has also approved an entity that seeks to address non-physical barriers to trade to enable the Northern Corridor to compete with the Central Corridor. The entity, Northern Corridor Transit and Transport Coordination Authority (NCTTCA), is expected to streamline customs procedures, reduce bureaucracy, and harmonise trade policies and regulations.
In a joint communique after the 35th meeting of the Northern Corridor Council of Ministers in Kigali, the council also delved into how to improve intermodal transport in the Northern Corridor region and the need to work on joint railway projects.
“The secretariat should continue bringing together all the six member states to promote rail and inland waterways transport to ease the pressure on the road network and work towards enhancing a seamless movement of goods along the corridor and reiterated the need to fast-track and operationalise the use of oil jetties on Lake Victoria in the transfer of oil products,” said the ministers. In May, Kenya and Uganda begun seeking an alternative financier for the standard gauge railway to connect Naivasha and Kampala via Malaba.
Nigeria and the Benin Republic have agreed to meet on Monday, July 24, on the provisions of the ECOWAS Trade Liberalisation Scheme (ETLS).
Adeniyi explained that the meeting, which would hold in Benin Republic, would set the tone for trade agreements beneficial to both countries to deepen the provisions of the ETLS as a precursor to the African Continental Free Trade Area (AfCFTA). He pointed out that preferential trade agreements “has been the bedrock of prosperous nations across the world.” He added that the development of geopolitical blocs “is hinged on policies and agreements which grant trade benefits to nations believed to share complementary needs.”
He said such symbiotic relationship “is needed to enhance the efficiency of the customs services of both countries as behoves neighbours and to strengthen the process of trade facilitation and economic development.
The panel started with Commissioner Solomon Ayele Dersso highlighting that while implementing the African Continental Free Trade Area (AfCFTA) project, States have an obligation to prevent exploitative economic relations, particularly with international monopolies. In addition, he stated that trade liberalisation should not lead to commodifying essential social services, including health, education, water and food.
“Trade and human rights have tended to remain on ‘the parallel, separate and sometimes inconsistent tracks’ on which they developed”, stated Brenda Kombo, a fellow of the Institute for Global Law and Policy, quoting Professor Makau Mutua and Professor Robert Howse.
Additionally, Kombo referred to Professor Babatunde Fagbayibo, who characterised the AfCFTA processes as State-centric, and to the 2016 statement of civil society actors, which described the AfCFTA as a project excluding civil society and private sector involvement until now. The African Union and the AfCFTA Secretariat have undertaken efforts to encourage greater participation in the processes. However, Kombo called for the meaningful participation of a broad range of actors, who are the beneficiaries of free trade, in the AfCFTA processes.
US-EAC trade pact comes into life amid disharmony (The East African)
The Trade and Investment Framework Agreement (Tifa) between the US and the East African Community has begun taking shape, with a section of the bloc’s members keen on it and others still biding their time. This week, US officials were in Nairobi to conduct part of the negotiations on the US-Kenya Strategic Trade and Investment Partnership and to meet Trade ministers from the region.
“The EAC members have their own very important dynamics in terms of engaging as a region on economic matters. This is really important for the US to show up as a partner that wants to strengthen regional integration, and our partnership with the region and other specific engagements,” she said.
US Trade Representative Katherine Tai
The meeting addressed market access issues, labour, environment, protection and enforcement of intellectual property rights and capacity building.
Dr Mathuki told The EastAfrican that the forum was important to the US because the EAC “is becoming attractive to others because of market size and improved business environment.”
They also used the forum to discuss the future of the African Growth and Opportunity Act (Agoa), which expires in 2025.
U.S. plans trade missions in South Africa, Ghana; unsure of Nigeria (Peoples Gazette)
The U.S. government says it will embark on a global entity of trade enterprise with African nations, including South Africa and Ghana, but it is sceptical about Nigeria due to the country’s foreign currency rate barrier. The United States Department of Commerce, International Trade Administration (ITA) disclosed this in a statement published on the U.S. government federal register in February. According to the statement, the ITA will be responsible for recruiting, organising and implementing the global trade mission between August 6-15, 2023.
“After South Africa, the mission will proceed to Ghana in West Africa,” it said. “In Ghana, mission participants will have the opportunity to participate in pre-arranged B2B meetings with potential partners and customers, as well as a potential site visit to a manufacturing facility.”
It added, “Given recent government regulations imposing additional tariffs on automotive imports, this sector is no longer considered viable for American automotive exporters. Companies involved in ICT and Safety & Security will be better situated for B2B meetings in Ghana.”
“After Ghana, mission participants have the option to proceed to the optional stop in Nigeria for two days after a weekend break. In Nigeria, participants will have B2B meetings with potential partners and customers. ”This stop will be optional as some of the target sectors for this mission face foreign exchange barriers, making it difficult to enter and compete in the Nigerian market. ”It is noted that some consumer goods, including textiles and cosmetics/toiletries, are among the products that face this difficulty. The mission will conclude in Nigeria,” the U.S. statement read.
“This second summit is expected to consider four declarations and a three-year Action Plan, which will be presented for consideration. These submissions will focus on strengthening cooperation between Russia and African States in politics, security, trade, science, IT, humanitarian support, education, culture, sports, youth and the environment.
“The declarations also seek to strengthen cooperation in the fight against terrorism, the prevention of an arms race in outer space, and in information security,” the President’s office said in a statement.
President Cyril Ramaphosa is expected to lead the South African delegation to the second Russia-Africa Summit to be held at St Petersburg in the Eastern European country on Thursday and Friday.
Could Supply Chain Security Take U.S. Firms to Africa? (RealClearDefense.com)
Beginning in August, China will levy export controls on two critical minerals: gallium and geranium. These metals are essential to semiconductor technology and restricting access to them marks Beijing’s latest volley in its strategic power competition with Washington and will significantly disrupt U.S. and Taiwanese chip manufacturers.
The global mineral supply chain is already narrow and China has an overwhelming lead with respect to rare earth metal extraction and processing. This market dominance enables Beijing to manipulate access seemingly at-will. Beyond minerals, China’s status as the world’s top manufacturer also makes raw material building blocks like plastics, chemicals, and agriculture products vulnerable to Beijing’s geopolitical ambitions.
For U.S. industry dependent upon reliable supply chains, this vulnerability underscores the need to pursue a pivot. Decoupling is unrealistic, but diversifying supply is a necessary long-term strategy. For American interests pursuing new, secure supply chains, Africa represents a key opportunity.
For the American firms also interested in engaging Africa as a supply chain partner, support exists for their first steps.
During the past 20 years, U.S. government efforts have encouraged safer trade and investment conditions, and current initiatives such as Prosper Africa and Power Africa align American industry with tools like risk insurance, business intelligence, and matchmaking. The Africa Growth and Opportunity Act also adds import provisions, and the African Continental Free Trade Area‘s further facilitates supply avenues and promotes trade through tariff removal between African states, regional cooperation, common rules, and regulatory reform.
Like any emerging market, Africa is not without risk.
Brics opportunities must not be at expense of other trade relations (Engineering News)
South Africa’s representatives do not seem to realise that the opportunities presented by the Brazil, Russia, India, China and South Africa (Brics) trade bloc must not be at the expense of other trade relationships and that South Africa’s trading relationships with the West are essential to its economic well-being, said business organisation Business Leadership South Africa (Busa) CEO Busi Mavuso.
“The Brics bloc is a positive opportunity for South Africa and it is right for government to cultivate relationships with Brics. India and China, in particular, are massive and fast-growing markets that South African businesses can benefit from. “However, our relationship with Brics must not come at the expense of our relationships with the West because, while the opportunities in the East are clear, our trading relationships with the West are essential to our economic well-being,” Mavuso said in a July 24 newsletter.
For example, Minister in the Presidency for Women, Youth and Persons with Disabilities Nkosazana Dlamini-Zuma, during a presentation to the Brics Youth Summit, decried those countries that prefer South Africa to ship raw materials to them, rather than manufactured goods. “However, she did not pause to consider that our relationships with India and China are overwhelmingly characterised by South Africa exporting raw materials and importing manufactured goods,” illustrated Mavuso.
“Immense harm would be done to our industrial base if we collapsed the trade relationships that currently sustain it without any competitive access to new trading markets. China, India and Brazil have huge populations that create potentially massive demand for goods we could potentially provide,”
BRICS leaders to discuss sustainable payment mechanism: Russian Foreign Ministry (The Economic Times)
One of the crucial topics the BRICS nations will consider at their summit next month is the establishment of long-term payment systems for cross-border commerce, the Russian Foreign Ministry said.
“Given the current international situation, this issue will be addressed during the upcoming meeting of the bloc’s leaders,” the ministry said on Friday, referring to the summit in Johannesburg, South Africa, on August 22-24, RT reported.
The use of national currencies in cross-border commerce is hindered, according to the Russian Foreign Ministry, by things like their restricted convertibility and higher volatility than the US dollar. The government also admitted that it would be a “delicate” process to possibly launch a new BRICS common currency.
The BRICS nations have been seeking to shift further from the US dollar in mutual trade, with the de-dollarization trend gaining momentum following sanctions that effectively cut Russia off from Western financial mechanisms. Numerous developing nations - including Russia’s fellow BRICS members China, India, Brazil and South Africa - have started to move toward alternative currencies in trade, RT reported.
South Africa became Chair of BRICS on January 1 this year under the theme: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development and Inclusive Multilateralism”.
“The theme informs the Chair’s five priorities for 2023 - Developing a partnership towards an equitable Just Transition; Transforming education and skills development for the future; Unlocking opportunities through the African Continental Free Trade Area; Strengthening post-pandemic socio-economic recovery and the attainment of the 2030 Agenda on Sustainable Development; Strengthening multilateralism, including working towards real reform of global governance institutions and strengthening the meaningful participation of women in peace processes,” according to the official statement.
China vows to aid Ethiopian recovery and boost ties with Kenya, Nigeria (South China Morning Post)
As the West steps up its diplomatic ventures into Africa, China has renewed its commitment to the continent, with debt relief and reconstruction pledges for Ethiopia and calls on new administrations in Kenya and Nigeria.
The commitments came as part of senior Chinese diplomat Wang Yi’s four-nation African tour, which will also include a visit to South Africa.
The commitments came as part of senior Chinese diplomat Wang Yi’s four-nation African tour, which will also include a visit to South Africa.
During an unannounced stop in Addis Ababa on Friday, Wang said China supported Ethiopia’s domestic reconstruction and economic recovery after the deadly Tigray war.
In a meeting with Ethiopian Prime Minister Abiy Ahmed, Wang, a Politburo member and director of the Office of the Central Committee for Foreign Affairs, said China “is willing to play a positive role in easing Ethiopia’s debt pressure”, according to a readout from China’s foreign ministry.
Ethiopia has an estimated US$13.7 billion in debt to China, much of it advanced by China Exim Bank between 2000 and 2021. Chinese capital has funded the US$4.5 billion Addis Ababa-Djibouti railway, along with other projects such as the capital’s Riverside Green Development and a light-rail network.
Abiy said he appreciated China’s strong support whenever Ethiopia faced difficulties and “regards China as a reliable and great friend”, actively taking part in the Belt and Road Initiative, according to the Chinese readout.
Given that intellectual property rights privatise agricultural biodiversity - our collective heritage and the cornerstone of food sovereignty - the implications of this protocol on seeds and the rights of peasants and rural communities in Africa must be carefully analysed.
Around the world, free trade agreements are forcing the privatisation of seeds, whether through patents or plant breeders’ rights. These rights enable seed companies to demand royalty payments from farmers for each generation of seeds they use, over a period of 20 to 25 years. According to seed companies such as Syngenta and Bayer, without these payments they will be unable to invest in research.
This same system is now rapidly gaining ground in Africa, potentially upsetting relationships between citizens within members states, and even between the member states themselves. Article 8 of the draft protocol addresses this issue. It stipulates that state parties shall provide protection for new plant varieties through a legal system that includes farmers’ rights, plant breeders’ rights, and rules on access and benefit sharing “as appropriate”.
Furthermore, it adds that states shall comply with “additional obligations” set out in an annex to be developed once the protocol is adopted. Upon adoption, this annex, along with the annexes on traditional knowledge and genetic resources, will have the same legal value as the protocol (article 41 of the protocol).
In a world of plenty, it is outrageous that people continue to suffer and die from hunger. The Food Systems Summit two years ago helped shine a spotlight on a core truth: global food systems are broken and billions of people are paying the price.
without access to financing and debt relief, developing countries are struggling to invest in food systems that can reach all people with the nutrition they need to live healthy lives. Meanwhile, unsustainable food production, packaging and consumption are feeding the climate crisis, generating one third of all greenhouse-gas emissions, using 70 per cent of the world’s freshwater and driving biodiversity loss on an epic scale. Many communities are one shock away from plummeting into food insecurity or even famine.
And that dire picture has grown bleaker with the Russian Federation’s termination of the Black Sea Grain Initiative that enabled the safe export of more than 32 million metric tons of food on more than 1,000 vessels from Ukrainian ports.
Broken food systems are not inevitable. They are the result of choices we have made. There is more than enough food in the world to go around. More than enough money to fund efficient and sustainable food systems to feed the world, while supporting decent work for those who grow the food we eat. And more than enough agricultural innovations and technology that can place healthy food within reach of every person.
Climate change: Which countries will foot the bill? (Hellenic Shipping News)
Record-breaking heat in China. Wildfires forcing Swiss villages to evacuate. Drought ravaging Spanish crops. As the costs of climate change rack up, a debate is surging among governments: who should pay?
The question has been in the spotlight amid this week’s climate talks between the U.S. and China, where the world’s two biggest economies tried to find ways to work together on issues ranging from renewable energy deployment to climate finance ahead of this year’s U.N. climate summit, COP28, in Dubai.
Given China’s rapid economic growth and increasing emissions, pressure has grown on Beijing to join the group of countries providing this funding.
“It’s difficult to argue that countries like China, Brazil or Saudi Arabia should still be put at the same level as the least developed countries and small island developing states,” a diplomat from one European Union country told Reuters. The EU, today the biggest contributor of climate finance, has