tralac Daily News
South Africa’s manufacturing sector is one of several areas of interest, identified in the National Development Plan (NDP) as an industry poised for job creation and GDP growth. Despite several hurdles having thwarted the industry’s progress over the past few years, efforts by the public and private sectors to revitalise and expand South Africa’s manufacturing capabilities, present an encouraging prospect for small- and medium-sized (SMEs).
Last year saw South Africa’s manufacturing sector being put through its paces, with the industry’s gross value showing a decline of 1.3 percentage points during the first six months of the year when compared to the same period in 2022. Persistent load shedding, input cost pressures and the Durban floods during April this year dealt deafening blows to the sector’s progress in several key performance areas.
The industry did, however, show signs of recovery during the latter part of 2022, with an almost 3 percentage point year-on-year increase in September.
For Jeremy Lang, chief investment officer at Business Partners Limited, as sectors such as manufacturing seek to follow the country’s renewed impetus towards economic recovery, a vital component of the solution lies with small businesses.
As he asserts: “Going forward, the strategic positioning of small businesses along the industry’s supply and value chains will serve to unlock the sector’s potential as a bolstered contributor to our country’s GDP, socioeconomic development and the broadening of the fiscal base.”
Recent data presented by Stats SA saw South Africa’s manufacturing sector taking its place as the second highest contributor to total turnover (25%), after trade.”Now is the ideal opportunity for local entrepreneurs to seek out and harness the opportunities that exist within the manufacturing space,” says Lang, who encourages SME owners to look into sub-sectors such as agriculture, pharmaceuticals, renewable energy, and steel.
South Africa’s automotive manufacturing sector has been a real success story for the country but there are several challenges and considerations that stakeholders must grapple with, as well as opportunities that can be capitalised on, as changes unfold, including a move towards electric vehicles. This was noted by speakers during Creamer Media’s webinar, titled ‘The Automotive Industry: Building on South Africa’s success and facing the challenges of the future’, and held on July 26.
National Association of Automotive Component and Allied Manufacturers executive director Renai Moothilal attributed the success of the sector thus far to the country having a long-established history of automotive production and a very sophisticated network, both from an original equipment manufacturer (OEM) perspective and the supplier base that had developed over a very long period of time.
Importantly, and supporting the strong private sector presence, there had been recognition and active involvement by various administrations of the South African government to provide serious levels of policy and incentive support, he pointed out. Therefore, Moothilal said, the country had a fairly stable supporting mechanism.
Toyota Wessels Institute for Manufacturing Studies Manufacturing Ambassador Professor Justin Barnes posited that the South African automotive industry’s opportunity lay in Africa and in creating regional value chains. He pointed out that an important area of focus for the country needed to be on increasing its domestic market, as this was tied to the number of vehicles it could export owing to rebates.
South Africa asks US for early renewal of key trade agreement (Engineering News)
South Africa asked the US government to consider an early extension of the African Growth and Opportunity Act to help stimulate investment across the continent, Trade, Industry and Competition Minister Ebrahim Patel said.
The request was made during a visit by South African officials to the US earlier this month to discuss the trade pact and finalize preparations for an AGOA forum that’s scheduled to be hosted in SA this year. An early renewal of AGOA in its current form would be preferable to a revised agreement that may take time to conclude, Patel said in an interview with the Johannesburg-based Business Day newspaper.
“If we extend AGOA largely in its current form, we can incrementally improve the terms over the next few years,” the paper cited Patel as saying. “Many African countries are keen on an early extension because it gives investors certainty to commit additional investment on the continent.”
South Africa ships cars and agricultural produce to the US under the accord. Last year, it exported $2.7 billion of goods using AGOA and the so-called Generalized System of Preferences.
IFC partners with Banking Association South Africa to boost climate finance (Engineering News)
Development finance institution the International Finance Corporation (IFC) is joining forces with local body the Banking Association South Africa (BASA) to help increase climate finance in the country and pave the way for a transition to a low-carbon economy.
Under the terms of the agreement between the IFC and BASA, IFC will provide advisory support to strengthen the climate risk assessment, mitigation and adaptation practices of South Africa’s banks and help them reduce their exposure to climate change-related risks. The partnership will also promote investment in green, climate-friendly assets, in line with the country’s National Development Plan and its commitments to the Paris Agreement.
Through the programme, the IFC aims to facilitate at least $500-million in climate investments by South African banks, and at least $300-million in climate-themed bonds issued by South African corporates, by 2027.
The country needs an estimated R1.5-trillion ($84-billion) over the next five years to transition from coal to renewable energy, reduce carbon emissions, adopt new green technologies and support affected communities.
Mali’s economy showed signs of resilience despite Economic Community of West African States (ECOWAS) sanctions, high food inflation, and parasite infestations that affected cotton production. According to the World Bank’s 2023 Economic Update for Mali, entitled “Strengthening Financial Resilience of Pastoralists to Drought,” GDP growth is estimated at 1.8%, driven by the recovery of food agriculture and the resilience of the gold and telecommunications sectors. Average annual inflation increased to 9.7% in 2022, owing primarily to rising food prices.
In terms of projections, the report notes that the outlook for 2023 is fraught with risks associated with the electoral timetable and tighter financial conditions. The rising cost of financing on the regional market, given Mali’s high gross domestic financing needs, is a significant risk that has emerged in the last 12 months.
The second chapter of the report focuses on disaster risk financing and insurance instruments designed to reduce the adverse socioeconomic impacts of climate shocks. It notes that Mali experienced at least 40 major climate shocks between 1970 and 2020 and that each year droughts are estimated to have affected about 400,000 persons and reduced crop revenues by $9.5 million. Financial resilience to drought could, however, be strengthened by establishing instruments to protect key sectors such as pastoralism and agriculture.
Douala-Bangui corridor: Truckers spend up to CFAF255,000 at checkpoints, survey reveals (Business in Cameroon)
Truckers traveling along the Douala-Bangui corridor disburse an average of CFAF64,000 and a maximum of CFAF255,000 at checkpoints along the corridor, a recent survey reveals. According to the survey published by the European Union (EU)-funded Observatory of Abnormal Practices (OPA) on the major corridors in Central Africa, these expenses average just CFAF22,941 with a maximum of CFAF126,000 on the Douala-Ndjamena corridor, which connects Cameroon and Chad.
Based on those figures, the OPA concludes: “Checks on the Douala-Bangui corridor (1,435 km) remain more costly than on the Douala-N’Djamena section (1,934 km), even though this route is shorter (400 km less).”
According to the OPA, payments made at road checks are the most abnormal practices corridor users mostly report in the Central African region.
Uganda to host a freight conference next month (The Independent Uganda)
Uganda Freight Forwarders Association (UFFA) in partnership with the International Federation of Freight Forwarders Associations (FIATA), will host the RAME2023 an international conference that brings together freight logistics stakeholders from the Region Africa and Middle East (RAME) at the Commonwealth Resort, Munyonyo, next month
RAME represents over 1,000 freight forwarders in over 30 countries in the Middle East and Africa. The three-day conference starting on August.01 will provide an opportunity for companies in the shipping business to discuss current and emerging global supply chain trends concerning resilience, adaptability, and diversity.
The conference will also provide an opportunity for Ugandan companies to participate in the heavily standardized oil and gas industry by forging partnerships with more established foreign players. Uganda, which is currently developing its oil and gas industry, hope to start production in 2024.
A strong African voice on global financial architecture reform (Mo Ibrahim Foundation)
The COVID-19 pandemic, the cost-of-living crisis fuelled by the war in Ukraine, the tightening of global financial conditions… Since the beginning of the new decade, Africa has been hit by a series of shocks that has stalled progress on the Sustainable Development Goals (SDGs), threatening to lead to a lost decade for the continent, rather than one of action.
62 million Africans were pushed into poverty in just one year after the COVID-19 outbreak, with an additional 18 million estimated to have joined their ranks by the end of 2022. Economies have been hit hard and many African countries are burdened with elevated levels of debt and insufficient fiscal space to make essential investments in critical infrastructure projects, education, and healthcare.
To respond to those challenges, the United Nations Economic Commission for Africa (ECA) created the Africa High-level Working Group on Global Financial Architecture (the Group) at the beginning of 2022.
The Group serves as a forum to develop reform proposals for the global financial architecture as well as to unify the African voice on the global stage. Many of the Group’s proposals have been echoed in a resolution passed by African Ministers at ECA’s Conference of Ministers in Addis Ababa in March 2023. Those proposals were also presented during the Africa Consultative Group meeting with the IMF Managing Director in Washington DC during the 2023 Spring Meetings of the WBG and the IMF. At the heart of those proposals are three key asks, centring on unlocking liquidity, reforming the global debt architecture, and enhancing representation for African countries in global financial institutions.
The East African Business Council (EABC), a regional apex body of the private sector, has in collaboration with its partners launched the East African Business and Investment Summit 2023, aimed at charting out a common agenda to take trade to higher heights for increased prosperity, the EABC said in a statement on Wednesday. Themed “Private Sector-Driven Regional Integration for Increased Intra-African Trade, Investment & Economic Growth,” the summit is slated for Aug. 31 to Sept. 1 in the Ugandan capital of Kampala, said the statement.
“This summit is organized in close collaboration with all investment promotion authorities in East Africa, who will showcase investment opportunities and present viable projects ready for investment to East African, African, and international investors,” said the statement.
The hybrid Meeting of the Committee of Ministers of Justice/Attorneys General of the Southern African Development Community (SADC) was held on the 20th July 2023 in Kinshasa, Democratic Republic of Congo, to review progress made on decisions taken at its previous meeting and considered the draft legal instruments to be recommended to SADC Council of Ministers and Summit of Heads of State and Government for consideration, approval, adoption and signature.
Among the legal instruments was the Draft Amendments to Annex VII to the SADC Protocol on Trade which was also considered and recommended to the Committee of Ministers of Trade for approval and adoption. The draft amendments to Annex VII the Protocol on Trade seek to incorporate the agreed provisions on the Preferential Trade in Sugar in the SADC region such as preferential access to be established for SADC surplus sugar producing countries to markets of deficit SADC sugar producing and non-sugar producing countries (surplus to deficit trade in sugar) amongst others.
Global fertiliser suppliers have made incredibly high profits in 2022/23 on the back of price spikes attributed to the Russia-Ukraine war. The profits of the world’s top nine producers trebled in 2022 from two years previously.
The wide gaps between fertiliser prices in the region and international fertiliser prices point to major issues within the supply chain with excess margins of some 30%-80% being earned on sales to many African countries.
High fertiliser prices undermine production, contribute to high food prices, and exacerbate food insecurity.
High prices for fertiliser inputs are squeezing African farmers who are cutting back on fertiliser use meaning low yields and supply, and high food prices. International action is therefore urgently required on fertiliser prices to improve food security in Africa.
Boosting trade with Morocco is a big Brexit benefit (Politics Home)
When it comes to post-Brexit trade opportunities, the government is right to prioritise building on the UK’s unique 800-year-old relationship with Morocco.
Morocco is well positioned not only by its proximity to the UK but as the “Gateway to Africa” to support and help catalyse UK-Africa trade, business, and commercial ties, offering both proximity and privileged access to the African market.
Importantly Morocco is a unique trading partner. In fresh food alone it produces ‘green/climate friendly agriculture’, utilises sustainable farming and produces an array of fresh products. It has a wonderful array of trade infrastructure.
Since the association agreement was signed in 2021, total trade in goods and services between the two countries has increased by 50 per cent. In 2022, the UK and Morocco did about £3.1 billion-worth of bilateral trade and the UK is using the association agreement with Morocco to boost that even further.
A number of key elements in areas of collaboration, including digital innovation, space science, as well as strengthening people-to-people exchange will form part of the subjects to be discussed at the second Russia-Africa Summit in St. Petersburg.
Speaking to SAnews in St. Petersburg, Department of International Relations and Cooperation (DIRCO) Minister, Dr Naledi Pandor, said that a wide spectrum of areas of partnership are a rationale for South Africa’s presence at the summit.
“We’ve also added a much stronger focus on matters of trade. All of these will be part of the subjects that we will discuss during this second summit,” Pandor told SAnews.
The Minister emphasised that it was important to mention that for the first time, it is not just Heads of State attending the summit, but there are also a number of enterprises from various African countries as well as the Continental Development Finance institutions present.
“Interestingly, we also have the brand new president of the New Development Bank or the BRICS Bank, as it is sometimes called. This will be President Dilma Rousseff’s first detailed interaction with African leaders, particularly the BRICS leaders. This (meeting comes ahead of the) BRICS summit that will occur in Johannesburg in South Africa, next month,” Pandor said.
Russia was able to replace Ukrainian grain and would continue to supply grain and fertilisers to African countries despite sanctions, Russian President Vladimir Putin said yesterday.
“I want to give assurances that our country is capable of replacing the Ukrainian grain both on a commercial and free-of-charge basis, especially as we expect another record harvest this year,” Putin wrote in an article titled “Russia and Africa: Joining Efforts for Peace, Progress and a Successful Future” published by the Kremlin yesterday.
The Russian city of St. Petersburg will host the Russia-Africa summit from July 27–28. Putin emphasised that Russia was ready to build mutually beneficial relations with the AU, including within the framework of the Eurasian Economic Union.
Addressing a session on trade for agri-food systems transformation via a virtual connection, DG Okonjo-Iweala emphasized that open and predictable trade is an indispensable mechanism for people to access affordable food because “one in five calories consumed around the world is traded across an international border”. Furthermore, “farm trade rules and policies shape the incentives influencing production, investment and consumption decisions at the centre of the food systems transformation,” she added.
The Director-General said trade is “a key factor” in driving development and income gains for people in poor countries and in supporting better access to nutritious food, as evidenced in the decades of trade-enabled growth up until the COVID-19 pandemic.