Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Trade statistics for June 2023 (South African Revenue Service)

South Africa recorded a preliminary trade balance deficit of R3.5 billion in June 2023. This deficit is attributable to exports of R167.6 billion and imports of R171.1 billion, inclusive of trade with Botswana, Eswatini, Lesotho and Namibia (BELN).

The year-to-date (01 January to 30 June 2023) preliminary trade balance surplus of R5.6 billion is a deterioration from the R129.6 billion trade balance surplus for the comparable period in 2022. On a year-on-year export flows for June 2023, were R167.6 billion, which were 8.3% lower compared to R182.9 billion for June 2022, whilst import flows were 6.5% higher having increased from R160.7 billion in June 2022 to R171.1 billion in the current period.

Confidential document reveals SA fears that Agoa trade pact status is under threat (Daily Maverick)

The document about South Africa’s Agoa status informed deliberations by high-level envoys sent to the US by President Cyril Ramaphosa to explain South Africa’s stance on the Russian invasion of Ukraine and to lobby to retain South Africa as part of Agoa. “The debate around the renewal of Agoa has provided Congress with an opportunity and a powerful tool to cajole and pressure South Africa to speak out against Russia more forcefully and publicly,” the document, dated March 23, reads.

“In addition, the new power dynamics in Congress, the current geopolitical context and big power competition for strategic influence, including in Africa, have afforded the Republicans a platform to use their narrow majority in the House of Representatives to put the Democrats under pressure to take stronger [measures],” it reads.

On Monday this week, the United States Trade Representative, which is responsible for developing and coordinating US international trade, began its annual review of the eligibility of sub-Saharan African countries to receive the benefits of Agoa

Ruto cuts on weigh bridges, roadblocks on Mombasa-Kla route (The Independent Uganda)

Kenya has agreed with neighbouring countries, a raft of measures to be implemented immediately to improve cargo handling through the Port of Mombasa to the hinterland. Among them, Ruto directed the immediate removal of all weighing points save for only Merikhani and at the borders for all transit cargo. He also directed that all the roadblocks along the transit highways within Kenya’s borders be removed immediately. These would be replaced by Mobile Police Security.

At a meeting held on Saturday at the port city, where Uganda was represented by Gen Edward Katumba Wamala, the Minister for Works and Transport, Kenya President William Ruto said they will convince again in 90 days to review the progress.

The directives President Ruto gave were aimed at facilitating faster movement of goods and services by reducing the non-tariff barriers to trade.

Morocco’s trade deficit widens 61.6% over first half of year (ZAWYA)

Morocco’s trade deficit widened by 61.6% in the first half of 2023 to 138 billion dirhams ($14 bln) despite a slight drop in imports, data from the foreign exchange regulator showed on Friday. Imports contracted 1.6% from a year earlier to 359 billion dirhams, overshadowing exports of 221 billion dirhams, up 1.9%, the regulator said in a monthly report.

Morocco’s energy imports stood at 61 billion dirhams, down 14.8%, while the cost of wheat imports slightly dropped by 0.7% to 45.7 billion dirhams. The automotive sector led Morocco’s exports with 70.9 billion dirhams, up 34.3%.

Breaking free of the dollar: PAPSS and intra-African trade, By Odewale Abayomi (Premium Times Nigeria)

At a recent forum on the African Continental Free Trade Area (AfCFTA) in Nairobi, Kenya, the Kenyan President, William Ruto called on African leaders to expedite the adoption of the Pan-African Payments and Settlement System (PAPSS) by both their central and commercial banks, in order to decrease pressure and reliance on the bullish US dollar for intra-African trade. The Kenyan president is deeply concerned about the fragmented African payment landscape, with nearly 40 currencies being used across 54 countries, under diverse payment structures and cumbersome processing strategies – thereby making free trade a herculean task.

During the forum referred to above, Ruto queried, “From Djibouti selling to Kenya or traders from Kenya selling to Djibouti, we have to look for US dollars. How is US dollars part of the trade between Djibouti and Kenya? Why?” “That is why Kenya champions the Pan African Payment and Settlement System that is done by our own institution — the Afreximbank. Why, members? Why is it necessary for us to buy things from Djibouti and pay in dollars? There is no reason,” he stated.

Before PAPSS, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) was the primary platform for African banks to conduct cross-border transactions, with an estimated loss of close to $5 billion annually, which undermines trade in Africa countries. It is quite an irony that it is faster and cheaper for Nigerians to receive and transfer money to far away Western countries than to those within Africa.

Currently, only nine countries, which are Nigeria, Ghana, Liberia, Guinea, Sierra Leone, The Gambia, Djibouti, Zimbabwe, and Zambia are part of the PAPSS’s network, out of the 54 African countries billed to trade under AfCFTA through a single and open market that allows for the unrestrained movement of goods, services, capital, and persons, and which supports investment opportunities. Every central bank on the continent is expected to enrol with and become part of PAPSS by the end of 2024, while all commercial banks are to follow suit by the end of 2025. But, the adoption process remains at a slow pace.

Civil servants urged to work towards maximising AfCFTA benefits (The Namibian)

Prime minister Saara Kuugongelwa-Amadhila has called on civil servants to prepare themselves for Namibia to reap the full benefits of the African Continental Free Area agreement (AfCFTA). She made these remarks in a speech read on her behalf by the deputy industrialisation minister, Verna Sinimbo, during the four- day 2023 Africa Public Service Day commemoration, which concluded at Katima Mulilo yesterday.

African Union (AU) member states commemorate Africa Public Service Day on 23 June annually to mark and recognise the role of public sector organisations and their positive contributions and benefits to communities, as well as the contributions of civil society and the private sector to national development efforts. This year, the day was celebrated under the theme, “The African Continental Free Trade Area (AfCFTA) will Require a Fit-for-purpose African Administration to Succeed”.

“Preparedness through the development of public systems and institutions, among others, is required. Further, we must align and coordinate our efforts at all levels and promote a spirit of partnership with other stakeholders beyond the public service in order to leverage the resources and capabilities of all Namibians to optimise economic growth and development. The public service is at the centre of the success of AfCFTA,” she said.

EABC organises forum on AfCFTA rules of origin (Tanzania Daily News)

THE East African Business Council (EABC) has commenced a three-day workshop on the African Continental Free Trade Area (AfCFTA) Rules of Origin. The workshop convened together National Associations, Chambers of Commerce from the Region, and delegates from the European Union and EAC Secretariat.

“Partnership in this endeavour is of vital importance for capacity building and knowledge sharing in fostering a vibrant, inclusive trade environment,” said EABC Board Member, Mr Paul Makanza in his opening remarks, 

to fully realise the advantages of AfCFTA, it is crucial to understand a number of aspects related to the agreement, and the most fundamental aspect is the Rules of Origin, he said. “It plays a crucial role in ensuring fair competition, preventing trade deflection, and safeguarding products originating from the Region. A comprehensive understanding of this training will help the region navigate through the complexities of trading and harness the potential of the AfCFTA,” he added.

Strategic partnerships key to unlock EU’s market for agricultural produce (Tanzania Daily News)

When it comes to the economies of the East African Community (EAC), agriculture stands tall as the backbone. Not only does it contribute to food security, but it also fuels employment, industrial development, trade and investment. In a recent report by Eurostat, the European Union’s statistics authority, it was revealed that in 2022, the EAC exported agri-food products worth a staggering 2.16 billion Euros (Sh330b) to the EU. This figure represented an impressive increase of 26.2 per cent from the previous year. Moreover, intra-EAC trade in agricultural products witnessed a remarkable 33 per cent growth from 2018 to 2022.

However, despite the significant strides made in value addition, a considerable proportion of agricultural products from the region are still exported in their raw form, due to a combination of demand and supply-side challenges. These statistics highlight the EAC’s untapped potential if supply side and market access obstacles are effectively addressed. The hurdles encompass access to market information, enhanced productivity throughout the value chain, compliance with international standards, improved post-harvest handling, logistics, branding, and more.

East Africa Regional Economic Outlook 2023: Mid-term growth for East Africa region projected highest on the continent for 2023-4 (AfDB)

East Africa will register the highest regional economic performance on the continent in 2023 and 2024, with growth figures at over 5 percent, according to the newly published African Development Bank 2023 East Africa Economic Outlook.

The report, launched on Thursday 27 July, projects mid-term economic growth in the region to accelerate to 5.1% in 2023 and 5.8 % in 2024, outpacing all the other African regions. This will be largely driven by growth in Rwanda, Uganda, Ethiopia, Kenya, Djibouti, and Tanzania.

According to the report, East Africa’s real GDP was propelled by its services sector, contributing almost half of the economic growth in 2022. The sector contributed 2.0 percentage points to GDP growth, lower than 2.5 percentage points on average for the period 2015-2021. The region’s natural and cultural attractions draw tourists from around the world, creating a demand for services like accommodation, food, and entertainment.

The report outlines four common challenges faced by the region’s economies, which justify a strong, inclusive green growth agenda. They include reliance on agriculture for livelihoods, natural resource dependence, energy, and water scarcity. It urges East African countries to adapt green growth pathways by tapping into key sectors like renewable energy; sustainable agriculture and infrastructure; and forestry.

23rd Meeting of SADC Ministerial Task Force calls for accelerated industrialisation (SADC)

The 23rd Ministerial Task Force (MTF) on Regional Economic Integration of the Southern African Development Community (SADC) held its meeting on 26th July, 2023 with Ministers calling for accelerated implementation of the industrialisation agenda to spur economic growth and poverty eradication in the SADC region.

In his opening remarks, Honourable Mr. Julien Paluku Kahongya, Minister of Industry of the Democratic Republic of Congo and Chairperson of the Ministerial Task Force (MTF) on Regional Economic Integration, highlighted the need for the SADC region to redouble its efforts in industrialising the regional economy in order to limit importation of finished products and reduce the export of raw materials.

He further called for the development of regional value chains, taking advantage of the region’s abundant minerals and natural resources which offer opportunities for trade, investment, and industrial development in the SADC region.

Final communique – Fifty First Extraordinary Summit of the ECOWAS Authority of Heads of State and Government on the political situation in Niger (ECOWAS)

President Bola Ahmed Tinubu, President of the Federal Republic of Nigeria and Chairman of the Authority of Heads of State and Government of the Economic Community of West African States (ECOWAS) has convened an Extraordinary Summit of the Authority on the political situation in the Republic of Niger. The Summit held in Abuja, on July 30, 2023. The ECOWAS Leaders considered and discussed the political situation and recent developments in Niger during the Extraordinary Summit.

Forum report highlights need to properly assess Africa’s place in the global world (ZAWYA)

The Mo Ibrahim Foundation has released the 2023 Forum Report, Global Africa: Africa in the world and the world in Africa. The Report outlines the key takeaways from the 2023 Ibrahim Governance Forum, alongside the latest available data around the theme of ‘Global Africa’.

The Forum was held in Nairobi as part of the Foundation’s annual Ibrahim Governance Weekend, which took place between 28-30 April. The event brought together African leaders, politicians and thought leaders to discuss the ‘Global Africa’ theme across three sessions, with participants considering Africa’s weight in the current world, the world’s presence in Africa, as well as the continent’s place within the multilateral architecture.

“The world is changing around us. Time is gone to underestimate Africa, talk down to Africa or give instructions to Africa. Do not take Africa for granted.” - Mo Ibrahim, Founder and Chair of the Mo Ibrahim Foundation (MIF)

Russia-Africa 2023 Summit: Progress & Joint Declaration (Russia Briefing)

The 2023 Russia-Africa Summit has finished in St.Petersburg, with 49 of the 55 African nations attending, up from 43 at the previous 2019 event.

On a regional basis, the BRICS grouping is willing to discuss expanded membership to include several African nations. At present, Egypt already has equity in the BRICS New Development Bank, while Algeria, Morocco, Nigeria, and Senegal are all known to have made official applications to join.

Russia plans to increase exports of food and fertilizers, vehicles, and industrial machinery to Africa. These commercial transactions will be increasingly settled in national currencies, including the Ruble, as opposed to the US Dollar and Euro. Moscow intends to send both commercial and humanitarian shipments of grain to “African friends”, according to the Russian president. This includes free deliveries and shipping of Russian grain to six African nations as soon as possible, and the delivery of free fertilizers and shipping to a further six. Russia is set for a record grain harvest this year, with President Putin stating that Russia will provide sustainable and affordable deliveries to Africa.

Russia has written off US$23 billion of African debt and is in discussions to allocate a further US$90 million for lowering the overall debt burden of African countries. According to Oleg Ozerov, Chair of the Russia-Africa Partnership Forum Secretariat, African countries’ debt issues involve restructuring “some financial issues, but we are not talking about the direct debt. We are talking about certain financial agreements and the obligations of both sides.”

There was considerable attention paid to having various East African countries officially join the International North-South Transportation Corridor (INSTC) which provides multi-modal logistics and transport between the Caspian Sea and the Persian Gulf, effectively connecting Russia with the Middle East. Extending this from the Gulf to Africa – Egypt would be a primary destination – would make Russia-Africa trade far more effective and discount the use of the longer, and more expensive Suez Canal option. It would also assist African nations access Central Asian markets, an issue of interest especially to Africa’s Muslim nations.

The two sides agreed to the further strengthening of trade, economic, and investment cooperation between Russia and the African States, including with the African Union, and the leading African regional organizations

Russia specifically mentioned the operations of the African Continental Free Trade Area (AfCFTA) which came into effect in 2021 and has reduced intra-African tariffs on 95% of all products. Moscow is ahead of the game here in terms of recognizing the benefits of this, as it effectively means that goods can be sourced on a pan-African basis, consolidated into one area – such as a Free Trade or Economic Trade Zone (ETZ), producing a final product either for export or resale on the African market. Russia has such a ETZ at Port Said in Egypt, with the first exports from that facility due later in the year. Similar Russia ETZ have been proposed in Ethiopia, Namibia, and Malawi, while China is also doing the same. In contrast, European businesses appear to have missed the significance of the AfCFTA, perhaps wanting to concentrate on intra-EU trade and a more protectionist attitude.

In terms of boosting what AfCFTA means for Russian investors, the summit stated that it was important “in order to enhance the market integration, industrialisation and economic development of the African continent by facilitating technology transfer and encouraging investment, promoting the development of value added chains, and boosting mutual capacity to produce and export value added manufactured products.”

Russia is ahead of the game here in terms of understanding what Africa has done in this regard. Consequently, Russian auto manufacturers are already looking at establishing manufacturing plants in east Africa, taking advantage of both AfCFTA as well as the INSTC transport routes.

Afreximbank reiterates prioritization of food security, promoting trade & investment and advancing the African Continental Free Trade Agreement (AfCFTA) at 2nd Russia-Africa Economic & Humanitarian Forum (Afreximbank)

With the prevalent dependency of African economies on external supply of fertilizers and grains and up to 30% of cereals imported from Russia, ensuring that critical trade flows continue uninhibited, remains the priority of Afreximbank and its African member states. The lingering global food security challenges and the critical role trade with Russia plays in guaranteeing Africa’s food security was at the core of discussions for Afreximbank at the second Russia African Economic and Humanitarian forum which held at St. Petersburg from the 27th to the 29th of July, 2023.

Addressing the summit, Prof. Benedict Oramah, President and Chairman of the Board of Directors of the Bank, said in his remarks that “ Afreximbank is working with the African Union Commission, the United Nations System and Russian partners to use the Africa Trade Exchange (ATEX) e-commerce platform to facilitate seamless flow of goods and payments in any currencies chosen by sellers and buyers in a transparent manner. The platform pools Africa’s demand for grains and fertilizers, and the Bank has placed an aggregate credit limit of US$3 billion to support these transactions.”

Trade flows between Africa and Russia reached almost US$20 billion in the four years to 2021, as against about US$10 billion in 2015, despite the COVID-19 pandemic and other significant global crises, bringing it closer to the target of US$40 billion by 2026. It is expected that the trade flows could double over the next four years.

Developing countries all set to start trading in national currencies - BRICS bank head (IOL)

There are no obstacles for developing countries to switch to trade in national currencies, the president of BRICS’ New Development Bank (NDB), Dilma Rousseff, said on Wednesday.

The NDB is an international financial institution established in 2014 following the BRICS summit after an agreement between Brazil, Russia, India, China and South Africa. It aims to mobilise resources for infrastructure and sustainable development projects in BRICS countries, as well as other emerging markets and developing countries, through the provision of loans, guarantees and other financial instruments as part of state and private projects.

Members of the BRICS group do not cooperate against third parties, and this concerns financial issues as well, Russian President Putin said during the meeting with Rousseff.

Putin added that settlements in national currencies among BRICS countries were on the rise, and the development bank could play a key role in this issue.

E-commerce co-convenors to issue updated negotiating text (WTO)

In his opening remarks, Ambassador Hung Seng Tan of Singapore, co-convenor of the initiative and chair of the 2023 plenary meetings, said: “We need to exercise greater flexibility and we need to really put our shoulders to the plough and push together as we head towards the finishing line.”

In closing the meeting, he said that the co-convenors will take time to reflect over the summer and take stock of progress made so far. He added: “We will develop a roadmap for us to double down our efforts from September to November.” He also announced that a text on “single windows” — the practice of establishing a single entry point for the exchange of information between trader and government — has been “parked”, meaning the technical work on this topic has been finalized.

WTO issues 2023 edition of the World Trade Statistical Review (WTO)

The World Trade Statistical Review 2023 presents recent trends in international trade at a time of geopolitical and macroeconomic strains and technological challenges affecting the global economy and supply chains. The data cover merchandise and services trade broken down by geographical origin, main product groups and sectors, along with related data on key economic developments such as GDP growth, commodity prices, and exchange rate fluctuations.

Director-General Ngozi Okonjo-Iweala says in the foreword to the report: “As a succession of crises buffet the global economy, with the COVID-19 pandemic giving way to the war in Ukraine, inflation, monetary tightening, and widespread debt distress, world trade has lost momentum, with trade growth slowing in 2022 and remaining weak into early 2023. That said, global trade growth has remained positive, underscoring how trade has been a force for economic recovery and resilience. Nevertheless, numerous downside risks, from geopolitical tensions to potential financial instability, are clouding the medium-term outlook for both trade and overall output.”

New publication sets out common framework for measuring digital trade (WTO)

The measurement of digital trade offers policymakers statistical evidence on the significant impact of digital trade on the global economy. Digital technologies have made it increasingly feasible for buyers and sellers to place and receive orders on a global scale. They also enable the instantaneous remote delivery of services directly into businesses and homes.

The Handbook focuses on two key elements: digitally ordered trade and digitally delivered trade. Furthermore, it highlights the important role of digital intermediation platforms (DIPs) in facilitating digital trade and addresses particular compilation challenges in measuring DIP transactions.


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