tralac Daily News
South Africa: Trade balance dipped unexpectedly in June (The Citizen)
South Africa’s merchandise trade balance unexpectedly dipped in June, with the value of the country’s exports and imports shrinking to register a trade shortfall of R3.5 billion. Lower export figures were mainly due to fall in the value of mineral goods, precious metals and stones, as well as vehicle and transport equipment exports.
Economic research group, Oxford Economics Africa, expected little change in the surplus but has noted that monthly merchandise trade flows will remain volatile for the time being. The group also says mineral producers find it difficult to get their goods to local ports, which are constrained by backlogs and inefficiency.
“The knock-on effects are undermining industry, a salient contributor to merchandise exports, which is already curtailed by scheduled power outages. What’s more, fixed investment intended to expand existing production capacity is undermined by weaker demand and unforeseen capital expenditure to source alternative energy generation.”
South Africa’s trade deficit of R3.5 billion in June is in sharp contrast to a downwardly revised merchandise trade surplus of R9.6 billion in May. The trade deficit was also much lower than the consensus forecast of R11.9 billion and marks the second goods trade deficit this year.
Tyre importers and manufacturers in China have been slapped with anti-dumping duties for the next five years following an investigation by the International Trade Administration Commission (Itac). The commission recommended that Minister of Trade, Industry and Competition Ebrahim Patel impose anti-dumping duties on new pneumatic tyres imported from China for cars, buses and lorries ranging between 7.18% and 43.6%.
The application was lodged by the South African Tyres Manufacturers Conference (SATMC), representing Bridgestone, Continental, Goodyear and Sumitomo. These firms are responsible for the production of these tyres in the Southern African Customs Union (Sacu) area. They allege that the dumping causes material injury in terms of price undercutting, decline in sales volumes, market share, employment, output and productivity.
SATMC submitted its application on 24 November 2021, and Itac introduced provisional duties of 38.33% on the back of prima facie evidence of dumping. These duties expired on 8 March this year.
Itac’s investigation showed that dumped tyres with different rim sizes for cars, buses and lorries from China ranged between 36% and 81% of total imports for the period 1 August 2020 to 31 July 2021.
SATMC said in a statement it welcomes the final decision to introduce the anti-dumping duties that will remain in place until July 2028. “Fairly traded imports from other countries will continue unaffected into the Southern African Customs Union,” says SATMC managing executive Nduduzo Chala.
Egypt has been facing food security challenges for years as it heavily relies on imported wheat to meet domestic demand. Egypt also imports a good amount of rice and other grains to cover local needs. Russia’s recent withdrawal from the Black Sea grain-export initiative and India’s restrictions on rice exports have raised concerns about the future of food security in Egypt. However, the government has already taken steps to secure grain supplies and ensure market stability.
Egypt increased wheat imports by about 34% from the beginning of 2023 until July 18th, reaching 5.66 million tons, compared to 4.22 million tons in the same period last year, Asharq Business cited an official document.
Aya Zoheir, Research Section Head at Zilla Capital, tells Arab Finance: “Russia’s exit from the Black Sea grain-export initiative could have negative impacts on Egypt. It could result in increased competition from other grain-exporting countries trying to fill the void left by Russia, leading to increased wheat prices. In addition, Russia is considered the world’s second-largest wheat exporter, so exiting such an initiative would also result in a drastic decrease in supply, leading to a food shortage worldwide as well as an increase in Egypt’s import bill while finding alternative markets for wheat.”
Private Sector: Tanzania’s agro-trade policies distabilising regional trade (The Independent Uganda)
The move by the government of Tanzania to restrict food exports to Uganda and Kenya is facing opposition from the private sector and politicians that it is not progressive. This financial year, Tanzania reintroduced food export restrictions including new tariffs and forcing traders to open up offices in Dar es Salaam, as well as applying for export permits is they have to export.
At a recent dialogue with farmers, processors and traders in Dar es Salaam, agriculture minister, Hussein Bashe announced that whoever wanted to buy food anywhere in Tanzania, had to do so through a locally registered company. “And this directive also affects buyers from countries like Uganda, DRC, Burundi, Kenya and Rwanda,” he said, adding that the move is aimed at protecting farmers against exploitation and would also help in price regulation.
Several members of the Tanzania parliament have criticised the move as capable of hindering free trade, with others saying farmers in many areas are already stuck with huge stocks of food amidst price falls, since it’s harder to sell. The East African Business Council (EABC) however welcomes the move by Tanzania saying it is aimed at making agriculture trade formal.
Intra-EAC trade down by $1.8bn on barriers, taxation (The East African)
East African economies are losing millions of dollars as stiff trading policies, including slow implementation of agreed taxation rules, yet again force a drop in intra-regional commerce. A new report on regional commerce shows that policymakers have not been putting their words into action, agreeing on significant policies but delaying implementation. In turn, this has seen East African Community member states frequently flout the Common Market Protocol and undermine the regional integration agenda through imposition of non-tariff barriers (NTBs) to trade and repeated requests for preferential tax treatment and exemptions.
The Intra-EAC Trade Brief Analysis report by the East African Business Council (EABC) shows that the value of trade among the EAC members states fell by more than 33 percent ($1.8 billion) to $3.6 billion in 2022, from $5.4 billion in 2021. The report seen by The EastAfrican shows the intra-EAC trade was mainly impacted by trade in cereals, which fell to $285.5 million from $607.2 million and trade in mineral fuels, which fell to $175.1 million from $618.2 million in the period.
Nigeria’s absence from the from the first batch of participating countries under the Guided Trade Initiative (GTI) of the Africa Continental Free Trade Area (AfCFTA) has been attributed to failure to meet the minimum requirements for trade under the agreement. The requirements include submission of a Schedule of Tariff Concessions (STCs) to the AfCFTA Secretariat and approval of the same and gazetting of the STCs or Provisional STCs.
Acting Chairman of Manufacturers Association of Nigeria’s Export Promotion Group (MANEG), Mrs. Odiri Erewa-Meggison said Nigeria is missing out from the first batch of participating countries because it is yet to meet the minimum requirements for the trade agreement.
“Nigeria has ticked most of the boxes but it is yet to gazette the STCs. The mobilisation and connection of local businesses with other members of the GTI is ongoing but progress has been slow. “There are some housekeeping issues that should also be sorted with the AfCFTA Secretariat. We believe that all outstanding actions can be completed within a short period if the political will is present and deliberately exercised,” she added.
Kenya among painful nations for suppliers in Africa (The East African)
Kenya is one of the most painful countries for suppliers on the continent given the time it takes to get money paid for goods delivered. A new report by Duplo, a payments platform for African businesses, shows that over 80 percent of Kenyan companies are taking more than a day to process invoices and the waiting can take nearly a year for some firms before the money is received. This highlights the struggles suppliers are facing to get their dues after delivery of goods.
The latest Duplo report: Exploring the State of B2B Payments in Africa shows that only 19.7 percent of Kenyan companies’ process invoices within 24 hours, with 57 percent of them taking up to a week to prepare them for payment.
South Africa has a better showing after the report found 39.9 percent of firms taking a day or less to process invoices compared with Nigeria’s 39.7 percent and Ghana’s 38.4 percent.
The agricultural sector, branding and communications, and consumer goods and retail, stand out as the most efficient invoice processors, mainly attributable to streamlined operational procedures, efficient administrative practices, or the nature of the businesses in these sectors, which may require prompt payment and transaction clearances.
Closing Africa’s gender tech gap will boost agri-food systems (Africa Renewal)
Women in agriculture still have significantly less access than men to mechanised equipment, according to The Status of Women in Agrifood Systems, a report released in 2023 by the Food and Agriculture Organisation (FAO).
The report is based on an investigation of the agri-food systems, the role of gender and work in the sector, the existing inequalities in resource distribution, women’s agency, norms and policies, and resilience to shocks and stresses. It shows that both men and women are equally likely to adopt new technologies when enabling factors are in place, underscoring the importance of ensuring equal access to productive resources for both genders.
The study shows that internet access has increased globally for both men and women while the gender gap has reduced slightly. As of 2022, 63 per cent of women globally were using the internet, compared with 69 percent of men, according to Statistica, a leading provider of market and consumer data. Unfortunately, the report highlights that the gender gap in internet use in Africa remains the largest. In 2022, 25 percent fewer women used the internet compared to men, a gap that has remained constant since 2019, according to the study.
This disparity extends to the agricultural sector, where the study established that as more women take up employment in non-agricultural segments of agri-food systems, gaps in access to relevant technologies become more evident.
West Africa experienced slower economic growth over the past year except for Cabo Verde, The Gambia, Guinea, Mali, and Niger, according to the African Development Bank’s 2023 West Africa Economic Outlook report.
Titled “Mobilising Private Sector Financing for Climate and Green Growth in West Africa,” the report provides key economic trends in 2022 as well as medium-term (2023-2024) economic forecasts for the region. It also evaluates strategies to accelerate the mobilisation of private sector financing for climate and green growth in West Africa.
The report notes that West Africa’s average gross domestic product decelerated to 3.8% in 2022 from 4.4% in 2021, implying that the growth recovery from the 2020 downturn had slowed. It attributes decelerating growth to, among other factors, such successive shocks as the resurgence of Covid-19 in China, a major trade partner for the region’s countries. Russia’s invasion of Ukraine has also spurred inflationary pressures on the cost of food, fuel and fertilizer in many West Africa region countries.
The 2023 West Africa Economic Outlook notes that adapting to climate change and the depletion of the region’s natural resources present an opening for businesses and governments to embrace sustainable and green growth.
The European Union, the world’s largest single market, has introduced new measures to reduce their “dependency” on mineral imports from outside the bloc. The European Council adopted the Critical Raw Materials Act on June 30, a regulation that seeks to utilise the bloc’s Common Market and partnerships to “diversify critical raw material supply chains, which currently rely on imports from a handful of third countries.” A spokesperson of the European Commission told The EastAfrican that the bloc has taken this route because of the lessons they have learnt from the recent supply-chain disruptions that significantly impacted their supply and consequently costs of products associated with the raw materials.
Under the new regulations, EU will source up to 65 percent of its annual consumption of critical and strategic raw materials from within the bloc, dealing a blow to countries in the region that have been exporting to the region. At least 10 percent of the minerals used in the bloc will now be extracted from countries in the union, 40 percent will come from processing, and 15 percent will come from domestic recycling of the critical and strategic minerals.
According to the spokesperson, domestic extraction of the minerals in the EU has been low due to a number of factors, including “long permitting procedures, local opposition, high energy costs, high labour costs, and high costs of regulatory compliance.” The Act now seeks to address most of these hurdles.
Working at reducing the trade deficit between South Africa and its BRICS counterparts – Brazil, Russia, India, China – while establishing strategic economic partnership to expand trade is key, according to the BRICS Business Council.
This view was emphasised at the BRICS Business Editors’ Breakfast in Johannesburg yesterday ahead of the BRICS Summit taking place at the Sandton Convention Centre in Johannesburg from August 22-24, under the theme: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism.”
Stavro Nicolaou, a member of the BRICS Business Council, said the statistics showed that South Africa was benefiting from BRICS. “As we begin to mature as a BRICS formation across the five markets, it is important to see what the trade patterns look like and see how South Africa can benefit from export opportunities,” he said. South Africa ran a trade deficit with the four BRIC partners. Trade deficits were to be expected and should be seen as a positive business, commercial trade and investment opportunity, Nicolaou said.