tralac Daily News
It is currently taking an average of 25 months for government to complete import duty investigations and to provide the necessary Ministerial approvals for the South African Revenue Service to implement duty increases or reductions, a new report shows.
Compiled by XA Global Trade Advisors, the analysis also highlights a marked slowdown in turnaround times over the past ten years, with the longest outstanding case in 2013 having been 17 months, which is eight months shorter than the current average turnaround time. Import duty investigations are officially meant to be concluded within six months.
CEO Donald MacKay believes the delays are also the chief cause for a steep decline in the number of applications to the International Trade Administration Commission of South Africa (Itac) for duty increases or reductions. “At times of economic distress, we should see the use of trade policy instruments rising, yet we find the very opposite happening,” Mackay argues.
The effectiveness of the proposed protection, Macsteel CEO Mike Benfield adds, is often undermined further by the proposed reciprocal-agreement stipulations attached to the proposed duty. The report, which is the third produced by XA, calls for a rethink of such reciprocal agreements, arguing that they are being unevenly applied, add significant cost without a commensurate benefit, slow down the process, and are causing businesses to opt out of the process. It also asserts that the delays are costly, calculating them at R2.6-billion in duties having been paid where there is no local producer and R4-billion in duties not collected in duties where protection has been requested.
There has been mixed reaction to Trade, Industry and Competition Minister Ebrahim Patel’s notice to impose definitive anti-dumping duties on imported chicken. The duties – approved by the minister in 2022 after a recommendation by the International Trade Administration Commission (ITAC) – had been suspended for 12 months but are now set to come into operation.
The notice published in the Government Gazette on August 2 said the International Trade Administration Commission of South Africa initiated an anti-dumping investigation on frozen bone-in portions of fowl of the species originating in or imported from Brazil, Denmark, Ireland, Poland and Spain in 2021. “After considering comments, the commission made a final determination that the product originating in or imported from the subject countries was being dumped into the Southern African Customs Union (Sacu) market causing material injury to the Sacu industry.
Izaak Breitenbach, the CEO of the SA Poultry Association (Sapa), said that the lapsing of the duties last year caused material harm to the local industry and imports surged from 17 000 tons per annum in October 2022 to 46 000 tons in February 2023. “Over and above this the industry had high raw material costs to contend with, as well as load shedding. This duty will impact dumped imports that hurt the industry in the past and will put the industry in a better position to grow, facilitating economic growth not only in poultry but the total grain value chain. It will also assist greatly with job creation.”
United States Ambassador to Kenya Meg Whitman has revealed that the US-Kenya bilateral trade agreement is set to be concluded by the end of the year as a pace setter for Africa. Speaking at the Devolution Conference in Eldoret Uasin Gishu, Whitman stated that the bilateral trade agreement between Kenya and the US will be a first of its kind to be negotiated by the US government.
The United States and Kenya held pre-negotiating discussions in February this year and the first negotiating rounds in April 2023. According to Whitman, the United States is highly interested in Kenya trade investment climate.
Whitman has advised that even if President William Ruto’s administration has made great strides in building a business-friendly environment for foreign investors there is still room for improvement by addressing challenges that come up. “Kenya is the leading financial hub, it is the gateway to the East Africa market because 80 per cent of the regional trade passes through Kenya Mombasa port,” she added.
She has also called on Ruto’s administration to address challenges facing Cargo and container clearance at the Mombasa port. “Despite improving logistics, the delivery cost of a container to Kenya remains significantly higher than container shipment landing in Europe and Asia,” she said. Back in the year 2010 it took over 11 days to clear a container at the port of Mombasa but to date the government established measures to ease the process where now container clearance takes 3-4 days despite cargo increasing over the past 5 years.
Mostafa Madbouly, Egypt’s Prime Minister, convened a meeting on Tuesday to discuss measures to maximise transit trade and re-exportation. Madbouly stressed the importance of maximising transit trade in Egypt to leverage the country’s existing ports and strategic locations.
Minister of Transport Kamel Al-Wazir highlighted the surge in transit trade and the movements that are driving this field forward, emphasising the importance of such projects. The Ministry of Transportation aims to increase Egypt’s share of transit trade in the Red Sea and the Mediterranean basins, as transit trade is an important and constant source of direct and indirect revenue in hard currency. To achieve this, the ministry has contracted with five international alliances to manage and operate five new stations. The main activity of the companies and alliances contracted with Egyptian ports will be direct and indirect transit trade as a global operator for regular shipping lines.
The infrastructure of maritime ports is also planned to be developed by creating 65 km of new platforms at depths ranging from 15-18 m, reaching a total length of 100 km of platforms in maritime ports. The latest development is the opening of the Tahya Misr station at the port of Alexandria with platform lengths of 2.5 km.
African economies can become major participants in global supply chains by harnessing their vast resources of materials needed by high-technology sectors and their own growing consumer markets, the United Nations Conference on Trade and Development (UNCTAD) said in its Economic Development in Africa Report 2023 launched today in Nairobi.
“This is Africa’s moment to bolster its position in global supply chains as diversification efforts continue. It’s also an opportunity for the continent to strengthen its emerging industries, foster economic growth and create jobs for millions of its people,” UNCTAD Secretary-General Rebeca Grynspan said.
Africa’s abundance of critical minerals and metals, including aluminum, cobalt, copper, lithium and manganese, vital components in technology-intensive industries, positions the continent as an attractive destination for manufacturing, as recent upheavals caused by trade turbulence, geopolitical events and economic uncertainty compel manufacturers to diversify their production locations. Africa also offers advantages such as shorter and simpler access to primary inputs, a younger, technology-aware, and adaptable labour force and a burgeoning middle class, known for its growing demand for more sophisticated goods and services.
The report says African small and medium-sized enterprises need more supply chain finance, which bridges the payment time gap between buyers and sellers, improves access to working capital and reduces financial strain. According to the report, the value of the African supply chain finance market rose by 40% between 2021 and 2022, reaching $41 billion. But this is not enough. The continent can mobilize more funds by removing barriers to supply chain finance, including regulatory challenges, high-risk perception, and insufficient credit information.
Political insurgency increasing prices of food items in sub-region (The Ghana Report)
Countries in the West African sub-region are bearing the brunt of political instability in the region, the Economic Community of West Africa States (ECOWAS) has said. According to the bloc, the five coup d’etat which had taken place in the four ECOWAS member states between 2021 and 2023, had contributed to uncontrollable increase in prices of market products such as onions and tomatoes, widely produced in Niger and Burkina Faso, respectively.
“As a result of insecurity and instability, economic activities in the region have been disrupted”, Ambassador Mrs. Perpetua O. Dufu, the Coordinating Director, Multilateral and International Organisation of the Ministry of Foreign Affairs and Regional Integration stated. She was speaking at the opening session of a day’s sensitisation workshop on ECOWAS protocols on Monday in Sunyani.
Ambassador Dufu indicated with widespread conflict and instability, economic prosperity could not be attained and sustained in the subregion, as regional integration was intrinsically linked to peace and stability. She said the region was currently at crossroads with many states witnessing severe cases of insecurity, conflict and violent extremism, which had been further exacerbated by the resurgence of unconstitutional changes of governments, bringing about political instability in some parts of the sub-region. The Niger coup, of July 26, 2023, has therefore underscored the importance of safeguarding democracy and upholding democratic norms within the sub-region, Ambassador Dufu added.
East Africa experiences some trade tensions as trade between Tanzania and Kenya dip (Business Insider Africa)
During the review period, Tanzania implemented new limits on grain trade with its neighbors in the East African Community bloc, laws that significantly curtailed the entry of maize into Kenya. According to information gathered by the Central Bank of Kenya (CBK), the value of Kenya’s goods imports from Tanzania fell 31.12% on-year to Sh18.68 billion between January and June. The decrease was the quickest since 2016 from Sh27.12 billion, a record-high for the half-year period, in a comparable period the previous year.
At the height of the disputes between Nairobi and the government of former Tanzanian President John Magufuli (dead), imports for the first half of the year had dropped 36.99 percent to Sh6.06 billion. Tanzania has dropped from being Kenya’s second to fourth-largest source market in Africa as a result of the dramatic decline in the value of imports over the Namanga border, having been surpassed by Egypt and Uganda. According to CBK statistics obtained from the Kenya Revenue Authority, Uganda’s imports jumped by 10.57% to Sh18.99 billion during the review period while Egypt’s imports increased by 5.21% to Sh23.75 billion.
Non-tariff Barriers (NTBs) and protectionism at the national level have been identified as the key factors impeding the growth of intra-EAC trade. The East African Community (EAC) Secretary General Hon. (Dr.) Peter Mathuki said that the region was therefore working continuously to eliminate NTBs with 26 NTBs having been resolved out of the 33 that had been reported as of June 2023. Dr. Mathuki added that seven (7) NTBs remained outstanding but were at different levels of resolution.
“To facilitate free movement of goods, Partner States have effectively eliminated Non-Tariff Barriers (NTBs) as they arise and have cumulatively eliminated a significant number of 184 NTBs with only a few remain outstanding,” said Dr. Mathuki. The Secretary General who was delivering the annual State of the EAC Address at the EAC Headquarters in Arusha, Tanzania, disclosed that EAC total trade increased by 13.4 percent to US$74.1 billion in 2022 from US$65.3billion in 2021, while the total Intra-EAC trade grew by 11.2 percent to US$10.9billion in 2022 from US$9.8 billion in 2021.
The SG further stated that the percentage share of Intra-EAC trade to EAC total trade stood at 15 percent in 2022, and 2023 has indicated a positive trend with 16% in January and 19% in February recorded of total EAC trade.
Dr Mathuki said that the implementation of the Single Customs Territory, which is a stop gap measure towards the realisation of a fully-fledged Custom Union in the EAC, has seen a reduction in the turn-around time from an average of 21 days to four (4) days along the EAC corridors.
The Council of Ministers of the Southern African Development Community (SADC) met in Luanda, Republic of Angola on 13-14 August 2023 to deliberate on the implementation of regional integration issues in preparation for the 43rd SADC Summit of Heads of State and Government to be held on 17th August, 2023.
In his acceptance speech, His Excellency, Ambassador Téte António, said under the Chairship of Angola, the SADC region will pay attention and focus on Human and Financial Capital as a catalyst for industrialization guided by the theme; “Human and Financial Capital: The Key Drivers for Sustainable Industrialisation in the SADC Region”. The theme seeks to address two of the most critical enablers in supporting regional industrialisation, namely adequate human resources within the context of climate change and 4th Industrial Revolution, and adequate financial resources to ensure more sustainable funding mechanisms.
His Excellency Amb. Téte António, underscored the need for sustained peace and security, highlighting that that it is only possible to guarantee the successful implementation of the SADC Development and Industrialisation Agenda in a context of peace and security, since peace, security and stability are indispensable prerequisites for economic development.
The Executive Secretary urged Member States to continue making progress in pursuing the various regional integration targets and accelerating the regional integration agenda while addressing the challenges so as to remove the bottlenecks that are slowing integration, industrialization, and market access in the region.
Sub-Saharan Africa has long been considered an area of opportunity for trading grains due to the widening gap between the booming population and demand and the comparatively low local production and yields. These fundamentals remain the same, but interesting changes have emerged, with new dynamics, challenges, and opportunities. In this report, we focus on eastern sub-Saharan Africa (ESSA) and look at the long-term horizon toward 2035.
ESSA encompasses twenty-two different economies with growing populations, increasing urbanization, and dietary changes that are expected to boost overall grain consumption. By 2035, ESSA’s population is forecast to reach 705 million from the current 520 million. This will be the major driver for white corn consumption, which we expect to remain the primary staple consumed in the region. Simultaneously, demand for other key grains will emerge, like wheat across the entire region and rice in Uganda, Tanzania, and Madagascar. Wheat demand is expected to grow strongly, driven by urbanization, income growth, and dietary changes, all trends that we also observe in large cities like Nairobi, Kampala, Dar es Salaam, and Lusaka.
ESSA is not self-sufficient in grains, and trade opportunities differ across commodities. In a very conservative scenario, we expect an additional 2m to 3m metric tons of wheat imports in the region’s eight largest economies by 2035. This growth will vary among the different countries and depend on the production outlook. Several countries will continue to have low yields and remain strong net importers.
BRICS Bank to expand trade in national currencies amid sanctions: South Africa (21st Century Chronicle)
New Development Bank (NDB) launched by the BRICS bloc aims to increase local currency fundraising and lending, amid Western sanctions against founding shareholder Russia, South African Finance Ministry has announced.
According to South African Finance Minister Enoch Godongwana, increasing local currency use among NBD members will be on the summit’s agenda, with the aim of reducing the impact of foreign exchange fluctuations rather than de-dollarization.
“Most countries that are members of the NDB have been encouraging [it] to provide loans in local currencies,” Godongwana declared as quoted in a Reuters report on Monday. Analysts have suggested that US sanctions on Russia have underpinned the need to boost the NDB’s local currency fundraising and raise capital from new members, which could help it cut dependence on US capital markets.
Production growth to slow in step with population, while geopolitical tensions, climate change, animal and plant diseases and price volatility of critical farming inputs pose long-term uncertainty (OECD)
Global agricultural and food production are projected to continue to increase over the next ten years, but at a slower pace of growth than the previous decade due to demographic trends, according to a report released today by the Food and Agriculture Organization of the United Nations (FAO) and the Organisation for Economic Co-operation and Development (OECD).
According to the OECD-FAO Agricultural Outlook 2023-2032, while uncertainty has risen due to geopolitical tensions, adverse climate trends, animal and plant diseases and increased price volatility for key agricultural inputs, global production of crops, livestock products and fish are projected to grow at an average annual rate of 1.1 percent during the period, half the pace recorded in the decade ending in 2015.
“Surges in agricultural input prices experienced over the last two years have raised concerns about global food security,” OECD Secretary-General Mathias Cormann said. “Investments in innovation, further productivity gains and reductions in the carbon intensity of production are needed to lay the foundation for long-term food security, affordability and sustainability.”
Global trade in agricultural commodities covered in the Outlook is projected to expand by 1.3 percent annually - half the pace recorded in the past decade - due mostly to slower growth in demand by middle-income countries. Maize, wheat and soybeans contributed the most to the overall agricultural trade growth in the past decade; however, they are projected to experience the biggest drop in trade growth over the next 10 years. Sub-Saharan Africa’s trade deficit in major food items is projected to almost double by 2032, largely reflecting rapid population growth compared to other regions.