tralac Daily News
South Africa still mulling design for sustainable automotive industry (Engineering News)
South Africa’s automotive manufacturing sector is widely regarded as a success story; however, it must now bolster local demand and adapt its policies and initiatives amid a weak domestic growth outlook and the global, albeit uneven, shift towards new energy vehicles (NEVs).
South Africa and Africa’s automotive markets are still dominated by internal combustion engine (ICE) vehicles, while the shift towards NEVs – which constitute a wide array of technologies – is occurring rapidly in the European Union and other developed markets. NEV development is, therefore, moving along in other markets in which South Africa competes, but not its domestic market, as NEVs are still not price competitive with ICE vehicles without considerable subsidies, Toyota Wessels Institute for Manufacturing Studies manufacturing ambassador Professor Justin Barnes explained.
The Automotive Production and Development Programme (APDP) in its current form is a particularly good incentive scheme for the production of NEVs and, therefore, the real challenge lies in the marketplace, Barnes argued. The country’s automotive industry is export orientated, with the APDP incentivising firms through a rebate mechanism that is tied to a reduction in import duties. If the domestic market does not perform well, there is less of an incentive to export, he pointed out.
While the focus should first be on targeting domestic and regional markets, the speakers also underlined the importance of having the right policy environment.
“The fuel subsidy is gone,” said Nigeria President Bola Tinubu, in his inaugural address on 29 May 2023. “The subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead rechannel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions.”
Organized labour threatened a nationwide strike if the government failed to reverse itself as former president Goodluck Jonathan did in 2012, when he tried to end subsidies. But after negotiations with the Tinubu administration, the unions reneged on their threat.
Before President Tinubu’s inauguration, the Nigerian government spent ₦400 billion (about $500 million) monthly to subsidize petroleum imports, according to Mele Kyari, chief executive officer of the Nigerian National Petroleum Company Limited (NNPCL), licensed to operate in Nigeria’s oil industry. The subsidy was the difference between the projected open market price and the pump price. To make up for the market shortfall, the government issued it as a direct or indirect payment to individuals or companies that imported refined products.
In 2022, Nigeria’s House of Representatives set up a panel to investigate its petroleum subsidy regime from 2017–2022. The government has yet to publish the panel’s findings, submitted in June 2023, but it has maintained that the subsidies benefitted a few companies.
Standards body warned against harassment of farmers (New Vision)
Standards bodies have been cautioned against harassment of farmers when enforcing standards. The caution was made by Dr Hermogene Nsengimana, the secretary general of the African Organisation for Standards (ARSO). They are accused of closing and demanding for payments whenever they come across a processing mill or coffee roaster that does not meet the set standards.
The practice has locked out mainly small-scale farmers and enterprises that are trying to add value to various commodities, including coffee. This was raised during a panel discussion on accelerating the implementation of the African coffee standards under the African Continental Free Trade Area (AfCTA) at Speke Resort Munyonyo last Thursday.T he panel was part of the just concluded G-25 African Coffee summit that kicked off on August 7 and is expected to end on 10, under the theme Transforming the African Coffee Sector Through Value Addition.
He explained that the best way to enforce standards is by showing people the right standards coupled with information on the right procedures, right machinery including steps of acquiring the recommended machinery.
Nsegimana added that the regulation that assesses an organisation’s business practices and performance on various sustainability standards will soon be a requirement by the European Union when accessing products from African countries.
He, however, added that at continental level, a standard is being developed that is in line with sustainability, taking into account views from the farming communities and private sector, among other stakeholders to guide the certification team.
Interview: Value-added exports on the rise: ZimTrade (The Zimbabwe Independent)
ZimTrade chief executive officer Allan Majuru (AM) said the country should continue focusing on retooling the manufacturing industry in order to increase export in value-added products.
Statistics show that exports of manufactured products increased by 14,7% between January and May 2023 compared to the same period last year. ZimTrade chief executive officer Allan Majuru (AM) this week told our business editor Mthandazo Nyoni (MN) that the country should continue focusing on retooling the manufacturing industry in order to increase export in value-added products. This, according to him, could assist the country benefit from participating in the African Continental Free Trade Area through regional value chains
It is true that minerals make up the bulk of our exports. But there are particular sectors that we could leverage on to increase our exports. Growing exports of value-added products and horticultural produce remain the ultimate goal for us. We have already established the low hanging fruits that will make it easy to realise this goal and these include processed foods, horticulture, agriculture inputs and implements, protective clothing, building and construction, timber, furniture, and services sectors. These are just examples, but across all sectors, we have potential to boost exports of value-added products and services.
Value -addition is a good way for local companies to maximise profits. They are also good for the country’s export earnings. According to the National Development Strategy (NDS1), Zimbabwe aims to increase the contribution of value-added exports to 20% by 2025.
There has been a steady increase in exports of value-added products. Figures show that exports of manufactured or valued-added products increased by 14,7% from US$139,9 million in January to May 2022 period to US$160,5 million in January to May 2023. With the NDS1 in place, there are a lot of efforts being made to retool our industries, improve value chains and increase production of value-added products. As ZimTrade, we have put in place different initiatives to capacitate local companies. For example, our partnerships with international expert organisations have helped local companies to improve their value chain systems and become competitive on the export market.
Environment, Climate Change and Forestry Cabinet Secretary (CS) Soipan Tuya has affirmed Kenya’s readiness to host the first ever Africa Climate Summit, convened by the African Union. The summit will be hosted at the Kenyatta International Convention Centre (KICC) in Nairobi.
CS Tuya spoke on August 16 in Addis Ababa during a joint press briefing. “The African leaders were prompted by the fact that the African continent and Africans themselves bear the greatest burden of climate change, despite the fact that Africa’s historical and current emission levels of greenhouse gases is very low,” CS Tuya recalled.
Out of the Summit, the CS said Kenya and the African Union looked forward to a “Nairobi Africa Leaders Declaration on Climate Change and Call to Action”, a blueprint that will propose a new climate financing architecture to alleviate the continent’s growing debt distress, among other provisions. Once again, CS Tuya said Africa Climate Summit will be a platform to showcase the continent’s immense climate action potential and seek partnerships needed to support Africa’s green growth ambition.
Africa should harness its vast mineral reserves to drive economic transformation and accelerate sustainable development on the back of power poverty, the Acting Executive Secretary of the Economic Commission for Africa, Antonio Pedro has urged, highlighting that the continent is well position to spearhead clean energy transition.
“The top priority for Africa is to achieve inclusive and sustainable economic transformation that delivers tangible impacts on job creation and poverty eradication while addressing the triple planetary crises of climate change, biodiversity loss and pollution,” Mr. Pedro, said in a video address at the 17th August opening of the 19th Ordinary Session of the African Ministerial Conference on the Environment (AMCEN) in Addis Ababa, Ethiopia.
Mr. Pedro reiterated that Africa was in the spotlight because of its rich mineral reserves which it must harness to tackle its development challenges. “Africa therefore needs a deep rethink on how it addresses its vast development challenges if it is to meet the goals of Agenda 2063, the UN 2030 Agenda for Sustainable Development and various national development goals, while positioning itself at the center of the global clean energy transition agenda,” Mr. Pedro said.
Home to up to one-third of global mineral reserves, Africa currently produces over half of the world’s platinum group metals, manganese, cobalt, and others. With the global demand for wind turbines, electric vehicles and other products that can generate electricity and transport people and goods without emitting C02, there is a projected huge increase in demand for lithium, cobalt, graphite, nickel, and copper by 2040.
Africa should boost investment in human and financial capital to accelerate its sustainable industrialization and economic growth, Antonio Pedro, acting Executive Secretary of the Economic Commission for Africa said at the 43rd Southern African Development Community (SADC) Ordinary Summit of the Heads of State and Government in Luanda, Angola.
African countries should align their education systems with market and societal needs, Mr. Pedro urged. Equally, he said governments must invest in science, technology, and innovation to move away from the resource extractivism model that characterizes most of Africa’s mineral-rich countries and escalate value chains to avoid the middle-income trap.
“For countries in the SADC region, the Russian/Ukraine conflict laid bare the fragility of the diversification strategies that do not address the structural issues compounding our growth model and the germane issues of poverty and inequality, said Mr. Pedro, lamenting that, commodity dependence has left many African economies at the mercy of global commodity price fluctuations, boom and bust cycles, leading to macroeconomic instability.
Calling for African countries to “break this vicious cycle” of commodity dependence, Mr. Pedro highlighted trade diversification as the solution to reducing the region’s vulnerability to global market turbulence and geopolitics.
The BRICS Business Council has maintained that South Africa remains an attractive investment destination and a gateway for trade within African markets, in spite of ongoing logistical and energy challenges in the country.
The Council’s Trade and Investment Working Group’s chairperson, advocate Mtho Xulu said yesterday one of their focus areas was to make the African Continental Free Trade Area (AfCFTA) the main priority to showcase the opportunities that exist in Africa.
“As much as we’ve seen trade growing over the last 10 years of the business council, we are unfortunately still maintaining a deficit with regards to South Africa being part of the group, but we look at this deficit as an opportunity,” Xulu said.
“We need to use the Trade and Investment Working Group to project South Africa as an investment destination, not only for BRICS members, but also for the global economy.”
Xulu said they would make a case to investors that South Africa was competitive from a trade point of view, with the correct human resource, the correct infrastructure, and cost-effective energy.
African countries have been urged to leverage the African Continental Free Trade Area (AfCFTA) to break the shackles of colonialism, neocolonialism, and imperialism stifling economic growth and prosperity. It must flee from the subtle recolonisation tactics being pursued through the honeyed policy shackles of the International Monetary Fund, World Bank and the United Nations (UN) dogma.
Olusegun Matthew Okikiola Ogunboye Aremu Obasanjo, former President of Nigeria, said the treaties and conventions agreed upon and signed by the imperialist institutions before and after the independence on trade and commerce were not destined for Africa’s development.
The former President said the AfCFTA presented an opportunity to increase trade to ensure the prosperity of the respective countries. The trade area would lead to an increase in intra-African trade by $35 billion and reduce external imports by $10 billion yearly.
“It is important to rebrand and turn Africa around for the world to know that Africans are one and good people with natural resources and diverse culture and we need strong partnerships with the diaspora to do this. Let us build the human resources of Africa by extending a hand of friendship to them so that together we can help change the narrative of the continent, now and in the future.”
World leaders call on Russia to rejoin Black Sea grain deal (U.S. Embassy in Luxembourg)
Humanitarian and government officials have warned of drastic consequences to Russia’s July 17 decision to walk away from the United Nations Black Sea Grain Initiative. U.N. Secretary-General António Guterres had described the deal as “a lifeline for global food security and a beacon of hope in a troubled world.” Pope Francis called on Russia directly to rejoin the deal: “I appeal to my brothers, the authorities of the Russian Federation, so that the Black Sea initiative may be resumed and grain may be transported safely.”
The initiative, which the United Nations and Türkiye brokered in July 2022, moved more than 32 million metric tons of Ukrainian agricultural exports via the Black Sea. Nearly 19 million metric tons went to developing countries. The deal also helped reduce food prices by over 23% since March 2022, according to the United Nations.
“With its latest decision to kill the grain deal, Russia is again disrupting the food-supply chain,” said Arian Spasse, Albania’s political coordinator at the U.N., on July 26. “And if this were not enough, it is intentionally targeting ports and grain storage facilities.” Russia’s decision to walk away from the initiative has sweeping consequences.
China-led de-dollarisation gains traction among emerging economies ahead of Brics summit (South China Morning Post)
The American dollar’s dominance in global trade looks to be challenged by the expansion of an economic bloc involving China, according to research by ING that comes as talk of a currency union has turned heads in the lead-up to next week’s Brics summit.
The association of five major emerging national economies – Brazil, Russia, India, China and South Africa – represents 8.3 per cent of the global economy and accounts for 41.9 per cent of people on Earth. Bloc representatives will meet in South Africa from Tuesday to Thursday.
“We suspect the subject of ‘de-dollarisation’ might gain some traction this summer when senior leaders of the Brics nations meet,” the Dutch bank’s analysts Chris Turner, Dmitry Dolgin and James Wilson wrote in a note on Thursday.
The economic expansion of Brics could determine the speed at which it adopts commercial and financial systems outside of the dollar sphere, posing certain challenges to the dollar’s dominant status as an international currency, they said.
However, Reuters reported on Thursday that a Brics currency was off the table, citing South African officials. As a new global currency, the expectation was that it might become analogous to the euro for non-Western states.
Climate adaptation finance in Africa (Brookings)
A recent analysis by the Climate Policy Initiative and the Global Center for Adaptation shows that an annual average of $29.5 billion in climate finance was committed to Africa in the years 2019 and 2020. Of this amount, about $11.4 billion, or 39 percent, was for adaptation investments.
Further analysis of Nationally Determined Contributions (NDCs) also indicates that the adaptation finance needs for the continent over the period 2020-30 are close to $580 billion. Unless adaptation finance increases substantially in Africa, a gap of $453 billion will accumulate over this decade.
The IMF projects growth in sub-Saharan Africa to slow sharply from the recovery path of 2021 when GDP grew 4.7 percent, down by one percentage point to 3.6 percent, and remain close to that level in 2023. The global economic slowdown, tight finances, and inflation are impacting the region in areas such as food and energy prices. Public debt and local inflation are at very high levels. The IMF recommends tackling urgent socioeconomic crises while trying to build resilience to future shocks, including climate shocks. The IMF also recognizes the critical importance of high-quality growth and policies to set the stage for a sustainable recovery.
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, including internationally.
The Handbook on Measuring Digital Trade sets out a conceptual and measurement framework for digital trade that aligns with the broader standards for macroeconomic statistics. It aims to help statistical compilers to address policymakers’ needs for statistical evidence on digital trade. It includes extensive compilation guidance, drawing upon substantive inputs and case studies from both developed and developing economies and covering a variety of survey and non-survey sources.
This second edition of the Handbook builds upon the concepts set out in the first edition, published in 2019. Focusing on cross-border digitally ordered goods and services, on digitally delivered services, and on the role played by digital intermediation platforms the Handbook provides a framework and template for the compilation of internationally comparable statistics on digital trade.