Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

NEV disruption holds opportunities for OEMs, component manufacturers (Engineering News)

The world is at the beginning of the biggest disruption to the automotive industry in 100 years with the transition to new energy vehicles (NEVs), and, in turn, considerable upheaval in the supply chain ecosystem – however, this could present opportunities if properly leveraged and capitalised on. This was noted by consultancy EVAdoption CEO Loren McDonald, delivering the keynote address on the first day of the National Association of Automotive Components and Allied Manufacturers (Naacam) 2023 show, in Pretoria, on August 30.

McDonald pointed out that NEVs were gaining traction, with automakers investing billions in NEV battery plants, factories, technology and supply chains. It was expected that, by 2030, there would be $1.3-tillion invested in electric vehicles and batteries, he noted.

In terms of challenges, he mentioned that, with vehicles becoming more technologically advanced, component manufacturers needed to be able to build the hardware to match and work with the software, with there currently being a disconnect here. This, he said, would lead to a fundamental shift in the nature of the supply chain.

Ghana to become net exporter of salt with establishment of Ada Songor project (GhanaWeb)

President Nana Addo Dankwa Akufo-Addo has said the establishment of the Ada Songor Salt project is an example of what government policies, backed by private sector participation, can achieve in Ghana’s quest to be become self-reliant on its resources. According to him, the project aims to ensure that the country can become self-reliant on the commodity while positioning itself at becoming a net exporter.

“This is the first time in recent history that an indigenous Ghanaian businessman owns one of the biggest extractive industries in Africa. He [McDan] is a shinning an example of what determination and perseverance can produce,” Akufo-Addo praised.

President Akufo-Addo said the Ada Songor project, currently has the ability to produce some 650,000 metric tons of salt products per annum, 1 million metric tons in 2024 and 2 million metric tons by 2027, will ultimately make it the biggest salt mine producing facility in Africa.

Kenya to link with South Sudan, Ethiopia via electric rail (Kenyan Wallstreet)

Kenya will in 2025 begin constructing a $ 13.8 billion high-speed electric standard gauge railway linking its Indian Ocean port of Lamu to Ethiopia and South Sudan. The 3,000 km big ticket standard gauge railway project, will hook Lamu port to Isiolo before branching into three arteries to Addis Ababa, Juba and Nairobi, according to the Lamu Port South Sudan Ethiopia Transport (LAPSSET) Corridor Development Authority.

With a projected economic internal rate of return of more than 12%, Lapsset says this proposal is viable. Kenya is already raising $9 million for detailed feasibility and engineering studies from an Africa Union infrastructure fund. This electric rail link project is expected to connect Kenya with the two other neighbours, creating a combined economic output of $ 233 billion and a population of close to 200 million people.

The LAPSSET Corridor Program is Eastern Africa’s largest and most ambitious infrastructure project bringing together three East African Nations of Kenya, Ethiopia and South Sudan.

AfCFTA not a perfect crinkle cut - Trade Law Centre (Namibia Economist)

According to TRALAC, the Trade Law Centre based in South Africa’s latest update on the implementation of the African Continental Free Trade Area Agreement, the process is too start soon. When implementation starts, the member countries should be informed by what the State Parties accepted as new commitments, and what they want to retain from existing structures and regional agreements.

“Although the objective of a trade agreement is to liberalise trade, the actual provisions are normally shaped by domestic and international political realities. Domestic and regional peace and stability are not to be overlooked when the benefits of trade deals such as the AfCFTA are discussed,” states the Tralac update.

The AfCFTA is codified based of previous and is most likely to be implemented alongside existing regional trade arrangements and will be implemented by the same governments. The AfCFTA does not, for example, provide for a new approach to trade facilitation. “It is assumed that this agreement will be properly implemented and soundly governed. If this does not happen, the perceived benefits will not materialise,” Tralac concludes.

Afreximbank says Africa benefits from use of local currency for continental trade (The Star)

The African Export-Import Bank (Afreximbank) said on Wednesday that the continent is benefitting from the use of local currencies when engaging in intra-African trade.

Denys Denya, Afreximbank’s executive vice president for finance, administration and banking services, said at a roadshow in the Kenyan capital of Nairobi that foreign currencies, such as the U.S. dollar which is traditionally used for cross-border trade, are currently in short supply in the continent.

“The use of local currencies for trade within Africa is easier for both large and small entrepreneurs because they don’t need to source foreign currencies,” Denya said during the Intra African Trade Fair 2023 Business Roadshow. He added that the use of local currencies has numerous advantages because it limits the possibility of extraterritorial sanctions by the owners of the third-party currencies. Denya said the use of local currencies also boosts trade among African countries because dollars are only required to settle net differences in trade.

He noted that intra-African trade is made possible by the Pan-African Payment and Settlement System, which was developed by the Afreximbank and is owned by African central banks.

Related: End raw material shipment, Africa told (The Star)

Export finance credit plays critical role in boosting exports – Chithyola (Malawi Nyasa Times)

Minister of Trade and Industry Simplex Chithyola Banda has emphasized the critical role export credit finance plays in promoting trade and investment, also as an essential tool for boosting exports facilitation. Chithyola Banda made the remarks on Monday during the opening of a three-day strategic training on Export Credit Finance in Lilongwe.

He said export credit finance is a very strategic area for Malawi as it augers well with the vision of the administration of His Excellency the President, Dr. Lazarus McCarthy Chakwera, as the country strive to achieve a Malawi that is an inclusively wealthy and self-reliant export-led industrialized upper middle income country by 2063.

He added that his Ministry is aware of the growing demands for our country and other countries within the SADC region to expand export trade footprints within the African region and even beyond by growing the existing markets and opening frontier markets. “With such calls, the issue of export credit finance is becoming even more important. Adding that as a region we need sound export credit finance functions that should ably enable export trade in a safe, value adding, and sustainable manner.”

African solution, new world order prescribed for debt burden (New Business Ethiopia)

Calling for an African solution and a new world order, the third edition of African Conference on Debt and Development (AfCoDD III) that aims to reflect on African countries debt burden, is opened this morning in Dakar, Senegal.

Experts along with representatives from non-governmental, governmental and media organizations have gathered for the three days conference that is expected to reflect on the state of debt in Africa and its implications of the development of the continent and the people.

In order to properly address the growing burden of debt, the conference suggested that African countries need to reimagine rethink, reorganize and remobilize for an African world order. “Our world is at critical juncture…Transition out of crisis need forming a new …The world we are living today is not sustainable. We need the world where the people are at the center. A world where Africa is a rule maker…not a rule taker,” said Ebrima Sall, Trust Africa Executive Director, in his opening speech.

Financing of African development needs to come primarily from Africa not external debt, according to Ebrima Sall. He mentioned some 90 billion USD is leaving Africa as illicit financial flows…He argued that stopping this can help African countries to stop the bleeding and its dependency on unsustainable aid. “…The solutions must be an African if they have to be lasting solutions…the future is in our hands” he said.

Africa’s Fragile States Are Greatest Climate Change Casualties (IMF)

Climate change poses grave threats to countries across Africa—but especially fragile and conflict-affected states. As the continent’s leaders converge on Kenya for next week’s African Climate Action Summit, it is vital that they come up with solutions to support these vulnerable countries.

From the Central African Republic to Somalia and Sudan, fragile states suffer more from floods, droughts, storms and other climate-related shocks than other countries, when they have contributed the least to climate change. Each year, three times more people are affected by natural disasters in fragile states than in other countries. Disasters in fragile states displace more than twice the share of the population in other countries. And temperatures in fragile states are already higher than in other countries because of their geographical location.

A new IMF paper finds evidence that climate change indeed inflicts more lasting macroeconomic costs in fragile countries. Cumulative losses in gross domestic product reach about 4 percent in fragile states three years after extreme weather events. That compares with around 1 percent in other countries. Droughts in fragile states are expected to cut about 0.2 percentage points from their per-capita GDP growth every year. This means that incomes in fragile states will be falling further behind those in other countries.

The more harmful effect of climate events in fragile states is not only because of their geographical location in hotter parts of the planet, but also because of conflict, dependence on rainfed agriculture, and lower capacity to manage risks.

Improving statistics on gender and trade in developing countries (UNCTAD)

When it comes to understanding and fostering women’s economic empowerment, measuring the gender dimension of trade has emerged as an increasingly important endeavour. But for a long time, the lack of data on gender equality in international trade has posed a bottleneck, hampering countries’ abilities to apply the gender lens needed to design policies that equally empower women and men.

To bridge this gap, UNCTAD in 2018 began developing a framework to help countries link existing national statistical data to assess gender in trade. The process, called “microdata linking”, offers a cost-effective and sustainable alternative to creating new one-off surveys. The framework has been tested by half a dozen countries, and the methodology is now outlined in UNCTAD’s newly published guidelines for measurement of gender-in-trade statistics, aimed at helping national statistical offices enhance data to inform trade policy development.

The guidelines were developed as part of a joint project on data and statistics for more gender-responsive trade policies in Africa, the Caucasus, and Central Asia, in which UNCTAD collaborated with the UN’s regional economic commissions for Africa and Europe. Cameroon, Georgia, Kazakhstan, Kenya, Senegal and Zimbabwe piloted UNCTAD’s microdata linking methodology and compiled a set of new experimental, sex-disaggregated indicators measuring employment, wages and business ownership. The results in all six pilot countries reaffirmed gender gaps in favor of men but also revealed many differences across countries.

Historic $650 Billion Liquidity Boost Continues to Benefit the Global Economy (IMF)

More than $100 billion of SDRs in pledges announced by the G20 are being channeled from stronger members to vulnerable low-and middle-income countries, amplifying the direct benefits of the allocation. A number of emerging market economies and low-income countries also used SDRs to finance pressing fiscal needs, including those related to the pandemic, according to the IMF’s SDR Tracker, which collects information on how countries used the resources.

Energy transition calls for faster investment treaty reforms (UNCTAD)

Sweltering heatwaves each year underline the need for a faster energy transition and speedier reform of International investment agreements (IIAs) to support the shift away from fossil fuels.

To reach net zero emissions by 2050, annual clean energy investment worldwide needs to more than triple to $4 trillion by 2030. But many investment treaties, especially older ones, can hinder the transition. As countries try to cut ties with fossil fuels, oil and gas firms might use these treaties to challenge policy changes. An example is a coal phase-out claim against the Netherlands.

“Governments and the international investment community should intensify their efforts to reform investment treaties in support of the energy transition and to minimize risks of expensive legal disputes,” says Hamed El-Kady, who heads UNCTAD’s international investment agreements section. UNCTAD has developed a toolbox to help countries transform IIAs to better support the energy transition.

Quick links

‘How Nigerian exporters can leverage AfCFTA using e-commerce’

Africa is poised to become a global supply chain powerhouse

Kenya joins efforts to have free trade area across all African countries “ Capital News

Critical minerals demand has doubled in the past five years - here are some solutions to the supply crunch

Manufacturing has the key to unlock intra-African trade

G20’s vision for trade and investment: A deep dive

Countries from Global South urged to harmonize regulatory frameworks on biotechnology


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