Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

SA records trade surplus in July but off a low base (IOL Business Report)

South Africa’s terms of trade deteriorated materially in the first half of 2023 compared to the same period last year due to the declining volume of exports and weakening rand exchange rate during the period.

In July, South Africa recorded its most significant trade surplus of the year of R16 billion following a deficit of R3.5bn in June, but exports lifted by only R7.7bn as June was a low base, and there is typically high volatility in the trade data, while imports fell by -R9bn, a not unusual amount.

Investec chief economist Annabel Bishop on Friday said the trade balance averaged a miniscule surplus of R500 million in the first half of 2023, versus the surplus of R22.3bn for the same period last year, due to lower exports compared to last year.

Bishop said there continues to be a broad-based increase in the cost of imports overall for South Africa in 2023 to date of 9.1% and 8.8% year-on-year for the first half of 2023, with the rand experiencing very marked weakness compared to the same period in 2022, adding to import costs.

Roadmap to ‘fundamentally reform’ freight logistics sector by end of October (Engineering News)

Government has committed to finalise a Freight Logistics Roadmap, outlining a sequenced set of actions to fundamentally reform the logistics system, by the end of October. The commitment was made at a meeting of Cabinet members and senior business leaders held at Discovery Place in Sandton on September 26, chaired by President Cyril Ramaphosa.

In a joint statement following the meeting, government and business reported that their current collaboration in the logistics focal area was centred on ensuring implementation of immediate operational interventions, which had already been defined, alongside the development of the Freight Logistics Roadmap.

Chinese companies to get preferential tax treatment (People Daily)

Kenya will extend preferential tax policies to Chinese- owned companies looking to expand local operations in a move expected to bolster bilateral relations between the two nations. Currently, National Treasury through Kenya Revenue Authority (KRA) spreads wear and tear allowances, industrial building deduction, investment deduction and farm-works deductions to foreign firms setting up locally.

The wear and tear allowances are charged on capital expenditure on machinery and equipment where they are classified into five classes all of which are offered the allowances at different rates. These include a 37.5 per cent per year on earth moving equipment and self-propelling vehicles like lorries, a 30 per cent rate on equipment like computers and a 12 per cent rate on telephone sets or switch boards among others.

Others are a 10-year withholding tax exemption on dividends and remittances paid to non-residents, 100 per cent investment deduction on capital expenditure for 20 years as well as exemption from customs duties on imported inputs. But the country’s chamber of commerce and industry is now seeking urgent clarification on whether the government can further extend or come up with new tax policies that enable foreign investors to benefit from taxable deductions.

This comes amid a recent report on tax compliance showing that Kenya and China are on the verge of signing a Double Taxation Avoidance Agreement (DTA), a move anticipated to create a space for investors to invest locally and exempt them from double taxation.

New industrial park; pathway to upper middle-income status (Tanzania Daily News)

BUSINESS experts consider the 3 billion US dollars (around 8tri/-) Sino-Tan Kibaha Industrial Park investment as a critical ingredient in Tanzania’s bold endeavour to attain an upper middle-income status. With a projected revenue output of about 1.3tri/- to be generated from over 200 industries to be erected at the industrial park upon completion of the project comes the year 2025, this project is expected to transform Tanzania into an industrial economic hub within the East African Community (EAC) and beyond.

According to analysts, the Sino-Tan Industrial Park marks an important milestone in the country’s journey toward ambitious Vision 2025 of making Tanzania an industrialised economy. A lecturer of economics at the University of Dar es Salaam (UDSM) Prof Humphrey Moshi commended the government for expediting its industrialisation agenda, noting that the project reflects that Tanzania and China diplomatic relationship continue to grow.

For his part, a business analyst, Mr Medard Wilfred also expressed optimism that Tanzania’s economy was going to grow from lower middle-income status to higher middle-income status. He revealed that industrialisation is a critical engine in any country’s economy, therefore the park’s establishment will help to strike a balance between exports and imports, something which will stabilise the economy. As such, the country will not only rely on exports but instead be the one to import more goods generating huge importation duties, he said.

Ethiopia To Manufacture Lada Cars For The African Market (Russia Briefing News)

Ethiopia will launch the production of Russian Lada cars on its territory for the African market, the countries Ambassador to Russia Cham Ugala Uriat has said. The move is significant as it illustrates why Ethiopia has joined BRICS – its low manufacturing cost base can assist keep production costs down while also providing access to the growing African market.

“We’ll see Russian Lada cars in neighboring countries in the near future, because Avtovaz have already signed a deal with one of the Ethiopian companies” Uriat said, adding that those cars will be produced in Ethiopia. Lada make a range of SUV suitable for the African market. In particular, Russian cars may be supplied to Sudan and South Sudan, Kenya and Somalia, Uriat said, and expressed hope that the production will start in the near future. Other Russian auto manufacturers “are showing interest now to go to Ethiopia to build assembling lines” as well, he noted. Two more companies are holding consultations with the Ethiopian side on that issue, the ambassador revealed.

Côte d’Ivoire, Guinea, Mali… Tunisian companies face boycott risk (The Africa Report)

“Today, the situation is not like the first crisis” when Tunisian products were the subject of calls for a boycott in March, following controversial statements by President Kaïs Saïed that were deemed offensive towards African migrants, a local businessman says on condition of anonymity. ”Our partners are unhappy with the treatment of sub-Saharan migrants.”

The businessman, who is familiar with African nations, cites “a rather delicate position” and “mistrust of Tunisian products” in certain countries, such as Mali, Burkina Faso and Guinea, despite the “very limited” economic repercussions.

“Strategically, Africa remains a niche for a few Tunisian companies in key sectors, such as construction and public works, agri-food and insurance,” says Bassem Ennaifer, a financial analyst. According to data from the Centre for the Promotion of Exports (CEPEX), nearly 800 Tunisian companies export to sub-Saharan Africa, with more than 1,000 different products.

Tunisia’s trade with sub-Saharan Africa represents only 3% of its total exports. In 2022, the country generated DT1.5bn (nearly $500m), from its main sub-Saharan trading partners: Côte d’Ivoire (15%), Senegal (12%), Guinea (7.2%), Cameroon (6.8%) and Burkina Faso (5.6%). “Efforts are underway to increase the share of Tunisian exports to sub-Saharan Africa to 5% by 2025, and even more in the years to come,” says Mourad Ben Hassine, CEPEX’s managing director.

Looming sugar crisis as shortage hits COMESA market (KBC)

Sugar prices are expected to rise further in the coming months due to an acute shortage of the commodity in the COMESA market. This comes amidst a ban on sugarcane milling in Western Kenya and the Nyando Sugar belt with fears that the prices could jump further amidst high demand. Agriculture and Food Authority (AFA) Chairman Cronelly Serem said the closure of mills in the affected regions was occasioned by a shortage of sugarcane.

The ban which ends in December 1, 2023, he said targets to ensure the millers have enough cane to crush to help the country bridge the shortage of the sweetener. Serem attributed the shortage to a prolonged dry spell early in the year and lack of proper cane development programmes by millers.

Companies which were licensed to import sugar to address the shortage, he said were experiencing difficulties due to the shortage of the commodity in the COMESA market. Kenya relies heavily on imports mainly from the COMESA region to bridge the local sugar deficit. “We will continue to experience a shortage of the commodity on the shelves since there is no sugar in the COMESA region,” he said.

Africa must collaborate on green energy agenda (SAnews)

Minister in the Presidency for Electricity, Dr Kgosientsho Ramokgopa, says intra-Africa collaboration will be important in the drive towards decarbonisation and strengthening energy security on the continent. The Minister was addressing the UNESCO 9th Africa Engineering Week held in Gauteng on Tuesday.

“The power pool on the SADC [Southern African Development Community] side is essentially matured (sic). I’m told that there is a similar power pool that is taking shape on the eastern side and the western part of the continent. I think that once we pool all of that together, we are going to get to a situation where we are going to exploit the opportunities that are presented.”

The minister further emphasised that because of its rich endowment in resources that are essential to the green economy, Africa must set its own standards. “What drives us is the quest to ensure that we industrialise on the back of these renewable resources [and] on the back of the demand that is coming from the major western countries.”

East, Central Africa experts discuss regional value chain (New Business Ethiopia)

To discuss sub regional value chain, the Meeting of the Intergovernmental Committee of Senior Officials and Experts (ICSOE) by the United Nations Economic Commission for Africa (UNECA) Sub-Regional Offices for Central and Eastern Africa opens today in Bujumbura, Burundi. In his opening remark Prime Minister of Burundi, Gervais Ndirakobuka indicated that the war in COVID-19 and Ukraine crisis have impacted African economy including affecting tourism, increasing fuel and food prices among others. He stated that developing regional value chain requires a combination of effort between and among the countries to harmonize policies and strategies so that our national resources benefit the people brining sustainable development.

This year’s meeting is themed, “Establishing Central and Eastern Africa as sources of quality products and investment destinations of choice to accelerate industrialization and economic diversification, and to strengthen food security”. Commenting about the theme of the year “…This will be an opportunity for the region to reduce poverty and enhance the livelihoods and standard of living of the people in the region,” said Dr. Hanan Morsy, Deputy Executive Secretary and Chief Economist at UNECA.

European Union Collaborates With The Republic Of Djibouti For Regional And Continental Economic Integration In Africa (Africa.com)

The European Union (EU) is partnering with the Republic of Djibouti and the African Alliance for e-commerce to organise the ongoing 9th edition of the International Single Window Conference taking place in Djibouti from September 25 to 26, 2023. This conference highlights some of the investment opportunities and ongoing developments throughout the African continent that will enhance the efficiency of trade globally. The EU is supporting efforts in the region that will boost regional economic integration and facilitate regional trade aligned with the objectives of the African Continental Free Trade Area (AfCFTA).

A key action under this partnership is the EU support to the Horn of Africa Initiative’s strategy, collaborating with the governments of the Republic of Djibouti and the Federal Democratic Republic of Ethiopia. The EU has committed €32 million to a programme dedicated to “Promoting regional economic integration in the Horn of Africa through the development of the Djibouti corridor” implemented by Agence Française de Développement (AFD) and the aid-for-trade organisation TradeMark Africa (TMA).

The programme is aiming at improving the effectiveness and efficiency of one of the most active economic corridors in Africa while promoting inclusive trade. This is achieved through trade processes digitalisation in government agencies to shorten the time required to get trade documents and accelerate the transit of goods along the corridor – from the Port of Djibouti to Addis Ababa, Ethiopia’s capital. Electronic Single Windows and cargo tracking systems are examples of such digital interventions.

Europe Lines Up African Minerals Pacts to Ease Reliance on China (Bloomberg BNN)

The European Union is finalizing partnerships with the Democratic Republic of Congo and Zambia to boost local industries as the bloc competes with China to secure critical materials for the green and digital sectors. A planned memorandum of understanding will signal to both governments and the private sector the EU’s backing for developing local value chains given that a big part of the processing of critical materials, including lithium or cobalt, currently takes place in China, people familiar with the matter said.

The EU is aiming to diversify suppliers of key resources and to counter China’s massive infrastructure investments in regions including Africa. The bloc has signed similar deals with Canada, Kazakhstan, Namibia, Ukraine, Argentina and Chile, and is also exploring accords with Rwanda and Uganda. The EU plans to sign the partnerships during a forum of the Global Gateway, the EU’s €300 billion ($317 billion) investment program, in Brussels on Oct. 25-26, said the people who asked not to be identified because the discussions are private. The meeting will bring together leaders from the EU, other countries and European business executives.

“The EU wishes for a partnership for strategic primary materials, which the DRC accepted,” Wameso said in a text message. A Zambian official did not immediately reply to a request for comment.

Bold global action needed to decarbonize shipping and ensure a just transition: UNCTAD report (UNCTAD)

UNCTAD has called for a “just and equitable transition” to a decarbonized shipping industry in its Review of Maritime Transport 2023 launched ahead of World Maritime Day (28 September). The agency highlights the pressing need for cleaner fuels, digital solutions and an equitable transition to combat continued carbon emissions and regulatory uncertainty in the shipping industry.

The shipping industry accounts for over 80% of the world’s trade volume and nearly 3% of global greenhouse gas emissions, with emissions escalating by 20% in just a decade. UNCTAD Secretary-General Rebeca Grynspan said: “Maritime transport needs to decarbonize as soon as possible, while ensuring economic growth. Balancing environmental sustainability, regulatory compliance and economic demands is vital for a prosperous, equitable and resilient future for maritime transport.”

Extensive UNCTAD agenda at the UN General Assembly 2023 (UNCTAD)

UNCTAD Secretary-General Rebeca Grynspan and other world leaders promoted a global rescue plan for the Sustainable Development Goals (SDGs) during the high-level week of the 78th session of the UN General Assembly, from 18 to 26 September. Currently at the halfway point towards achieving them by 2030, only 15% of the SDG targets are on track and many are going in reverse.

On 20 September, Secretary-General Grynspan spoke at the SDG Media Zone, where national leaders, influencers, activists, experts and media partners highlighted actions and solutions in support of the SDGs. The session examined the ongoing crisis of global debt, which reached an all-time high of $92 trillion in 2022.

A recent UN report flagged that 37 out of 69 of the world’s poorest countries were either at high risk or already in debt distress, while highlighting the inherent inequality in the international financial system. The report found that developing countries on average pay four to eight times more in interest rates than developed ones.

Turning to solutions, Secretary-General Grynspan outlined the “very concrete things” the world can do to rev up investment, debt restructuring, and liquidity and contingency funding for developing countries. She echoed calls from UN chief António Guterres for an SDG Stimulus of at least $500 billion a year to bolster sustainable development and climate action.

Quick links

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WTO Members share views in informal talks on trade and industrial policy

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