Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

South Africa must build renewable energy momentum, and then move on to other sectors (Engineering News)

The rapid pace at which South Africa is building renewable energy projects, driven by private sector investment, is viewed as positive in the global context, including at the recently held World Economic Forum’s (WEF’s) yearly Davos meeting, said business organisation Business Leadership South Africa CEO Busi Mavuso.

While there is an opportunity for South Africa amid a global context beset by risks, the momentum must continue, particularly the next steps to reform the electricity sector, including the establishment of an independent grid operator, she emphasised in her latest weekly newsletter, published on January 22.

South Africa must also demonstrate that electricity reform is not a one-off, with the logistics sector the next front for reforms to turn around the dismal performance of its ports and rail infrastructure, which are directly constraining economic output.

Mombasa, Dar cargo volumes keep rising with competition (The East African)

Cargo volumes at Mombasa and Dar es Salaam ports have grown amid intensified competition, with Mombasa touting its efficiency while Dar is offering what it describes as favorable terms. Tanzania this week announced the completion of the $420 million Dar es Salaam Maritime Gateway Project (DMGP) and plans to expand its maritime infrastructure as it opened storage for cargo destined to four East African Community (EAC) states. Kenya charges up to $1,200 more per 40-feet container passing through the port of Mombasa.

But the attractive package offered by the Dar port has seen it grapple with efficiency challenges, prompting the management to mull diverting cargo to the Bagamoyo Port.

Tanzania Ports Authority (TPA) Director-General Plasduce Mbossa said they planned the construction of six new berths in Dar and Bagamoyo through public-private partnership. Dar es Salaam Port’s current performance is low compared with Mombasa, Beira and Durban, forcing major shippers to skip it due to higher anchorage costs.

Influx of imports helps slash sugar prices to below Sh200 (Business Daily)

Sugar prices eased by about Sh5 per kilogramme to hit the lowest level in five months last November. The drop was driven by an influx of imports that helped offset a slowdown in local production.

Data from the Sugar Directorate shows prices eased to Sh213 per kilogramme on average during the month compared to Sh218 in October. The price of the sweetener has been on a steady decline from a peak of Sh224 per kilogramme in August, with the price currently below Sh200 in several supermarkets for some brands.

The price drop followed a significant jump in sugar imports, which increased by 51.3 percent to 90,759 tonnes in November, the highest since last March. As a result, the total quantity of sugar supply in the market including that produced locally hit 113,495 tonnes, also the highest since March and an increase of 37 percent from October.

Only eight counties enjoy quality services by the top telcos (Business Daily)

Only eight out of Kenya’s 47 counties on average enjoy the industry-set quality of services from local telcos Safaricom, Airtel and Telkom Kenya, pointing to the underlying gaps that exist in the country’s network coverage, at a time the penetration of mobile devices in the economy has grown to hit 127.8 percent or 64.7 million gadgets as of last September.

Latest data from the Communications Authority of Kenya (CA) shows that it is only in Nairobi, Mombasa, Kiambu, Nakuru, Lamu, Migori, Siaya and Nyamira counties that the three telco firms have attained a combined average of the required 80 percent score in Quality of Service (QoS) compliance levels.

Kenya Railways puts proposed Lapsset SGR cost at $16b; bulk on Isiolo-Nakodok line (The East African)

Kenya will need at least Ksh2.4 trillion ($16 billion) to construct a proposed Standard Gauge Railway (SGR) on the Lamu Port-South Sudan-Ethiopia-Transport (Lapsset) corridor, according to projections by the Kenya Railways Corporation.

According to the parastatal, it would cost Ksh523.05 billion ($3.49 billion) to build a 544.4 kilometre SGR link to connect Lamu and Isiolo and a further Ksh476.7 billion ($3.178 billion) to extend the line from Isiolo to Moyale over a distance of 475.9km.The largest spending would be on constructing the SGR line from Isiolo to Nakodok town on the border between Kenya and South Sudan over a distance of 753.2km at a cost of Ksh664.65 billion ($4.431 billion).

Kenya Railways has estimated that a further Ksh358.8 billion ($2.392 billion) will be required to link Isiolo and Nairobi via SGR over a distance of 278.6km and a further Ksh385.95 billion ($2.573 billion) for the 325.35km stretch between Lamu and Mariakani.

Uganda spending cuts, red tape add to contractors’ woes (The East African)

Spending cuts and delays in approving contractors’ claims pushed government arrears to more than Ush800 billion ($208 million) last year in a sign of tougher times faced by local engineering contractors. Domestic arrears accumulated by the Uganda National Roads Authority (UNRA) rose from Ush471.827 billion ($122 million) in financial year 2021/22 to Ush621.496 billion ($161 million) in financial year 2022/23.

Unpaid invoices held by UNRA, and the Ministry of Works and Transport have reportedly crippled local contractors’ operations amid severe cashflow constraints reflected in settlement of routine expenses such as employee wages, rent, bank loan repayment obligations, tax bills and construction material costs, The EastAfrican has learnt.

Recent budget cuts by various government ministries and departments are cited for the massive arrears incurred during the previous financial year in spite of huge budget allocations made to the works and transport sector.

Due to delayed government payments, some contractors have opted to undertake construction projects belonging to private organisations that offer a revenue margin of around 25 percent per project. Small construction projects financed by experienced individual investors in the housing sector usually offer a profit margin of five percent because of tight budgeting habits.

What you should know about Nigeria’s $3.3 billion crude oil loan from Afrexim Bank (Business Insider Africa)

Nigeria possesses over 35 billion barrels of untapped proven reserves, presenting an opportunity to generate necessary funding through methods such as forward sale financing. Lately, the $3.3 billion crude oil pre-payment loan has generated significant public and stakeholder interest recently, prompting NNPCL to address some related questions.

In forward sale financing for crude oil, an SPV agrees with NNPC Limited to sell future crude oil. The SPV secures funding from a bank based on the agreed sale value, often using future crude oil as collateral. NNPC Limited uses the sale proceeds for operational needs, while the SPV fulfils its financing obligations and returns any surplus to NNPC Limited.

Forward-sale contracts enable resource-producing companies like NNPC Limited to receive significant upfront funding for new projects before production and export. The funding can then be used for investments in existing and future resources, leading to increased oil and gas production and higher exports, resulting in more dollars and foreign currencies entering the country.

IMF reveals $400m exposure in Kenya fuel import deal (The East African)

The International Monetary Fund has estimated the taxpayers exposure to the fuel import scheme at around $400 million, which means the government-to-government (G-to-G) deal is not risk-free as touted. The IMF estimates the state’s contingent liabilities stemming from the letters of support issued to participants in the supply chain at 0.4 percent of GDP, said the IMF in the latest country report under the Extended Fund Facility (EFF) and Extended Credit Facility (ECF) Arrangements. A contingent liability is a potential loss that may occur in the future depending on the outcome of a specific event.

In the case of the G2G mechanism launched in April 2023, the IMF says taxpayers are exposed to calls on the national budget in case prices at the pump are not adjusted to fully pass through any forex losses to the final consumers.

African Development Bank and UK select Tunisian cereals project as prime climate finance transaction under landmark Room to Run Sovereign Programme (AfDB)

The African Development Bank and the United Kingdom have announced the selection of the Inclusive and Sustainable Development of the Cereal Sector Project in Tunisia, as a standard-setting project under the Room to Run Sovereign transaction (R2RS).

Approved in July 2023, this cereal sector project in Tunisia will strengthen the resilience of the cereals sector to external shocks and climate change. The project will benefit up to 250,000 cereal farmers in the country, boosting their food security and self-sufficiency. It is estimated that up to $35 million of the $87 million Bank financing corresponding to the climate adaptation component of the loan, has been unlocked by the UK Government guarantee, which increased the Bank’s overall lending capacity.

UN urges Ethiopia, Somalia to talk to solve dispute (Garowe Online)

United Nations Secretary-General Antonio Guterres on Sunday urged Addis Ababa and Mogadishu to open dialogue to settle their dispute over Ethiopia’s maritime deal with the breakaway region of Somaliland. ‘We are always guided by our principles and our principles are related to the unity, the sovereignty and territorial independence of countries, including Somalia,’ Guterres told a press conference at the G77 plus China summit in the Ugandan capital.

Nations urged to prioritize AfCFTA implementation (UNECA)

Africa renews its call to action as experts and government representatives gather to discuss the use of national and regional strategies for effective implementation of the African Continental Free Trade Agreement (AfCFTA). The conference, titled “AfCFTA Implementation Strategies: Towards an Implementation Peer Learning Community,” took place from January 15 to 17, 2024, and was organized by ECA in partnership with the AfCFTA Secretariat and UNDP.

Speaking at the conference in Nairobi, Kenya, Stephen Karingi, Director of Regional Integration and Trade at the Economic Commission for Africa (ECA), emphasized the transformative potential of AfCFTA for the continent.

he highlighted that the realization of this promise hinges on the effective implementation of the commitments undertaken by AfCFTA State Parties. Mr Karingi called on AfCFTA State Parties to adopt an urgent and expedited approach to implementing AfCFTA strategies, noting: “Implementation is primarily a national responsibility. Therefore, Governments must also be ready to finance the complementary policies and investments, especially from domestic resources, for its success.” This, he added, will foster the “much desired diversification of African economies, creating resilience to withstand economic, health and food security shocks.”

ECA Preparations for African Electric Mobility Regional Value Chains Kick-off in Rabat (UNECA)

The ECA office for North Africa launched on 16-19 January 2024 in Rabat (Morocco) a workshop on “Developing Regional Value Chains in E-Mobility for Zambia, Morocco, and the DRC.” This event was organised as part of an ECA project aimed at fostering the emergence of African electric mobility value chains by helping policy makers from the three countries acquire the technical know-how required to develop them.

“By fostering a collaborative ecosystem for the production, distribution, and maintenance of electric vehicles and their components, the Electric Mobility Regional Value Chain can create opportunities for employment creation, skills development and entrepreneurship, along with facilitating progress towards SDGs in Africa, said Zuzana Brixiova Schwidrowski, Director of the ECA office for North Africa at the meeting.

Beijing boosts use of Chinese yuan in Africa as nations move away from US dollar (South China Morning Post)

But it was in the southern nation of Zambia where BOC established its first African subsidiary, allowing customers to make deposits in and even withdraw Chinese yuan. Branches in both Lusaka and Kitwe, a mining town in the country’s northern Copperbelt region, serve the growing number of Chinese mining firms and immigrants. Recently, the lender also announced that its Zambian division would help to boost the use of the yuan for trade as part of China’s efforts to promote the Chinese currency in Africa.

“Actually, Bank of China is a local clearing bank and we will earnestly act upon our responsibility and leverage on our role in Zambia to support other African countries to provide holistic products and services related to the yuan and to promote the use of the yuan in bilateral trade and economic activities,” Lin said during his visit to Lusaka.

Africa in debt spiral as restructuring efforts drag on (The East African)

While the explosion of debt is throwing a shadow over global economic growth, experts warn that Sub-Saharan Africa, where several countries are already in default, is experiencing its worst-ever crisis. The rise in interest rates and over-indebtedness is already crimping the ability of countries to finance their development, as a number of African leaders emphasised at appearances at the World Economic Forum in Davos.

“Many developing countries in a desperate need for cash injection in their economies rushed to these low-cost loans, in markets with no rules or regulation,” said Kenyan economist Attiya Waris, who also serves as an independent expert for the United Nations.

Africa at Davos 2024: What the leaders and experts had to say (WEF)

Davos 2024 presented a timely opportunity to ring the alarm and delve into the policy and public-private partnerships that could rapidly scale the African economy. The meeting saw a keen focus on economic growth from African delegates and the launch of the Private Sector Action Plan, a first-of-its-kind initiative between the World Economic Forum and the African Continental Free Trade Area (AfCFTA) Secretariat. The initiative is comprised of 40 global companies.

Speaking at a session where panellists discussed the schism between the global North and South, Rwandan President Paul Kagame alluded to capacity building as one way to ensure that Africa remains up-to-speed with global developments, especially in times of crisis. We cannot address global inequality by mitigating crises as they happen. We need to involve developing countries from the beginning. There are tools available for Africa to deal with crises as well.

Enoch Godongwana, South Africa’s Minister of Finance, made a case for BRICS, the recently-expanded intergovernmental organization that comprises Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, the United Arab Emirates, Iran and Ethiopia. “The key issue is how do we mobilise savings in the south in order to ensure a better development agenda? That’s the most critical part. To do this there needs to be reform of the international, multilateral institutions,” he said.

According to a World Economic Forum’s Insight Report - AfCFTA: A New Era for Global Business and Investment in Africa - the free trade area, one of the world’s largest by number of people and economic size, is projected to host 1.7 billion people and oversee $6.7 trillion in consumer and business spending by 2030. Speaking at the African Economy of Scale session, Wamkele Mene, Secretary-General of AfCFTA, argued that the agreement has laid the ground for Africa’s potential to be unleashed.

Energy transition of fishing fleets Opportunities and challenges for developing countries (UNCTAD)

As more countries commit to net-zero emissions and include ocean-based climate action in their nationally determined contributions (NDCs), the energy transition of the fishing industry and its fleets is becoming a pressing issue. The fisheries sector is a contributor to greenhouse gas (GHG) emissions because of its heavy reliance on fossil fuels.

With agriculture and tourism, the fisheries sector is one of the three economic sectors most vulnerable to climate change. The main causes for concern are rising sea levels, warmer water temperatures and ocean acidification – and their impacts on fishing activities – particularly in least developed countries (LDCs) and small island developing States (SIDS).

While non-motorized fishing vessels are emissions free, artisanal fishers face fish stocks decline because of climate change. They need public support to adapt to climate change and improve their livelihood. On the other hand, motorized fishing vessels need support in shifting to renewable and clean energy resources. This applies especially to small-scale fishers. Policies to incentivize or mandate the energy transition of the fishing fleet cannot be designed without considering trade-offs and co-benefits.

WEF2024: What does the future hold for global trade? (Ventures Africa)

Trade makes the world go round. This sector is as old as time and has always been a core determinant of who gets a seat at the “World Powers” table. When global trade is troubled, the world is unsettled. That’s why it became worrisome when the World Trade Organisation halved its global goods trade forecast for 2023 to 0.8%. It’s a lot lower than the trend over the last two decades. COVID and the wars in Ukraine and the Red Sea have caused continuous supply shocks and made trade challenging. So, it’s no surprise that inflation, poverty and unemployment rates have risen in many countries.

At the World Economic Forum 2024, Dr Ngozi Okonjo-Iweala, Director-General of the World Trade Organization, said the world economy won’t experience recovery without trade and investment. The last time the global economy had high growth, trade was the engine behind it. Yet, she’s “less optimistic” about this year’s outlook for the sector. “…Going into this year, we were more optimistic, and we projected 3.3% [growth]. But the concerns about what is going on in the Red Sea and the Suez Canal and… climate change drought in the Panama Canal… make us slightly less optimistic,” she said during a panel held on Thursday, January 18th. “Nevertheless, it’s still better than last year.”

Red Sea shipping attacks pressure China’s exporters as delays, costs mount (Reuters)

The rupture of one of the world’s busiest shipping routes has exposed the vulnerability of China’s export-reliant economy to supply snarls and external demand shocks. In a speech at the World Economic Forum in Davos on Tuesday, Premier Li Qiang emphasised the need to keep global supply chains “stable and smooth”, without referring specifically to the Red Sea.

Some companies, such as U.S.-based BDI Furniture, have said they are relying more on factories in places such as Turkey and Vietnam to mitigate the impact of the disruptions, adding to recent moves by Western countries to reduce dependence on China amid geopolitical tensions.

At stake for China now is the danger that other firms will follow suit and reassess their de-risking strategy, opting potentially to shift production closer to home, an approach known as “near-shoring”. “If it’s permanent, and it could be permanent, then the whole mechanism will be readjusted,” said Marco Castelli, founder of IC Trade, which exports Chinese-made mechanical components to Europe. “Some (companies) may also consider moving more production to India, which is one week closer to Europe. Companies need to reevaluate everything.”

Mike Sagan, the Shenzhen-based vice president for supply chains and operations at KidKraft, said that “A lot of suppliers, they’re screaming about money today.” A worry for larger manufacturers, he said, is the snowball effect on smaller suppliers with tight margins, as they would be among the last to receive payments but are critical to the supply chain.

Europe, Africa crude market tightens on Red Sea disruptions, China demand (Engineering News)

Surge in wheat shipments bypassing Suez Canal, WTO Wheat Dashboard finds (WTO)

An increasing number of shipping vessels has been rerouted in the past two weeks to avoid the Suez Canal amid heightened security risks, causing a nearly 40% year-on-year drop in shipments of wheat through the Canal, to around 0.5 million metric tonnes, according to the WTO Wheat Dashboard.

It is estimated that around 76 million metric tonnes of grains, oilseeds and oilseed products are shipped annually from the European Union, the Russian Federation and Ukraine to Asia and Eastern Africa, representing 17% of global trade in those commodities.

Guterres urges G-77 and China to drive momentum for global governance reform (UN News)

More than 130 countries are members of the bloc - the largest grouping of the global South, representing 80 percent of the planet’s population – and their solidarity and partnership are essential to building a sustainable, peaceful, and just world for all, he said. “Let us face it: those that benefit most from the present global governance system are unlikely to lead its reform. So, momentum for change must come from you,” he told leaders. “I urge you to keep driving these efforts forward.”

He outlined many of the challenges facing the world today, including achieving the Sustainable Development Goals (SDGs) by the 2030 deadline as well as ensuring economic recovery from the COVID-19 pandemic, respect for human rights, and climate action.

“While South-South cooperation is strong and deepening, it does not replace the need for the respect of the commitments of the global North – for sustained engagement to reduce poverty and inequality, support growth, and build resilience in developing countries,” he said.

Ranked: The Most and Least Developed Countries in the World, 2024 (CEOWORLD magazine)


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