tralac Daily News
Many of the submissions the Department of Mineral Resources and Energy (DMRE) has received from the first round of public engagements about the draft Integrated Resource Plan 2023 (IRP 2023) in January have revealed new sources of data to consider in the plan’s modelling, DMRE energy planning specialist Sonwabo Damba said on January 31.
He added that the modelling for the draft IRP 2023 did not take into account the implications of the 10% curtailment on the availability of grid connectivity in the Eastern Cape, the Northern Cape and the Western Cape.
Damba provided insight into where the department sources its data, and some of the assumptions that inform the modelling of the data. Importantly, the department considers unserved energy as a significant cost factor because peaking stations will have to run longer to make up for unmet demand, which is why its modelling had indicated that an energy system dominated by solar, wind and battery energy storage would be the highest cost system for the country to build, he said.
However, University of Cape Town senior scholar and National Planning Commission energy expert Professor Anton Eberhard pointed out that, when gas is included with a renewables- and battery-dominated energy mix, the outcome is a least-cost scenario. This scenario was used as the reference case by the department in the draft IRP modelling.
Itac creates temporary rebate provision for several products (Engineering News)
The International Trade Administration Commission of South Africa (Itac) has created a temporary rebate provision for the importation of certain cold-rolled steel and painted steel; a rebate facility for the importation of certain flat-rolled products of iron or non-alloy steel; and a temporary rebate facility for the importation of sheet piling of iron or steel. The commission has published details of these rebate facilities in three statements issued on February 1.
The commission found that the subject products are not manufactured locally. As such, the applicable customs duty has an unnecessary cost-raising effect on the domestic industry. Moreover, duty relief, through the creation of a rebate provision, should allow the applicant, together with the downstream manufacturing industry, to maintain, and potentially increase, profitability in both the medium and long term. Also, rebate provision will be made subject to an Itac permit issued in terms of applicable guidelines, rules and conditions.
A tight balance is expected for this year’s National Budget as South Africa’s woes continue; however, any significant, or fundamental, raising of taxes is not expected, but rather a tightening hold on revenue collections to bridge the budget gap.
South Africa’s 2024 budget is set in an environment that has an election year, companies in a “zombie zone” and treading water, a sluggish economy, a financially pressured tax base, increasing government dependents through social grants and global economic headwinds exposure, the latter of which requires a structural overhaul of the economy so as to not be as sensitive to external shocks.
While many factors will guide how the Budget will play out, infrastructure failures and no room to squeeze consumers leaves Finance Minister Enoch Godongwana in a tough position requiring careful balance. This emerged during a Deloitte pre-Budget roundtable on Wednesday, where a panel discussed their views on South Africa’s economy and what to expect from the upcoming Budget speech on February 21.
In his 2023 Medium-Term Budget Policy Statement (MTBPS), tabled in November 2023, Godongwana pointed to “significantly weaker” public finances, and owing to the increased fiscal consolidation that is required, National Treasury had said that tax measures will be proposed to raise additional revenue of R15-billion for 2024/25 in the 2024 Budget. Revenue collections were projected to be R56.8-billion below 2023 Budget estimates.
South Africa places great importance on the African Union (AU) Summits, as the country forges ahead with its foreign policy of the advancement of the African agenda. This is according to International Relations and Cooperation Minister, Dr Naledi Pandor, who was briefing the media on Wednesday on developments in her department.
The summit, which will take place on 17 and 18 February in Addis Ababa in Ethiopia, will focus on education. Last year, the AU finalised a 10-year review of Agenda 2063.
A key recommendation, Pandor explained, is that the AU Member States must accelerate the implementation of the Agenda 2063 flagship projects that are aimed specifically at fast-tracking continental integration. The project particularly focuses on trade and market integration, free movement of people and infrastructure development. However, top of the agenda is the operationalisation of the African Continental Free Trade Agreement (AfCFTA), in which South Africa is playing a leading role.
She also announced that Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates have confirmed they are joining the BRICS (Brazil, Russia, India, China and South Africa) bloc after being invited to last year. “However, you’d be aware that Argentina has written to indicate that they will not act on this successful application by the previous administration to become full members of BRICS. And we accept their decision, particularly given that 30 countries have now written to Russia, expressing interest in becoming members.”
South Africa’s government has admitted that improving the efficiency of the struggling national ports will be key to the success of the African Continental Free Trade Area (AfCFTA) agreement as the country has commenced preferential trade under. This comes as South Africa’s economy is being stifled by logistical bottlenecks as Transnet is struggling with weeks of backlogs caused by inadequate equipment at the ports and railway lines.
Since its inception in October 2022, the GTI has been instrumental in facilitating trade in “Made-in-Africa” goods among State Parties across various regional economic communities on the continent. Under the AfCFTA, South African-made vehicles could find new markets across Africa, benefiting from reduced tariffs and simplified trade regulations.
The CEO of the South African Association of Freight Forwarders (SAAFF) believes progress is being made in navigating the ‘perfect storm’ of South Africa’s current logistics crisis, which is strangling trade and investment. However, Dr Juanita Maree argues that there is still a pressing need to intensify the initiatives being pursued under the National Logistics Crisis Committee (NLCC), which was established in 2023 to arrest the precipitous decline in Transnet’s performance and to introduce reforms to enable greater private sector participation in the rail and ports systems.
Despite the strides made under the NLCC, SAAFF notes that the contribution of imports and exports to gross domestic product fell 8.7% year-on-year to 56.22% notwithstanding robust commodity markets. “The drop obliterated robust trade growth posted in 2022 – a recovery year after the impacts of the Covid-19 catastrophe,” she said. “[At] the worst of times recently, the inefficiencies in rail cost us R1-billion a day, while the inefficiencies at the ports amount to a loss of R200-million a day.”
Kenya and South Africa on Thursday intensified their efforts to strengthen the African Continental Free Trade Agreement (AfCFTA) framework. The two nations that share cordial bilateral relations, marked a significant moment by initiating the first shipment of products under the AfCFTA framework across the African continent. South Africa led the way by sending a shipment containing refrigerators, paperboard, and steel products destined for the Kenyan market.
The launch occurred on the sidelines of the 13th AfCFTA Council of Ministers Meeting in Durban, with the President of the Republic of South Africa, Cyril Ramaphosa, presiding over the ceremony. Rebecca Miano, the Trade Cabinet Secretary in attendance, commended the initiative, highlighting the tremendous opportunity it presents for enhanced trade between the two nations.
Cabinet Secretary Miano emphasized that the consignment from South Africa serves as a genuine testament to the nation’s readiness for strengthened trade ties. Despite the relatively modest total trade figures of R9.7 billion between Kenya and South Africa in 2022, with South Africa holding a trade surplus, the implementation of the AfCFTA opens up avenues for substantial growth.
Kenya imports fridges from South Africa under AfCFTA (The East African)
Kenya is importing its first consignment of machinery, agricultural products and electronics, among them refrigerators, from South Africa under the African Continental Free Trade Area (AfCFTA). Going forward we shall expect imports from South Africa only of the products we do not manufacture in Kenya,” said Ms Miano.
Horticulture sector: Tanzania borrowing a leaf from Ethiopia (The Exchange Africa)
The fresh produce market is projected to reach US$40.24 billion by 2026 growing at an annual rate of 10.2 percent and Tanzania is angling for a pie of these billions from its horticulture sector. These statistics by Global Market Estimates (GME) show that the global horticulture market averages US$20.77 billion in 2021 and is growing rapidly. However, African countries such as Tanzania, which has enormous agricultural production potential still lag behind and only get to enjoy a small percentage of the over US$30 billion horticulture market.
“We believe, when we ensure access to information and knowledge including the adoption of appropriate technologies, market access, and advocating for business enabling environment, there is a potential of earning up to US$3 billion per annum through the Horticulture Industry,” comments Dr. Jacqueline Mkindi, the CEO, Tanzania Agricultural and Horticulture Association (TAHA). Mkindi adds that Tanzania is making considerable strides in developing the sector but has a long way to achieve its full potential.
“Massive achievements have been accrued so far, including increases in yields of fruits and vegetables by 200 – 300 per cent, increase in export earnings from US$64 million in 2004 to over US$779 million in 2019,” she notes.
Sugar shortages in Tanzania lead to a spike in prices (The Exchange Africa)
A biting sugar shortage in Tanzania is causing the price of the commodity to skyrocket over the last few months. On the one hand, the sugar shortage is blamed on heavy rains at the end of last year while on the other hand, there are allegations of hoarding and price setting by industry cartels.
With little to no evidence of the latter, the speculations remain just that, mere allegations. However, what is undisputed is sugar shortage and the attendant surge in prices for the sweetener. Sugar shortage in Tanzania has persisted for almost an entire year now. So profound is the problem that President Dr Samia Suluhu Hassan was forced to issue a public statement explaining the government’s plan to resolve the issue.
Kenyan, Ethiopian cut flowers to face more scrutiny in EU (Capital Business)
Cut rose flowers from Kenya and Ethiopia will be scrutinised more before accessing the European Union market. According to the Fresh Produce Exporters Association of Kenya, the flowers will be checked 25 percent more starting this May. The new measures follow the review of EU regulatory measures that sought to take precautionary measures over the false codling moth.
“FPEAK has been advised that the EU Member States representatives, meeting with the EU Commission in the EU Standing Committee SCOPAFF earlier this month have formally adopted the anticipated changes to the minimum percentage of plant health import inspections at EU borders of consignments of cut roses from Kenya and Ethiopia,” said FPEAK in a statement.
Djibouti has achieved remarkable economic growth over the past two decades, driven by strategic infrastructure investments, its advantageous location, and political stability in a volatile region. With an average annual GDP growth of 4.4 percent between 2000 and 2021, the nation’s real GDP per capita has more than doubled, surpassing USD 3,200 in 2021.
While these gains have translated into solid progress in reducing poverty, from 22.3 percent in 2013 to 17 percent in 2019, more must be done to ensure that the benefits are shared by all segments of society, according to a new World Bank report released today.
The report, titled “Djibouti Beyond the Ports and Bases: A Path to Prosperity for All”, highlights the economic potential of the country. To achieve its potential, Djibouti faces multiple economic challenges, including a limited domestic market, high operating costs in the electricity and telecommunications sectors, limited economic diversification, and the growing challenge of climate change.
“Djibouti is uniquely placed, with assets that can be leveraged to expand its market and attract international private investors,” said Stephane Guimbert, World Bank Country Director for Djibouti, Egypt, and Yemen. “As Djibouti enters its next stage of development, it is essential that the private sector drives growth and that the benefits of growth be shared by all segments of society, particularly women and young people,” he added.
IPR protection, if sought after by most of the country’s SMEs, would have strategically positioned them to capitalize on the EU-Africa trade agreements as well as the African Continental Free Trade Area (AfCFTA), which provides duty-free access to vast markets for growth. These trade agreements, however, had at their core the protection of IP rights as a key requirement for trade. Studies by the European Union Intellectual Property Office and the European Patent Office have revealed that IP protection is not just key to market competitiveness but also boosts the revenue of SMEs that have IP rights protected, compared to SMEs that do not.
The failure of Liberian struggling SMEs to, therefore, take full advantage of the benefits of IP rights has resulted in a significant number of them missing out on opportunities for growth and income generation.
This is why a healthy SME sector is critical to the overall prosperity of Liberia since half of the country’s employed population is found in the informal sector, largely controlled by SMEs, making IP protection and commercialization key. Each SME entering the Liberian market potentially harbors a unique product or invention capable of revolutionizing the country’s economic landscape. However, the limited utilization of IPR among them poses a significant barrier to this transformative potential.
How Africa states’ indebtedness, collapsing currencies could be fixed (The East African)
Highly indebted African countries are facing stark trade-offs between servicing expensive debt, supporting high and growing development needs, and stabilising domestic currencies. Government debt has risen in at least 40 African countries over the past decade. As a result, some are experiencing a bad combination of high debt, elevated development spending needs amid budget shortfalls, and unfavourable exchange rate pressures.
These issues have become more pressing since 2022, when persistently high inflation prompted major central banks around the world to embark on the most aggressive monetary tightening campaign in decades. Monetary policy tightens when central banks raise interest rates.
Steps can be taken to expand the policy space to tackle these challenges while easing difficult trade-offs. These steps include prioritising public spending measures that raise growth, fixing the revenue collection problem facing all African countries, and restructuring unsustainable government debt.
ECOWAS: Niger, Mali, Burkina Faso Exit Poses Security Threat (Leadership News)
Civil Society Organisations (CSOs) in Northern Nigeria have written to President Bola Ahmed Tinubu, stating that the withdrawal of Niger, Mali and Burkina Faso in the Economic Community of West African States (ECOWAS) poses a big security threat. In the letter they jointly signed, the CSOs said the withdrawal of Niger, Mali, and Burkina Faso poses a direct threat to the collaborative efforts required to combat regional security challenges.
“The withdrawal of Niger, Mali, and Burkina Faso poses a direct threat to the collaborative efforts required to combat regional security challenges. These countries, particularly Mali and Niger, are critical in the fight against terrorism and insurgency, given their geographic positioning and the nature of cross-border security threats.”
Nigeria will likely face more security and economic challenges following the exit of Burkina Faso, Mali, and Niger as the country’s fight against insurgency and dwindling economy bite harder.
The exit of these countries at a point when Nigeria heads ECOWAS leadership, some diplomatic analysts said, was a result of “poor exploration of diplomatic channels,” professor of Political Science and International Relations and Director of Strategic Partnership at Al-Muhibbah University, Abuja, Muhktar Imam, said. “There is a need for foreign policy drive to re-strategise and think around the foreign policy. The grievance of some of the exited countries is that the management and leadership of ECOWAS are beginning to derail from the founding fathers’ vision,” Muhkar observed.
China-Africa trade hit US$282 billion in 2023 but Africa’s trade deficit widens (South China Morning Post)
“The 1.5 per cent growth was … a reflection of strong resilience of the China-Africa trade,” Jiang Wei, head of the commerce ministry’s West Asian and African affairs department, told reporters on Wednesday. Observers said the modest growth followed the pattern of China’s overall trade with other regions as it faced severe economic headwinds, including weak business and consumer confidence, tepid global demand, a property crisis and heavy local government debt that could constrain the ability to stimulate the economy.
Last year, the value of China’s total global trade slumped 5 per cent from the previous year to US$5.93 trillion. According to Chinese customs data, in 2023 China recorded a drop in trade with its top five trading partners in Africa – South Africa, Angola, Nigeria, the Democratic Republic of Congo (DRC) and Egypt – which are predominantly resource-rich nations.
China imports raw materials from the continent, including oil, copper and aluminium, whose prices dropped in the past year. “A fall in these and Africa’s trade earnings will fall, even if volumes stay the same – and sometimes even if they grow,” Johnston said. “To a large extent today, Africa’s trade balance depends on the price of oil.”
The President, Nana Addo Dankwa Akufo-Addo, says a new paradigm hinged on structural transformation must be defined to allow African economies trade at the high end of the global value chain. In the search for a robust Euro-Africa trading system, in particular, a structural transformation to change course from raw material producing and exporting economies, to value-adding, industrialising economies, was a necessity, he stated.
“This will generate mutual prosperity for the peoples of the two continents,” the President said in an address at the Africa Day 2024 Summit, in Vienna, Austria. The continent, he noted, must shrug itself off the existing practice where it had been largely dependent on the production and export of raw materials, without any meaningful value-addition processes.
In 2021, 68 per cent of goods exported from the European Union (EU) to Africa were manufactured goods, while 65 per cent of goods imported to the EU from Africa were primary goods (food and drink, raw materials and energy), the World Trade Organisation has estimated.
Low-income countries face a sweeping debt crisis, making it all the more urgent for the IDA21 replenishment to be the largest ever. Ballooning debt payments are pulling scarce resources from development priorities, the International Debt Report 2023 highlights. A robust International Development Association (IDA) – which provides zero to low-interest loans and grants to world’s poorest countries - will be fundamental for many poor countries to invest in their people and the environment and to prevent the loss of hard-won development gains.
“The poorest countries need help, and they need it now,” said Haishan Fu, Chief Statistician of the World Bank and Director of the World Bank’s Development Data Group.
The scale of the problem is stark. In just the past three years, there were 18 sovereign defaults in 10 low- and middle-income countries— more than over the previous two decades. Today, about 60 percent of low-income countries are at high risk of debt distress or already in it. The problem is compounded by the weak growth seen in many of the poorest countries over the past decade. From 2012 through 2022, IDA-eligible countries increased their external debt by 134%, far beyond the 53% increase in their Gross National Income.