Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Vegetable export bans stir concerns in Southern African agriculture (Food For Mzansi)

While Botswana and Namibia have banned vegetable exports from South Africa, trade relations between the countries have been excellent, said Thabile Nkunjana from the National Agricultural Marketing Council (NAMC). It spans a variety of industries that are interlinked to agriculture such as finance, logistics, retail, wholesale, and primary agricultural production. However, experts have warned that new policies by incoming governments might either harm or unblock the great potential of the agricultural industry.

“Using the vegetable industry as an example, South Africa’s average annual export revenue between 2018 and 2022 was R3.1 billion, largely due to the country’s neighbours. About 20% of South Africa’s vegetable export revenue in 2021 came from Mozambique, with the remaining 15% coming from Botswana, 9% from Namibia, 7% from Eswatini, and 4% from each of Zimbabwe and Lesotho. “From South Africa’s perspective, these figures demonstrate why the recent prohibition on its vegetable exports by its bordering major markets is problematic,” he explained.

Nkunjana said numerous companies from South Africa, Southern African Customs Union (SACU) and Southern African Development Community (SADC) member nations have made significant investments over the years, which have resulted in the creation of employment and an improvement in the region’s food security.

Subdued growth expected in transport sector; more freight going to Maputo (Engineering News)

The Ctrack Transport and Freight Index (Ctrack TFI) forecasts “another year of fairly subdued growth for the transport sector”. This is based on the assumption of mediocre economic growth in South Africa this year, forecast at 1.3%, up from 2023’s estimated 0.6%. The latest Ctrack TFI says real transport sector growth is expected to reach 3.7% for 2024, compared with an estimated 3.4% in 2023.

On the assumption that rail will continue to improve gradually to account for 15.8% of total freight payload (compared with 15.5% in 2022 and 2023), growth of 7.4% is forecast for rail freight in 2024, compared with an estimated 1.5% last year. “Though off an extremely low base, and clearly continuing to underperform relative to other transport modalities given ongoing challenges plaguing the sector, the improvement should be celebrated,” notes the TFI report.

“While government approved the Freight Logistics Roadmap at the end of 2023, with proposals to resolve the immediate operational challenges while developing interventions to fundamentally restructure the logistics sector…implementation still needs to be fast-tracked before a notable difference would be evident. More of a medium-term expectation for improvement would be realistic here.” This said, road freight payload is forecast to grow by 5.1% this year versus 1.5% in 2023, which makes it likely to account for 84.2% of total freight payload in the country in 2024.

“The transport and logistics sector is of utmost importance to the South African economy,” comments Ctrack CEO Hein Jordt. “The inability to effectively move products to and from markets comes at a cost, which has a negative impact on the whole economy. “Not only does it subtract from economic growth, given that products are not timeously available for trading, but the cost of products is typically higher given inefficiencies.”

EIB in talks with South Africa over loan for ports, freight rail (Engineering News)

The European Investment Bank (EIB) said it’s in talks to loan South Africa money to upgrade its port and freight-rail infrastructure as its first contribution to a decarbonization pact known as the Just Energy Transition Partnership. “This potential investment would aim to support South Africa’s ambitious decarbonization efforts under the JETP, while boosting economic growth through more efficient and reliable freight transport,” the EIB said.

Kenya’s power imports from Uganda rise 18pc in January on high demand (The East African)

Kenya’s electricity imports from Uganda increased 18.4 percent in January, fuelled by a bigger demand. Data from the Energy and Petroleum Regulatory Authority (Epra) shows that Kenya last month imported 20.29 million units of power from the Uganda Electricity Transmission Company Limited. This is a significant increase from 17.12 million units that Kenya imported from her neighbour in December.

Kenya and Uganda have a power exchange programme during which either country supplies the other with power during periods of deficit. At the close of the financial year, the country that will have exported more electricity to the other invoices its counterpart. In January for instance, Kenya exported 3.41 million units to Uganda, and in December, it exported four million units to its neighbour, meaning that Uganda continues to enjoy a positive trade balance in this exchange. Besides Uganda, Kenya also imports power from Ethiopia, which has been key in stabilising local supply over the past year.

Kenya rolls out tax incentives for key foreign investors (CGTN Africa)

Kenya said Wednesday it has commenced rolling out tax incentives for foreign investors who set up establishments worth more than 65.5 million U.S. dollars. Abubakar Hassan, the principal secretary in the Ministry of Investments, Trade and Industry, told a trade forum in Nairobi, the capital of Kenya, that the customized incentives will apply to companies undertaking manufacturing activities in the country.

“We are rolling out performance-based tax incentives to expand our industrial base,” Hassan said during the Diamond Trust Bank economic and sustainability forum. He noted that firms that qualify for the fiscal tax regime will enjoy reduced tax rates on excise, import duty as well as value-added taxes subject to the approval by the National Treasury.

Uganda in talks to import all its oil via Tanzania (The East African)

Uganda is negotiating with Tanzania to import all of its oil products through Dar es Salaam, which would mean an end to imports via Kenya’s Mombasa port, Uganda’s Energy minister told Reuters on Thursday. Uganda has been dissatisfied with the longstanding system under which Ugandan fuel companies buy 90 percent of their supplies through affiliated firms in Kenya. President Yoweri Museveni has complained this exposes his country to supply disruptions and high pump prices.

In response, Uganda announced in November it would hand over exclusive rights for supply of all petroleum products to a unit of global energy trader Vitol. Uganda imported $1.6 billion worth of petroleum products in 2022, mostly originating from the Gulf. The government planned for imports to still arrive via Kenya, but Energy Minister Ruth Nankabirwa said the Kenyan government refused to grant the required licence.

“We are negotiating with the Tanzanian government. The technical teams are talking, and I will be meeting Her Excellency, the president on that,” Nankabirwa said. “We want to find a route that will keep us safe in terms of petroleum supplies.”

Zimbabwe should speed up currency reforms, IMF says (The East African)

The International Monetary Fund (IMF) on Wednesday encouraged Zimbabwe to speed up currency reforms at the end of a staff visit, saying authorities should move towards a market-driven exchange rate and remove distortions currently in place. The visit discussed Zimbabwe’s request for an IMF staff-monitored programme, part of the Southern African country’s efforts to re-engage with the international financial community by demonstrating a track record of sound economic policies.

Zimbabwe has not been able to secure financing from the likes of the IMF for more than two decades due to arrears in servicing its debt to lenders including the World Bank, the African Development Bank and European Investment Bank.

“An IMF financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and a reform plan that is consistent with durably restoring macroeconomic stability.” Zimbabwe’s central bank and finance ministry have said they are working on measures to stabilise the Zimbabwean dollar, which has fallen about 40 percent against the US dollar since the start of the year. One option being considered is linking the exchange rate to assets such as gold.

See IMF Staff Completes 2024 Article IV Mission to Zimbabwe

Algeria and Tunisia promote a free trade area (Atalayar)

Algeria and Tunisia are seeking to develop their economic collaboration. The two North African countries have proposed strengthening their commercial ties by promoting a free trade zone between the two countries.

The aim is for this free trade zone to become operational in a few months’ time in order to revive the Algerian and Tunisian economies, which are not going through the best of times. Algeria is highly dependent on the income derived from its powerful energy industry, which supplies gas and oil to many other countries, but it has deficits in other economic sectors and, in addition, various sectors have criticised institutional corruption in part of the Algerian state, which has also influenced the national economic crisis and poor administrative management. Tunisia, for its part, is also experiencing major economic problems and social discontent with the political class, which President Kais Saied, who came to power as an independent politician against the traditional political formations, is now trying to reverse.

This free trade zone between Algeria and Tunisia is expected to reinforce economic integration between the two nations, as trade and economic exchanges have remained isolated and mostly limited to the activity of smuggling networks across the border strip, as reported by media outlets such as Al-Arab.

TotalEnergies: IMF debt rules hobbling Africa green energy projects (The East African)

Renewable energy investments in Africa are being hobbled by insufficient government loan guarantees, as the International Monetary Fund keeps a tight leash on country indebtedness, TotalEnergies CEO Patrick Pouyanne said on Wednesday. Pouyanne said currently electricity projects in Africa suffer from “a problem of solvency... you have a risk not to be paid”.

“So, when a renewable developer wants to develop, and it’s obvious you have huge potential, he will go and see the government and ask for guarantees,” he said. “But the African governments, they will tell you, are not able to give these guarantees because the IMF is coming and telling them, ‘Don’t go and give these guarantees, you are already over-indebted’.”

Related blog: ‘Total’ Transformation or ‘Total’ Chaos? Mozambique’s LNG Saga Continues (tralac)

Road project to link SADC countries underway (Tanzania Daily News)

Construction of a 50-kilometre strategic road that will link Southern African Development Community (SADC) countries through neighbouring Zambia is underway which will facilitate the smooth flow of goods and services in the region. Tanzania National Roads Agency (TANROADS) Rukwa Regional Manager, Ms Mgeni Mwanga said here on Tuesday that the completion of the project will help to facilitate the movement of people services and goods within the SADC countries. “The road will relieve trucks from congestion at Tunduma border posts that has been causing delays leading to increased transport costs,” he said.

She said the first phase of the project involving the construction of 25 km Matai – Tatanda road works has reached 45 per cent. She said the road is part of an important road network within the country linking Dar es Salaam, Morogoro, Iringa, Njombe, Mbeya Songwe, Rukwa and the neighbouring Zambia via Kasesya border post. Likewise, the Matai – Tatanda – Kasesya road will also link 107 kilometres of tarmac road stretching from Sumbawanga town to Kasanga port on Lake Tanganyika. Furthermore, the road will strengthen socio-economic activities including the transportation of people and goods including food and cash crops, forest products and other cargo.

The East African Community Competition Authority and Rwanda Inspectorate, Competition and Consumer Protection Authority sign Bilateral Agreement (EAC)

The East African Community Competition Authority (the EACCA) has signed a Memorandum of Understanding (MoU) with Rwanda’s Inspectorate, Competition and Consumer Protection Agency (RICA) to strengthen cooperation between the two authorities in the advancement of competition policy and law in the East African Community. The signing took place on the sidelines of the EAC Stakeholder Merger Workshop held in Kigali on 12-13 February, 2024. The MoU will ensure that implementation of EACCA and RICA mandates and activities will foster joint efforts in addressing competition and consumer protection matters while enhancing regional integration and cross-border trade.

The MoU sets out modalities for a wide range of collaborative initiatives through which the two institutions will cooperate and coordinate their activities in regard to cross-border competition and consumer protection matters in the region. ”It is important to foster a regulatory environment that supports fair competition, innovation and the protection of consumer rights in the community”,

EAC Partner States reaffirm their commitment to advancing renewable energy sources and addressing fossil fuel challenges in the region (EAC)

East African Community (EAC) Partner States have reaffirmed their commitment to enhance energy efficiency and exploit wind, solar and geothermal energy as sustainable energy sources for the region. Partner States have subsequently embarked on various initiatives in an effort to tap into the potential of renewable energy and energy conservation, such as review of national renewable energy laws, implementation of energy management regulations, national strategies and standards for energy efficiency and renewable energy, and promotion of energy efficiency and conservation.

During the Ministerial Session of the 16th Sectoral Council of Energy that was held at the EAC Headquarters in Arusha, Tanzania, Partner States reported that investments in wind and solar energy infrastructure were also underway, from Burundi’s solar mini-grids to Kenya’s wind and solar projects, all aimed at increasing renewable energy contributions to the national grid. Similarly, Rwanda and Tanzania reported increased investment in solar energy projects, while Uganda reported that she is focusing on solar energy deployment for rural electrification.

Speaking during the opening session of the Ministerial Session, the Chairperson, Hon. Shaib Hassan Kaduara, the Minister of Water, Energy and Minerals, Revolutionary Government of Zanzibar, United Republic of Tanzania, emphasised the significance of the energy sector noting its unique role in achieving socio-economic development of the Community. “Energy plays a critical role in industrial development and investment promotion, and therefore access to reliable, safe and cost-effective energy is not optional but compulsory if our region is to realise its development objectives,” said Hon. Kaduara.

Consultative Competition Committee of ERCA met in Abuja (ECOWAS)

The ECOWAS Consultative Committee on Competition (CCC) held its 8th meeting to review the draft Cooperation Agreement between ECOWAS bodies in charge of competition in the Member States and to review and validate the Terms of Reference (ToRs) of the Market Study on Digital Marketsfrom the 6th to 8th February 2024, in Abuja, Federal Republic of Nigeria.

The meeting brought together Members of the CCC and staff of ERCA to review and validate the draft Cooperation/ Grant Agreement for the collection of information and administration of the ECOWAS Competition Information System (ECIS),review and validate the Terms of Reference of the market study on digital markets as well as Elect a new Bureau for the Consultative Competition Committee, being the commencement of the mandate and the maiden meeting of the new the Committee.

ECOWAS-UNDP Technical Consultation Initiates Efforts To Develop West Africa Resilience Strategy (ECOWAS)

The ECOWAS Commission, in partnership with the United Nations Development Programme (UNDP), has launched a three-day regional workshop aimed at developing the Regional Resilience Strategy for West Africa. Held at the NAF Conference Centre in Abuja, this event represents a significant step in addressing the region’s challenges and promoting resilience and sustainable development.

Despite West Africa’s abundant natural resources, sustainable exploitation and equitable distribution of benefits to communities remain challenging. The region, contributing only 1.8% of global greenhouse gas emissions, faces increasing temperatures and extreme weather events, exacerbated by inadequate development and governance, and security-related issues.

In her opening remarks, H.E. Professor Fatou Sow Sarr, Commissioner for Human Development and Social Affairs at the ECOWAS Commission, highlighted West Africa’s vulnerability to hazards and disasters, including climate change impacts, conflict, poverty, and disease outbreaks, stressing the importance of disaster risk reduction in post-disaster recovery and development.

ECOWAS finalizes architectural and engineering designs for the new ultra-modern joint border post to be constructed at the Jendema-Bo waterside border between Sierra Leone and Liberia (ECOWAS)

The President of the ECOWAS Commission sanctioned a special Mission to the Bo-Waterside-Jendema land border, where Engineers, Sector Ministries and Border Control Officials from the two neighboring Member States, Liberia and Sierra Leone, met to review and approve architectural, engineering, electro-mechanical and related technical designs for a new ultra-modern Joint Border Post to be constructed at this strategic land border crossing between the two Countries.

The new Jendema-Bo Waterside Joint Border Post is yet another major regional integration intervention being provided by the ECOWAS Commission to facilitate cross border trade and the free movement of community citizens along the Dakar-Abidjan Road Corridor. In addition to improving the border crossing environment for officials and travelers of the two neighboring Member States, this Joint Border Post complements the ongoing project to transform the transport corridor from Dakar through Banjul, Bissau, Conakry, Freetown, Monrovia to Abidjan, into a supranational economic development corridor, which will spur on development of economic activities among the corridor Countries.

How Africa can attract tech investment beyond ‘Big Four’ (The Herald)

Africa’s “big four” countries — Kenya, Egypt, South Africa, and Nigeria — continue to lead as markets that have long captured attention from global investors, securing 87 percent of all startup funding in Africa in 2023. However, there is a need for venture capitalists to redirect and explore untapped potential in other parts of Africa’s techpreunerial landscape.

Amidst the well-known challenges associated with the global macroeconomic environment such as high interest rates, currency devaluation, inflation, and layoffs, the Partech Africa Report attributed the funding contraction to two key factors. Firstly, startups adopted conservative capital raising strategies, prioritising cash efficiency over fundraising due to a significant decline in valuations and heightened economic requirements. Secondly, there was a notable withdrawal of investors from the market, with a 50 percent decrease in the number of investors participating in funding rounds in Africa in 2023 compared to the previous year. This decline was particularly pronounced among major institutional funds, which typically play a significant role in driving larger funding rounds.

There is a need to transform non-”Big Four” countries into appealing destinations for startup investments. Countries can leverage the African Continental Free Trade Area (AfCFTA) as a tool to attract investments. Through the AfCFTA, African governments, including those in non-”Big Four” countries, can draw increased start-up funding by reducing investment barriers and enhancing investment governance within their respective countries. However, before venture capitalists can venture into the space, it is essential to acknowledge that Africa is not a uniform market. African markets are unique, and the constraints also differ. Issues to do with infrastructure limitations, regulatory requirements, and socio-economic factors, therefore necessitate a tailored approach for each region. The aim is to extend investments beyond the “Big Four.”

The Digital Trade Protocol of the AfCFTA and Digitally-Driven Development in Africa (tralac)

One of the important protocols forming part of the set of agreements within the African Continental Free Trade Area (AfCFTA) is the Digital Trade Protocol (‘the Protocol’). This protocol has the very important task of defining the desired digital environment for digital trade within Africa, and by implication, also has bearing on Africa’s digital trade with respect to the rest of the world. The Protocol aims to establish harmonised rules and common principles to enable and support digital trade across Africa. It focuses on promoting intra-African digital trade, enhancing cooperation on digital matters among State Parties, and creating a transparent, secure, and trusted digital trade ecosystem.

The three most important areas in which governments and regulatory authorities can contribute to digitally-driven development and digital trade would be: Creating supportive regulatory frameworks; Enhancing internet accessibility; and Ensuring that tax and customs duties do not create perverse incentives.

High Level Forum on Inclusive Instant Payments Systems in Africa (African Union)

In a world increasingly reliant on digital connectivity, access to financial services remains a crucial determinant of economic empowerment and social development. Unfortunately, millions of Africans are excluded from the formal financial system, trapped in a cycle of poverty and limited opportunities, primarily due to limited investments in digital infrastructure especially in the rural areas. Presently, the digital transformation is expanding to almost all economic sectors altering the local job markets. Over 500 African companies provide technology-enabled innovation in financial services or fintech, with over 640 tech hubs active across the continent.

To accelerate the expansion of digital public infrastructure translating into universal access to digital financial services for all Africans, the African Union Commission has entered a strategic partnership with AfricaNenda to develop an advocacy program to support Digital Transformation Strategy for Africa (2020-2030), policy harmonization in Africa, and contribute to implementing the strategy’s roadmap with a particular focus on Inclusive Instant Payments Systems in Africa.

The partnership aims to unlock access to the formal financial system for over 400 million adults in Africa who are primarily financially excluded from the formal economy. This gap has exposed millions of people who are heavily reliant on cash or informal providers for their financial needs, which is costly, risky and leaves them vulnerable to economic instability. The partnership will enhance collaboration with governments, central banks, regional organizations, the private sector, and development institutions.

Progress, challenges, and prospects of Africa’s development form the agenda of ministers at the AU Summit (AU)

African Union (AU) Summit will discuss and make far-reaching decisions on the security situation on the continent as some of its member states continue to face security challenges. At the opening of the Executive Council of Ministers of Foreign Affairs, the resurgence of military coups, pre- and post-election violence, humanitarian crises linked to war and the effects of climate change, were highlighted as serious threats that may reverse the gains accumulated in the development agenda of the continent. The emerging cracks on regional integration will also be discussed in the two-day ministerial session on the 14th to 15th February 2024.

On advancing multilateral cooperation, H.E. Moussa Faki Mahamat, Chairperson of the African Union Commission noted the significance of the African Union as a member of the G20 stating that “our membership at the G20, for which we have made intense advocacy, imposes on us more rationality, method and constant vigilance in the turbulent sphere of international relations of the moment.” His sentiments were echoed by H.E Taye who noted that “the African union participation in the G20 will provide us with a unique platform to contribute to global economic governance and decisions. We must therefore ensure that the voice of Africa is heard, that our participation is meaningful, and in the same vein enhance our working relationship with the BRICS to advance South-South cooperation. Ethiopia will certainly leverage it BRICS membership with other sisterly African countries to further advance, interest of our continent and strings and global governance.”

African Union Summit: A chance to transform Africa’s debt, climate and development agenda (African Business)

See also: Morocco attends 44th AU Executive Council Ordinary Session in Addis Ababa (The North Africa Post)

A look ahead at the AU Summit and Africa Business Forum (Google Africa Blog)

This year’s theme for the Africa Business Forum; “Boosting Africa’s Transformation Through Education, Science, Technology, and Innovation”, could not be more timely, as new advances in Artificial Intelligence (AI) will revolutionize how the world addresses its biggest challenges, drives economic growth, and unleashes new opportunities in African economies and around the world. Our first grantee in Africa, the African Leadership University Foundation, will explore how AI can address poverty, hunger and disease in Sub-Saharan Africa, propose AI governance frameworks that can mitigate potential risks, and study AI’s impact on social equality and economic opportunity.

At IEA Ministerial Meeting and 50th Anniversary, global leaders pledge to strengthen energy security and accelerate clean transitions to keep 1.5 °C target alive (IEA)

Energy leaders from around the world met in Paris this week for the International Energy Agency’s 2024 Ministerial Meeting and 50th Anniversary, a two-day event that produced a strong commitment to safeguard energy security while speeding up clean energy transitions to keep the goal of limiting global warming to 1.5 °C within reach.

The major gathering of high-level energy decision makers took place just a few months after the COP28 Climate Change Conference in Dubai, where nearly 200 governments reached a key agreement on energy and climate issues. This included the new 2030 global goals – aligned with the Paris Agreement target of limiting global warming to 1.5 °C – of transitioning away from fossil fuels, tripling renewable energy capacity, doubling energy efficiency progress and reducing methane emissions.

In the joint communique, IEA ministers recognised the significant focus on energy in the outcomes of COP28 and directed the IEA to take a leading role in ensuring their implementation. Ministers noted the continued importance of oil supply security to the global economy, and emphasised the key role played by the IEA’s oil stockholding system. They also directed the IEA to develop a framework to advance the objectives that have been laid out for a voluntary IEA Critical Minerals Security Programme, which would look to boost the security of the supply chains for the crucial minerals needed for clean energy technologies.

Read: 2024 IEA Ministerial Communique

DG Okonjo-Iweala on MC13: “We are going to get it done” (WTO)

Speaking at a special meeting of the WTO’s General Council on 14 February, WTO Director-General Ngozi Okonjo-Iweala acknowledged the challenges members face in securing a package of outcomes for the organization’s upcoming 13th Ministerial Conference (MC13) in Abu Dhabi but said she was confident members would be able to deliver.

She noted that she intends to work with delegations in the following days to address some issues that remain outstanding, in order to circulate a “clean” draft Declaration on 16 February for members’ consideration. The General Council Chairperson, Ambassador Athaliah Lesiba Molokomme of Botswana, briefed members on the state of play regarding the drafting of an MC13 Ministerial Declaration.

DDG Ellard stresses importance of securing substantive outcomes at MC13 (WTO)

Deputy Director-General Angela Ellard on 12 February outlined priorities for the WTO’s 13th Ministerial Conference (MC13) at the 2024 Washington International Trade Conference, organized by the Washington International Trade Association (WITA). In particular, she stressed the importance of securing the entry into force of the Agreement on Fisheries Subsidies and concluding the second wave of fish subsidy negotiations, securing progress on dispute settlement reform, and taking a decision on extending the existing e-commerce moratorium.

She noted that MC13 priorities include entry into force of the Agreement on Fisheries Subsidies and completing the second wave of negotiations; progress on dispute settlement reform; a decision on the extension of the e-commerce moratorium; agriculture negotiations; development-related issues; and deciding how to integrate outcomes of the joint initiatives into the WTO rulebook. A successful MC13 would achieve outcomes or make substantive progress on as many issues as possible, she added.

More WTO-related news

Barbados, Dominica, Senegal, Uruguay formally accept Agreement on Fisheries Subsidies (WTO)

New edition of “WTO Ministerial Conferences: Key Outcomes” publication now available (WTO)

TRIPS Council finalizes preparations for MC13 (WTO)

WTO’s E-commerce Moratorium: Will India Betray the Interests of the Global South Again? (The Wire)

Visit tralac’s MC13 Resource page


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