Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Innovative interventions needed to turn around underperforming growth trajectory (Engineering News)

Against the backdrop of a profoundly challenging macroeconomic environment where South Africa’s economy is expected to continue underperforming, averaging at 1.6% growth in the next three years, innovative interventions are needed to turn the current trajectory around, said the Agricultural Business Chamber of South Africa (Agbiz) chairperson Francois Strydom.

The 2024/25 Budget presented a valuable opportunity to do so, but was largely silent on incentives for business, he said. “The agricultural sector, while having performed broadly positively in the past few years, is confronted with various challenges, with energy security, logistics and declining municipal service delivery challenges front and centre,” said Agbiz CEO Theo Boshoff. “South Africa desperately needs to upscale the incentives provided to communities that meet their own energy, infrastructure, and service delivery needs,” Boshoff emphasised.

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Private rail network investment expected to focus on bulk freight at first (Engineering News)

Government raises US$3.3 billion to support climate change initiatives (SAnews)

Uganda’s exports to Europe now overtake imports (Monitor)

Uganda now exports more than it imports from the European Union (EU), which commands a favourable balance of trade position. The balance, details indicate, has been due to rising coffee exports, while Uganda has seen a significant reduction in machinery imports from EU countries.

Ambassador Jan Sadek, the EU head of delegation to Uganda, said out of the 1.5b euros worth of export between the two markets, Uganda has accrued 800m euros (about Shs3.3 trillion) in export value compared to 700m euros (about Shs2.9 trillion) registered by the EU. This means for the first time in recent history, Uganda has been able to deliver more exports to the largest single market in the world with a population of approximately 450 million people, and a GDP of 16 trillion euros.

“We are proud to see that there is a balance in trade,” said Amb Sadek ahead of the third Uganda-EU Business Forum, which seeks to facilitate structured collaboration between the EU and Uganda’s private sector and public actors.

AfCFTA offers ‘significant’ opportunities for Morocco’s automotive industry - Report (The North Africa Post)

The African Continental Free Trade Area (AfCFTA) agreement offers four significant opportunities to the Moroccan automotive sector, which is among the best developed on the continent, especially for its affordable inputs, finished exports, advantageous labor, and reduced customs tariffs, the 9th edition of the CFC Africa Insights report outlined.

The report, titled “AfCFTA: unlocking the potential of intra-African trade,” suggests that increased trade integration with African partners, particularly in North and West Africa, could lead to economies of scale. Morocco is well-positioned to benefit from the establishment of cross-border value chains, while the sector also holds promise for economies across the region.

Under the AfCFTA, the Moroccan automotive sector stands to gain two key opportunities, namely access to low-cost inputs and an outlet for finished goods exports.

Domesticate AfCFTA to Boost Commerce, Halt Naira Fall, NILDS DG Urges FG (This Day)

The Director General of the National Institute for Legislative and Democratic Studies (NILDS) Prof. Abubakar Sulaiman, has urged the federal government to domesticate and leverage on the African Continental Free Trade Area (AfCFTA) policy to address the current economic challenges.

He explained, “Today the country is not at a crossroads, we have gone beyond the crossroads; when you look at the foreign exchange earnings, forex, the dwindling fortune of the naira and unemployment across the globe especially as it related to Nigeria. “It is now time for us to put up our thinking cap; how do we harness resources and our markets, how do we ensure domestication of AfCFTA and take advantage as done by other countries.

Catalyzing Digital Innovation: African Development Bank commits $80 million to Ekiti Knowledge Zone Project in Nigeria (AfDB)

In the heart of Nigeria’s Ekiti State, a groundbreaking initiative is taking shape – the Ekiti Knowledge Zone (EKZ), a bold step to transform the region into a hub for digital innovation and knowledge economy. The African Development Bank has committed $80 million in loan financing for this state-led pioneering special economic zone project, designed to foster linkages between educators, researchers, innovators, entrepreneurs, and industries, all within one location.

In April 2023, the Federal Government of Nigeria conferred “free zone” status to the project under the Nigeria Export Processing Zones Authority (NEPZA) Act. This designation unlocks a plethora of incentives for private investors, including rent-free land, tax holidays and import/export duty waivers, fueling an environment ripe for investment and innovation.

African Development Bank and OCP Group provide $188 million for green investment in Morocco (AfDB)

The African Development Bank and the OCP Group signed three loan agreements in Rabat totalling $188 million to help fund the OCP Group’s Green Investment Program supplying clean drinking water to the towns around three new desalinisation plants.

The construction of the new modular seawater desalination plants will be funded by the first loan of $150 million from the African Development Bank and the second loan of $18 million from the Canada – African Development Bank Climate Fund (CACF). The third loan of $20 million from the Clean Technology Fund (CTF), will be used to fund storage systems for energy generated from renewable sources, supplying the desalination plants and other OCP Group production units.

Powering the One Africa Market through the digital financial inclusion of small traders (African Business)

Opinion by Wamkele Mene and Lacina Kone

In 2024, Africa is poised for a historic transformation as we accelerate the implementation of the African Continental Free Trade Area (AfCFTA). This landmark agreement holds the promise of uniting diverse nations, spurring economic growth, and reducing dependence on external markets. However, amid this optimism, the plight of cross-border traders, many of whom are women and youth, have come into sharp focus. To truly understand the daily hardships faced by these traders, the AfCFTA, Smart Africa, and the Better Than Cash Alliance’s Secretariats conducted visits to pivotal border locations.

One critical hindrance to financial inclusion and digital trade is the lack of interoperability of digital payment systems, particularly for micro and small traders who dominate Africa’s economy, especially at land borders. Additionally, the recurring use of third currencies in cross-border trade payments places a significant burden on national foreign exchange reserves, leading to delays in settlements and diminishing profits for small and micro-merchants. Enter the Pan-African Payment and Settlement System (PAPSS), a groundbreaking initiative designed to address these challenges and facilitate fast, seamless payments for intra-African trade.

In partnership with the AUC, Smart Africa, and the Better Than Cash Alliance, the AfCFTA has issued a call to action on Digital Financial Inclusion for the Success of the One African Market. The call to action focuses on five key pillars that will be instrumental in Africa’s governments readiness to build inclusive digital economies for the One Africa Market: Government leadership, supportive regulations, fostering universal trusted usage, promoting regional collaboration, and championing financial equality. More than a trade agreement, the AfCFTA it is a gateway to economic empowerment, gender equality, and youth development.

Transition to the green economy offers great opportunities for women, but problems remain (Engineering News)

The move to a green economy is a move to a more feminine economy, affirmed KD Strategies founding director Katnisha Singh on Thursday. She was participating in a panel discussion at the Women in the Green Economy breakfast, a function of the Africa Green Economy Summit 2024, being held in Cape Town. “This is our time!”

The green economy was not an alternative to the mainstream economy; it would be the mainstream economy, she asserted. The green economy allowed, especially in Africa, the redefinition of industrialisation. It was a travesty that Africa had not yet experienced development, and that 70% of the continent’s population still lived in poverty.

“Women, by far, make the most energy decisions in the home, particularly in low-income homes,” pointed out another panellist, City of Cape Town Energy Efficiency and Renewable Facilitation Manager Mary Haw. But very few women were involved in energy decisions at high levels.

SADC Business Council to Host Major Investment Forum Focused on Angola and Regional Growth (AfDB)

The SADC Business Council will host the Southern African Industrialisation Forum from 26-27 February 2024 at Sandton Hotel, in Johannesburg, South Africa. The prestigious two-day event will convene top government and business leaders to shape industrial priorities and investment opportunities focused largely on Angola with the theme focus, Human and Financial Capital: The Key Drivers for Sustainable Industrialisation in the SADC Region.

With Angola as the centrepiece, forum conversations will cover human capital development, trade and investment facilitation, infrastructure development, and targeted high-potential sectors like automotive, pharmaceuticals, tourism, renewable energy and transport and logistics.

Free movement in west Africa: three countries leaving Ecowas could face migration hurdles (The Conversation)

For Niger, Mali and Burkina Faso, a recent decision to withdraw from the Economic Community of West African States (Ecowas) has thrown up questions about how they will navigate regional mobility in future. Ecowas covers a variety of sectors, but migration is a major one. The bloc’s protocols since 1979 have long been seen as a shining example of free movement on the continent. They gave citizens the right to move between countries in the region without a visa, and a prospective right of residence and setting up businesses.

Niger, Mali and Burkina Faso have much to lose if their departure from Ecowas curtails mobility. But it is likely that informal mobility will continue anyway.

ARDA, Stakeholders To Build Intra-Africa Oil & Gas Industry (DailyGuide Network)

The President of the African Refiners and Distributors Association (ARDA) Dr. Mustapha Abdul-Hamid, has reiterated ARDA’s commitment to work with the Organization of the Petroleum Exporting Countries (OPEC), the African Petroleum Producers’ Organization (APPO) and the African Union Commission (AUC) to deliver a sustainable intra-Africa oil and gas industry.

Dr. Abdul-Hamid said the industry would be focused on delivering cleaner fuels and value-added petroleum products via a lower-carbon footprint. He was speaking as a co-chair at the third high-level meeting of the OPEC-Africa Energy Dialogue held on February 19, 2024, in Cairo, Egypt. Dr. Abdul-Hamid also shared ARDA’s objective of developing a consolidated register of investable energy infrastructure projects that would be shared at the first-ever ARDA Investment Forum to be held during the 2024 ARDA Week in Cape Town from 22-26 April 2024.

Africa programme launches ‘A Continent in Conversation’ series at AU summit (Chatham House)

The Chatham House Africa Programme partnered with the United Nations Development Programme (UNDP) and Institute of Peace and Security Studies (IPSS) to hold the inaugural policy dialogue of the ‘A Continent in Conversation’ series on 15 February at the 37th Summit of the African Union in Addis Ababa.

‘A Continent in Conversation’ is a series of events that will run throughout the year. It will bring together political and thought leaders from across Africa to discuss how the continent and individual countries respond to global geopolitical trends including climate change, conflict, migration, international trade and technology. The series is intended to foster a deeper understanding of the continent’s role in shaping a sustainable global future in the context of international political multipolarity and Africa’s increasing economic connectedness and importance.

Red Sea crisis sees China’s brisk business in Africa waver under high shipping costs amid Houthi attacks (South China Morning Post)

Avoiding attacks in the Red Sea has raised the cost of business for Chinese firms in East Africa, which borders the embattled waterway, and shaken the production of companies that cannot afford the more costly alternative transport options, analysts said.

“Chinese companies with a substantial presence in African markets are facing heightened uncertainties and complexities as they navigate these disruptions, prompting a re-evaluation of their shipping strategies and contingency plans to mitigate the impact on their operations,” said Gary Lau, chairman of the Hong Kong Association of Freight Forwarding and Logistics.

China has particular exposure to Africa as its fifth-largest source of foreign direct investment stock in 2021, United Nations Conference on Trade and Development data showed. Its investments in Africa reached US$1.8 billion in the first half of 2023, up by 4.4 per cent year on year, the Ministry of Commerce said in October. China is also Africa’s biggest trading partner, the state-owned news outlet said.

Overlapping disruptions pose unprecedented challenges to global trade, UNCTAD warns (UNCTAD)

Recent attacks on commercial vessels in the Red Sea have severely affected shipping through the Suez Canal, adding to existing geopolitical and climate-related challenges facing global trade and supply chains, UNCTAD says in a new report released on 22 February. The Red Sea crisis compounds the ongoing disruptions in the Black Sea due to the war in Ukraine, which have resulted in shifts in oil and grain trade routes and altered established patterns.

Additionally, the Panama Canal, a critical artery linking the Atlantic and Pacific oceans, is confronting a separate challenge. Dwindling water levels have raised concerns about the long-term resilience of global supply chains, underscoring the fragility of the world’s trade infrastructure. UNCTAD estimates that transits passing the Suez Canal decreased by 42% compared to its peak. With major players in the shipping industry temporarily suspending Suez transits, weekly container ship transits have fallen by 67%, and container carrying capacity, tanker transits, and gas carriers have experienced significant declines.

Mounting uncertainty and shunning the Suez Canal to reroute around the Cape of Good Hope has both economic and environmental repercussions, particularly for developing economies.

Worries SA could help kill global deal on tax-free e-commerce (TechCentral)

The decades-old global consensus that’s allowed e-commerce and a growing tidal wave of data to cross borders without tolls is at risk of falling apart. Every couple of years since 1998, ministers at the World Trade Organisation have renewed a moratorium on digital customs charges. It’s kept online transactions — a Netflix movie streamed in South Africa, an international Zoom call with a doctor in India, an e-book downloaded on a beach in Bali – free of tariffs throughout the internet age. Maybe not for much longer. The WTO meets in Abu Dhabi next week with the latest moratorium set to expire in March. At least three large developing economies are signalling they’ll oppose another extension.

The tariff ban has helped fuel the fastest-growing segment of world trade: digital goods and services. They’re key to the success not just of tech companies like Amazon.com and Netflix but also the growing number of traditional firms that collect data and conduct e-commerce in foreign markets. Now, emerging economies cite concerns about the dominance of US-based Big Tech – and other worries including risks from artificial intelligence, the need to protect data privacy, and the loss of customs revenue into the ether of the digital economy.

India against EU bringing in new issues at WTO meet via backdoor (The Economic Times)

India has opposed the European Union’s bid to push new issues such as carbon taxes, industrial subsidies, women and climate at the upcoming ministerial meeting of the World Trade Organization (WTO) in the garb of “deliberative functions” or “conversation with ministers” that seek to reform the body. Officials said the EU wants an open-ended work programme for such issues while developing countries are against them being discussed among ministers as they don’t have a negotiating mandate from the global trade body.

The EU has proposed that these issues be taken up as part of reforming the multilateral trade watchdog. Many proponents are calling MC13 as a “reform ministerial”. The EU has identified three areas of systemic importance - trade policy and state intervention in support of industrial sectors, global environmental challenges, and trade and inclusiveness - to reinvigorate the deliberative function of the WTO. India has insisted these are non-trade issues and should be discussed at organisations which deal with them. “Our perspective is that there is no need to add things unnecessarily,” said an official, who did not wish to be identified.

WTO’s push for reform plagued by obstacles (Gulf Business)

At least 100 ministers will gather in Abu Dhabi on February 26-29 for the WTO’s 13th ministerial conference once dubbed the “reform ministerial”. In a sign of wider divisions plaguing the body, delegates cannot even agree to “formalise” the talks that aim to revive the WTO’s top appeals court, known as the Appellate Body, which has been idle since 2019 due to US blockages of judge appointments. As such, trade experts say the best hope is a feeble commitment to keep negotiating on this and other key reforms like reviewing poor countries’ trade terms in Abu Dhabi.

Free trade, its supporters say, has helped lift billions out of poverty. But critics say the WTO has failed to shape trade so that it narrows inequalities between rich and poor nations and help tackle new global challenges, not least climate change. To be sure, the scope of what the WTO can achieve is limited by factors beyond its control such as crisis, elections and geopolitical rivalries.

Changes to WTO rules require consensus which has always constrained its ability to reach global deals since it just takes one country to block an agreement. Only two have ever been reached: a partial fishing deal (2022) and the red-tape cutting Trade Facilitation Agreement (2013).

World Economic Forum to host inaugural TradeTech Forum alongside MC13 (Trade Finance Global)

The World Economic Forum is set to host the inaugural TradeTech Forum 2024, where 300 ministers, industry leaders, trade professionals, and representatives from civil society will discuss the integration of advanced technologies into trade. This event is scheduled for 27 February, coinciding with the 13th Ministerial Conference of the World Trade Organization (MC13). This initiative aims to transform international trade through the trial of innovative technologies and the examination of their implications for policies and business models. Børge Brende, President of the World Economic Forum, said, “It’s time to revitalise trade and this includes the urgent need to understand and integrate new technologies. MC13 and the TradeTech Forum give us the opportunity to build on the work done in Davos to accelerate technology deployment. That can drive a trade recovery and get us out of the trap of ‘slowbalization’.”

World trade map being redrawn as global growth slows and regional links deepen (ProAgri)

Southeast Asian nations are among the biggest winners in the new world trade order, with cumulative ASEAN trade forecast to grow $1.2 trillion in the next ten years due to its emergence as a key destination for companies seeking to decrease their dependence on China for manufacturing and sourcing, which is driving ASEAN’s growth as a platform for global exports. Increasing African prosperity levels, improved regional economic integration, and the growing importance of critical minerals in the global economy will lead to Africa’s trade growing faster than the global average.

International trade statistics: trends in fourth quarter 2023 (OECD)

After several quarters of decline, G20 merchandise trade growth flattened in value terms in Q4 2023, as measured in current US dollars. There was little change in exports and imports compared to Q3 2023, as a robust recovery in East Asia was counterbalanced by a slowdown in Europe and North America. Export growth stagnated in the United States, with lower sales of automobiles being offset by higher sales of industrial supplies. In the European Union, exports were down by 0.6% driven by a decline in chemical products, while imports were down by 1.8%.

Conversely, merchandise trade growth was strong in East Asia. China recorded a 0.6% increase in exports, in part driven by high tech products such as mobile phones, and a 3.9% increase in imports due to mechanical and electrical products. Exports increased in Japan and surged in Korea due to strong automobile sales and a recovery of the Korean semiconductor business. Higher sales of primary commodities fuelled export growth in Australia, Indonesia, and Brazil.

On the services side, preliminary estimates point to moderate growth for the G20 in Q4 2023 compared to the previous quarter, as measured in current US dollars (Figure 1 and 2). Exports and imports are estimated to have grown by 1.6% and 1.3% in Q4 2023, respectively, following the 0.9% decrease in exports and 0.2% increase in imports in Q3.

BRICS competition authorities convene in Egypt to discuss food security, grain trade (Daily News Egypt)

The competition authorities of the BRICS countries (Brazil, Russia, India, China, and South Africa) gathered in Cairo, Egypt, on Wednesday for a two-day meeting to discuss critical issues related to global food supply chains and grain trade. This marks the first competition-related meeting hosted by Egypt since its official accession to the BRICS group earlier this year.

The meeting, held under the auspices of the Egyptian Prime Minister, aims to develop new mechanisms to tackle distortions affecting the global grain trade market. Key concerns include anti-competitive practices, market dominance by major players, and fluctuations in supply chains. These factors can lead to price instability, reduced access to food, and increased financial burdens for consumers worldwide.

Alexey Ivanov, Director of the BRICS Competition Law and Policy Centre, welcomed the opportunity to enhance cooperation in combating anti-competitive practices in food supply chains. The meeting will witness presentations, discussions, and knowledge sharing on ongoing investigations and innovative approaches to food market regulation.

More global economy news

Challenging Times for International Trade: Realigning supply chains to overcome stagnation (RIETI)

UN forum: Nations must collaborate now or risk further setbacks in sustainable development (UN News)

Brazil calls for reform of UN as it starts its G20 presidency (South China Morning Post)

“Connector economies” and the fractured state of foreign direct investment (Atlantic Council)


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