Building capacity to help Africa trade better

tralac Daily News


tralac Daily News

tralac Daily News

Role of gas in SA’s future energy mix comes under intense scrutiny (Engineering News)

Given South Africa’s ongoing energy crisis, there remains much debate around whether gas should be included in the future energy mix and, if so, how much. Advocates argue that the fossil fuel is a necessity and a step up from coal – since it produces fewer carbon emissions when burned – but many still oppose its large-scale incorporation into, owing to the global shift towards clean energy technologies such as renewables, battery storage, green hydrogen and even nuclear.

Government heavily supports gas in the electricity sector and is belatedly working with industrial stakeholders to avert a “gas cliff” later in this decade, which will arise from a tapering of supply from Mozambique and Sasol diverting the balance to its own facilities as part of its own decarbonisation efforts.

South Africa builds new roadmap to revitalize entrepreneurship (UNCTAD)

South Africa has more than 2 million micro, small and medium-sized enterprises, representing over 98% of formal businesses, according to UNCTAD’s entrepreneurship strategy review for the country. Despite their sheer prevalence, these small businesses create less than a third of all formal jobs, leaving job creation highly concentrated in a few large corporations and government entities.

The survival rate of the businesses is also low, with two thirds failing within the first five years and about 20% in the first two years. Combined with a high level of youth unemployment and around 70% of entrepreneurs operating in the informal sector, South Africa’s entrepreneurial potential remains well below international trends. To boost entrepreneurship, the country’s Department of Small Business Development (DSBD) is developing a national entrepreneurship strategy to create an enabling environment for entrepreneurs, small businesses and start-ups to flourish.

Angola bets on small businesses to help transform its economy (UNCTAD)

Developing a national entrepreneurship strategy in Angola is high on the political agenda and aligned with the country’s 2050 strategy, focused on economic diversification and growth, among other priorities. It’s also part of the government’s 2023-2027 National Development Plan, which includes strengthening the business environment, fostering entrepreneurship and positioning the private sector as the main driver of economic development.

To lay the building blocks of the national entrepreneurship strategy, UNCTAD has supported the country’s National Institute of Support to Micro-, Small and Medium-Sized Enterprises (INAPEM) to design a national entrepreneurship review, with an action plan. “We want to diversify the economy and make it more competitive on the international market,” says Amadeu de Jesus Leitão Nunes, Angola’s Secretary of State for Commerce. “For this to happen, we are developing a stronger framework that will encourage entrepreneurship, drive innovation and facilitate access to funding,” he added.

Zimbabwe launches gold-backed currency to replace battered local dollar (Reuters)

Zimbabwe is replacing its collapsing local currency with a new one backed by gold and foreign currencies that it hopes will be more stable and help bring down inflation, the central bank said on Friday. The Southern African country relaunched its own currency in 2019 after a decade of dollarisation, but it struggled to win public trust and more than 80% of domestic transactions are now conducted in foreign currency. The new currency – called Zimbabwe Gold (ZiG) – will circulate alongside foreign currencies, central bank governor John Mushayavanhu told a press conference in the capital Harare.

Kenya expects three new cranes to lift Lamu Port (The East African)

The Kenya Ports Authority (KPA) is expecting delivery of three cranes this weekend to support the Lamu Port. The authority says Ethiopia and South Sudan have expressed interest in using the port. “We are set to receive the first three ship-to-shore gantry cranes this Sunday, along with a substantial consignment of bulk cargo,” said KPA Managing Director Capt William Ruto. He was speaking during the donation of Ramadan food items to members of the Muslim community in Mombasa, Kwale, and Lamu counties.

Lack of standards hindering SMEs from tapping into continental free trade area (Nile Post)

Ugandan medium- and small-sized enterprises (SMEs) have been urged to embark on quality standards and enough production to get into the African Continent Free Trade Area (AFCFTA). Entrepreneurs stand to gain by adhering to standards, it improves the quality of products and services which, in turn, facilitates market access not only in the East African Region but also on the continent

“Standards have been a barrier to AFCFTA market, it’s important for SMEs to know and maintain them as well as embarking on production to get into the AFCFTA market,” Prof Charles Kwesiga, executive director of Uganda Industrial Research Institute said. “Three things should be done as well,” Kwesiga said. “Firstly, enhancing technology use, secondly, affordable finance mechanism, and thirdly, human capital.”

China invites Uganda’s energy minister for talks on pipeline financing (Reuters)

China has invited Uganda’s energy minister to Beijing to discuss the East African country’s $5 billion crude oil pipeline, Uganda's presidency said on Friday. The development could signal a possible breakthrough in Uganda’s efforts to woo Chinese financiers to fund the pipeline, which the country requires to start crude production from oilfields that were discovered in 2006. Potential Chinese funding is being considered as pivotal after Western banks declined to fund the pipeline after pressure from environmentalists who said the project would add to global carbon emissions.

Ghana, Kenya lead Africa’s economic renaissance (Ghana News Agency)

Two of Africa’s emerging economies – Ghana and Kenya – have taken giant steps to consolidate trade relations as they seek to lead Africa’s economic renaissance. The bilateral trade cooperation, initiated at the instance of Ghana’s President Nana Addo Dankwa Akufo-Addo, is being worked out within the purview and objectives of the African Continental Free Trade Area (AfCFTA) Agreement.

“What is being done in this room today is critical for our continent and the future prosperity of our people,” the President said, as he was joined by visiting Kenyan President William Ruto to witness the signing of multiple pacts between the two countries, at a ceremony in Accra. The Memoranda of Understanding were initialed by the Ghana Investment Promotion Centre and the Kenyan Investment Authority, the Association of Ghana Industries and the Kenya Association of Manufacturers.

Reopened Nigeria-Niger border promises trade growth (DW)

Trade between Nigeria and neighboring Niger has bounced back since the West African bloc ECOWAS lifted sanctions on Niger. The Economic Community of West African States imposed the measures following the July 26, 2023, military coup that ousted Mohamed Bazoum, Niger’s democratically elected leader. The measures failed to achieve their aims, and the border closure devastated local communities on both sides of the frontier with hundreds of millions of dollars worth of trade lost.

“The relationship has spanned centuries, so immediately after the imposition of the sanctions, there were cries everywhere. Local farmers suffered greatly,” said Tukur Abdulkadir, professor of international relations at northern Nigeria’s Kaduna State University. But in recent weeks, a semblance of normality has returned to the Jibiya-Maradi border area. Businesspeople can move freely between the neighboring nations.

Before ECOWAS withdrew the sanctions, people living in border communities were cut off from all traditional trading and socio-economic activities. In 2022, data from the International Trade Centre (ITC) showed that cross-border trade between Nigeria and Niger was worth roughly $226 million ($209 million).

Niger, Mali, Burkina Faso’s withdrawal will cost ECOWAS US$1 billion, says president of ECOWAS Commission (Asaase Radio)

The president of ECOWAS Commission, Omar Touray, has warned that the withdrawal of Niger, Mali and Burkina Faso from the bloc puts ECOWAS’ investments worth nearly US$1 billion at risk. In January 2024, the three countries announced their withdrawal from the ECOWAS, citing “illegal sanctions” attracted by an unconstitutional change of government.

But Touray, speaking at the inauguration of the sixth ECOWAS Parliament held at the International Conference Centre, Abuja, on Thursday, warned that “On the economic and financial front, the withdrawal of the three states could result in default or suspension of all ECOWAS projects and programmess in these countries, worth more than US$500 million.

“It should be noted that…the ECOWAS Bank for Investment and Development currently has 27 ongoing public sector projects in the three countries valued at approximately US$321.6 million. “38% of this is in the form of investment in the public sector, while 61% is constituted by investment in the private sector.”

There’s a lot of container diversion to Lome (GhanaWeb)

A lot of containers are being diverted to Lome because Ghana’s port duties are higher, Vice President Mahamudu Bawumia has complained. At a town hall meeting with the pharmaceutical industry where he promised to enhance the business-friendliness of ports by implementing fixed exchange rates aimed at alleviating forex pressure faced by traders, the flagbearer of the governing New Patriotic Party promised that his government, should he win the December election, is “going to make sure that our duties in ports, by policy, cannot be higher than in Lome, which is our competitor.”

“And right now, there’s a lot of diversion of containers to Lome because ours are higher”, he observed. Dr Bawumia also vowed that he is “going to change the duty structure and go into more of a flat specific duty”. He explained: “If you have a 40-footer container, you know how much you are paying in cedis... So, you take the exchange rate out of the matter and deal with it”, he added. At the meeting, the President of the Pharmaceutical Society of Ghana, Dr. Kow Donkor said it was imperative their concerns were addressed to safeguard the industry.

Lomé hosts first edition of ECOWAS Investment Forum (Togo First)

The first ECOWAS Investment Forum began today, April 4th, in Lomé. The two-day event gathered over 400 key stakeholders of development, investment, and governance in West Africa. Together, they will discuss major issues the region faces. These include food security, developing sustainable infrastructure, and leveraging the green economy to tackle youth unemployment.

George Agyekum Donkor, President of the ECOWAS Bank for Investment and Development (EBID), noted that the forum aims to bolster regional cooperation and foster innovative solutions to the various bottlenecks that hamper the region’s growth. Through the forum, the EBID seeks to secure investments for large ECOWAS projects. The Lomé-based Bank has a clear goal: Bridging an investment deficit estimated at $12 billion per year, vital to support the economic development across all 15 ECOWAS member States. The EBID, it is worth noting, has disbursed $3.69 billion since the end of 2022 to support these countries.

AfCFTA to mobilize $10 billion to support SMEs (Citinewsroom)

The African Continental Free Trade Area (AfCFTA) Secretariat has announced its commitment to mobilize $10 billion to bolster the development of small and medium-scale enterprises led by youth across Africa. The AfCFTA revealed that it has already allocated $150 million to support the burgeoning businesses of young entrepreneurs in Africa. Additionally, it aims to augment its funding resources through partnerships with institutions such as the United Bank of Africa and the Africa Exim Bank.

Delivering his address at a ceremony to welcome the President of Kenya, H.E. Dr. William Ruto to the AfCFTA Secretariat, the Secretary General of AfCFTA Secretariat, Wamkele Mene emphasized the role of the secretariat in promoting youth-led businesses in Africa. “We’re signing an MOU with United Bank of Africa, where they are committed to disburse 7 billion dollars to SMEs that are led by young people. It has been reported to us that already 150 million dollars under this fund has been disbursed. We will mobilize up to 10 billion dollars to ensure in the implementation of AfCTA, young people are at the centre to benefit.”

TDB launches a $100 million facility for agricultural growth in Africa (Techpoint Africa)

Over the years, the Trade and Development Bank has financed trade, fostered sustainable growth, and promoted regional integration in Africa through trade finance, advisory services, asset management, and project and infrastructure finance. In March 2024, TDB extended a three-year $2 million term loan to MPower Ventures Zambia Limited via the Trade and Development Fund (TDF) to improve Zambian access to modern and affordable energy solutions. The BII funding will allow it to provide additional financial assistance to local businesses and financial institutions operating in key African markets.

Andrew Mitchell, UK Minister of State for Development and Africa, stated that this investment reflects the UK Government’s commitment to boosting economic and agricultural growth in Africa, and that it will lower trade barriers, assist businesses in accessing resources, expanding, and addressing food security concerns.

Africa’s trade volume to shrink, higher inflation rate seen on Red Sea attacks (Businessday Nigeria)

Africa’s trade volume is projected to shrink in the first half of 2024 as Iran-backed militants continue to disrupt trade flows on the Red Sea route – the world’s main trade route to most container ships, a new report says. The report compiled by Afreximbank on the implication of the Red Sea attacks on African trade and macroeconomic stability also said that African countries face the risk of accelerating inflation following the attacks on ships using the vital trade route.

“The ongoing attacks in the Red Sea have produced distortions to African trade and may have deeper implications for the region’s macroeconomic stability in the short to medium term,” the report said. “On African trade, the crisis has given rise to a reallocation of resources among countries on the continent, depending on what side of the pendulum they sit,” it added. According to the report, the disruption in the worldwide supply chain, coupled with rising prices for food and energy, might compel local manufacturers to divest from the region if production costs exceed those of their rivals in other continents.

ACP and LDC sugar suppliers demand policy coherence from EU and UK authorities amid poorly regulated Ukrainian sugar imports (ChiniMandi)

In the face of poorly regulated Ukrainian sugar imports, Africa, Caribbean, Pacific (ACP) and Least Developed Countries (LDCs) sugar suppliers demanded policy coherence for development from the EU and UK authorities and an end to preference erosion. The agreement of the European Council presidency and of the European Parliament of 20 March 2024 – likely to be ratified by the European Union in the next few days – to permit up to ≈ 459,320 tonnes of sugar from Ukraine, duty free and inadequately regulated, into the European Union sugar markets in 2024 and until 5 June 2025 will – as the trade data shows has already happened from June 2022 to date – displace an equivalent quantity of preferential sugar exports to the EU originating in ACP and LDCs.

The ACP-LDC Sugar Industries Group, representing the ACP and LDC sugar industries supplying the EU and UK markets, has therefore requested the EU authorities to support the transit of Ukraine’s sugar exports through the EU to its traditional markets in north Africa and the Mediterranean, supported by subsidies as may be required. They urged to limit Ukrainian sugar imports into the EU in accordance with the EU’s international commitments, particularly to developing country sugar sectors. Such limitation could be achieved by taking a benchmark average of Ukrainian imports in 2021, 2022 and 2023. And Ukrainian sugar trade to and through the EU must be carefully monitored via a suitable licensing system with safeguards being swiftly applied.

Opportunity To Enhance U.S.-East African Trade Relations (Africa.com)

Like the rest of the world, African economies are today faced with economic headwinds. This has elevated the need to enhance trade and investment with key partners, such as the U.S., as long-term partner for the continent to weather such crises, catalyze economic growth and safeguard livelihoods.

According to the United Nations’ World Economic Situation and Prospects report, economic growth in Africa weakened to 3.3 percent in 2023. This was attributed to the global economic slowdown, subdued investment and falling exports. However, there is great optimism over the East African region’s prospects. The African Development Bank projects that the region’s growth will stand at 5.1 per cent in 2024 and 5.7 per cent in 2025, ahead of the rest of the continent. A significant proportion of this is expected to be driven by trade and investment activity, hence the need to optimize flows as an antidote to the current slump but also a pathway for long-term sustainable and inclusive growth.

US manufacturing subsidies for Africa could help revive AGOA (African Business)

The US should pay ‘negative tariffs’ in Africa – essentially targeted manufacturing subsidies – to help revive its faltering African Growth and Opportunity Act (AGOA), according to a new report from the Washington-based Center for Global Development (CGD). CGD’s Justin Sandefur and Arvind Subramanian estimate that $291m in negative tariffs – which they describe as “a drop in the bucket compared to aid levels” could create $1.5bn in new trade and would fit with US “friend-shoring” efforts – the act of manufacturing and sourcing from countries that are geopolitical allies.

Despite an initial “fast and furious” impact within five year’s of AGOA’s passage – in which African garment exports to the US grew by 150% and new factories were opened in Kenya, Lesotho, and Mauritius – the benefits of the AGOA soon fizzled out. By 2010, garments exports were almost back at their 2000 level, the result, the authors say, of Chinese competition flooding the market when “arcane” global textile treaties expired in 2005. The authors say that their proposal for negative tariffs could kickstart the flagging scheme.

See Renewing AGOA “As Is” Won’t Do Much for Africa’s Exports. Here’s What Could (Center For Global Development)

Regional analysis of Liner Shipping Connectivity: What does the revised LSCI reveal? (UNCTAD)

Measuring trends in maritime markets is a dynamic process, as markets change over time. Regarding liner shipping trends, UNCTAD revised its well-established Liner Shipping Connectivity Index (LSCI) in mid-March 2024, adjusting the impact of vessel size on the final index measurements.

Compared with five years ago (2019), the scale of increase in four of the five best-connected countries in sub-Saharan Africa has been impressive. The five best-connected countries in sub-Saharan Africa are South Africa (49th best-connected in the world), Ghana (52nd), Nigeria (which in the last year emerged from the 62nd best-connected country worldwide to 54th), Côte d’Ivoire (55th) and Togo (56th). Liberia, Comoros, Mayotte, Sierra Leone, and Guinea top the percentage growth list, followed by Nigeria and Eritrea. Conversely, the LSCI was lower in 12 Sub-Saharan African countries. Major declines were observed in Djibouti, Gambia, and Namibia.

See also International Conference on Maritime Transport Challenges, Governance and Innovation in Ports

Room for rules-based global trade remains, but WTO showing signs of geopolitical tension (Engineering News) 

Over the past five years, geopolitics has cast a shadow over how the world trade system functions, leading to a state of inertia within the World Trade Organisation (WTO) and its dispute resolution mechanisms. The global trade rulebook was outdated and new challenges needed to be addressed, said German Institute of Development and Sustainability deputy director Dr Axel Berger, including digitalisation, environmental, pollution and climate change issues. The multilateral approach was no longer fit for purpose for all issues.

"However, there are also high points, with many ascensions to the WTO, which is an indicator that countries still see value in the WTO. About four-fifths of global trade is through the WTO system, and it has had some notable achievements in agreements on trade facilitation in the recent past," South Africa’s ambassador to the WTO Dr Mzukisi Qobo added.

Quick links

Securitizing the Ethiopia–Sudan border: How cross-border conflict is shaping trade and the control of land

BRICS as a platform for economic sustainability

Cost Of Cross Border Trade Can Be Mitigated By Going Paperless

FAO Food Price Index rises in March

2024 Regional Human Development Report: A Complex Landscape of Progress and Challenges


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