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COVID-19 and trade in SSA: impacts and policy response (World Bank)
Measures taken to curtail the spread of COVID-19 have led to a sharp contraction of the global economy and an even larger decline in trade, with significant implications on the livelihoods of people in Africa. Despite the relatively low number of cases, the region’s economy would be hard hit due to its high reliance on trade, heavy dependence on commodities, a fragile food system, and limited fiscal capacity to respond. This reinforces the region’s inherent vulnerabilities, posing risks of wiping out the gains made in poverty reduction. Extract:
Though Africa accounts for a very small share of global trade (3%), the share of trade in the national income of most economies in the region is relatively large, compared to other regions. In 2017 the share of trade in GDP was 31% in North America, 40% in South Asia, 56% in SSA and 57% in EAP. Africa’s share of exports to the rest of the world ranged between 80-90% during 2000-2017, higher than any other region. Given that the countries most afflicted by the pandemic account for a significant share of global trade and output and are the largest trading partners of the region, the trade impacts are expected to be severe. Hence, despite a relatively low percentage of confirmed cases of COVID-19 in SSA thus far, the largest shocks to the region are going to be external. In addition, the lion’s share of FDI to SSA comes from these regions, creating a confluence of triple shocks: falling demand for African exports; global supply shocks further curtailing production in export-oriented sectors; and a slump in FDI flows. The impact of disruptions in GVCs driven by the global demand slump would be predominant in countries with strong forward linkages – mainly exporting raw materials used in the production for export in other countries. This accounts for the largest share of the region’s trade and GVC integration. [The author: Woubert Kassa]
pdf COVID-19 and Trade in SSA: Impacts and Policy Response (2.47 MB)
Zhihua Zeng: How will COVID-19 impact Africa’s trade and market opportunities? (World Bank Blogs)
In the recent decade, Africa’s trade linkage has been steadily increasing. Based on an upcoming study on Africa-Asia global value chain linkages, exports to Asia are positively correlated with exports to the rest of the world, and increased exports from a Sub-Saharan African country to Asia tend to raise exports to the rest of the world as well as to other African countries, thus, helping Sub-Saharan African nations move up the value chains. Although exports from Sub-Saharan Africa to Asia remain highly concentrated in resource-intensive products, such as petroleum, minerals, metals, and primary goods, there are a few exceptions. For instance, Ethiopia and Tanzania have done relatively well in diversifying their export portfolios during the boom of exports to Asia. However, the COVID-19 pandemic will put a brake on this for the time being. The mass production shutdowns and supply chain disruptions due to the rare “twin supply-demand shock” will create ripple effects across all global economic sectors, causing further uncertainty for a continent already grappling with widespread geopolitical and economic instability. With China, Africa’s largest trading partner, and other major economies gradually reopening their economies, Africa’s trade will gradually pick up, however, the path might not be that smooth at least for the foreseeable 1-2 years. So, where is Africa’s future market and trading opportunities? [The author: Douglas Zhihua Zeng]
Related: World Bank pdf COVID-19 Trade Watch No. 2, 29 May 2020 (1.31 MB)
Andrew Mold: How East Africa could bounce back from the COVID-19 pandemic (OECD Development Centre)
This final point [strengthening regional integration] merits some elaboration. China is a major supplier to the East African market, accounting for around 20% of all imports into the region. China-Africa trade contracted by 14% in the first quarter of 2020. That is hitting both consumers and firms dependent on imported inputs and capital goods coming from China. But there is also a double-whammy effect at play, because the European market – the other major source of imports, responsible for another 20% of the regional total – is also now being hit by major disruptions to its supply chains.
However, all of this may have a silver lining over the mid-to-long term. Dependency on imports from China and elsewhere has become excessive for the region. An interruption to the surge of imports will oblige countries to find alternative strategies. Regional manufacturers will need to rise to the challenge and fill the void left by reduced Chinese and European imports, not just for this period of crisis but for the future. In this context, the crisis is underpinning the importance of the African market and urgency of implementing the African Continental Free Trade Area.
Climate change impacts on Africa’s economic growth (AfDB)
Climate change and climate variability could lead to severe macroeconomic consequences as early as 2030. In all African regions, negative climate change impacts would progressively compound and lead to decreasing GDP per capita. The warming scenarios entail losses by 2030 (as compared to a baseline GDP per capita scenario) that range from -0.6% in Northern Africa in the low warming scenario, to -3.6% in Eastern African in the high-warming scenario. As early as 2030, African regions would start benefiting from stringent mitigation action. Even though, by 2030, the absolute difference in losses between the low and high warming scenarios is still minor, the high-warming scenarios lead to increased damage ranging from about 16% in Northern Africa to about 54% in Central Africa, compared to losses in the low warming scenario. African countries are projected to experience detrimental economic consequences from climate change by mid-century, in both warming scenarios.
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Under a high-warming scenario, Eastern and Western Africa, would experience a reduction in GDP per capita by about 15% by 2050 (below a baseline GDP scenario).
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Northern and Southern Africa would experience a decrease in GDP per capita approaching 10% by 2050, while Central Africa could be less affected, with a possible decrease of 5% in the high-warming scenario.
Nigeria: AfDB’s Country Strategy Paper 2020-2024
Although Nigeria is not a transitional state, the country possesses some pockets of fragility that undermine its resilience to cope with human and nature induced pressures as highlighted by the Bank’s 2018 Country Resilience and Fragility Assessment (Annex 1). The assessment is based on seven dimensions (political inclusion, security, justice, economic and social inclusion, social cohesion, regional spill-over effects and environment). The major challenges arise from a tenuous security situation, weakness in social cohesion, growing youth unemployment, weak judiciary, fragility and inadequate preparedness to tackle environmental and natural disasters. The country’s policy architecture to handle economic shocks may be further tested by the speed and efficacy with which Nigeria addresses the challenges of the COVID-19 pandemic. In most indicators however, Nigeria’s capacity and resilience to overcome the fragility pressures and challenges are assessed to be relatively low.
On regional integration and trade: The Nigerian economy is more integrated with the rest of the world than with the continental and regional peers. Available trade data for 2018 show that 92.6% of Nigeria’s exports went to the rest of the world (see Figure A6.1 in Annex 6), compared with 3.7% to ECOWAS member states, and the same figure to the rest of Africa (South Africa). Similarly, Nigeria imported 96.3% from the rest of the world against 3.7% from African countries outside ECOWAS region. While Nigeria is a key regional player contributing about 65-75 % of ECOWAS GDP, its trade intensity with member countries is very limited. Several factors explain this discrepancy. These include concentrated structure of its exports, dominated by crude oil mainly to destinations outside Africa; poor regional infrastructure and partial domestication of regional protocols on trade liberalisation and proliferation of non-tariff barriers, including outright import ban on some products.
Q&A: What early data says about gendered impacts of COVID-19 (Devex)
In Bangladesh and Pakistan, women are less likely to receive information about COVID-19 than men, according to early results from surveys conducted by UN Women’s Regional Office for Asia and the Pacific. In April, UN Women created a new rapid assessment survey tool, partnered with mobile network operators, and began rolling out questionnaires via SMS to capture the pandemic’s gendered consequences throughout the region. With thousands of respondents already — and with weights applied to adjust for age, sex, and educational attainment — the agency is beginning to better understand how the coronavirus is impacting men and women differently.
COVID-19 and food security: gendered dimensions (World Bank)
Across the developing world, the coronavirus pandemic threatens to cause massive disruptions in food supply chains. The World Food Programme estimates that by the end of 2020, 265 million will face acute food insecurity - twice as many as before the crisis. Women play a key role in keeping the food system functional. Their livelihoods also depend on these jobs, which are primarily concentrated in the informal sector, and they have little access to savings and social safety nets. This note highlights women’s contribution to food supply chains, focusing on women as informal producers and traders of food. It discusses potential impacts of the pandemic on their vulnerabilities and policy responses. It concludes with some early reports on how women along the food supply chain are rising to the challenge of COVID-19, and some considerations for investments in inclusive food systems.
COMESA’s Christopher Onyango: Diaspora remittances critical to post Covid-19 recovery (The Star)
In the COMESA region, the leading recipients of remittances in 2019 were Egypt ($26,791m), Kenya ($2,819m), Tunisia ($ 1,912), DRC ($1,823m) and Zimbabwe ($ 1,730m). In terms of contribution of remittances to GDP, Zimbabwe led with 13.5%, Comoros (11.5%) and Egypt (8.2%). Within Africa and by extension COMESA, the commitments to remove restrictions on the movement of persons across the region specially professionals and other essential workers is now paramount. Restrictions hinder productivity and growth of both migrant source and destination countries and subsequently the associated remittances. Going forward, COMESA member states should undertake financial regulatory reforms to streamline and effectively reduce the costs of sending remittances. This would entail review Central Bank Acts, Money Remittance Regulations, National Payment System Act, and the E-money Regulations. The reforms should also guide licensing and operations for Remittance Operators as well as anti-money laundering measures. [The author is Director of Trade and Customs at the COMESA Secretariat]
pdf Measures in COMESA Member States in response to COVID-19 - 8th Edition (1.43 MB)
Antonia Esser, Juliet Munro: How to fill the remittance gaps left by COVID-19 (Devex)
However, unlike mobile money, mobile remittances aren’t as simple. While remittances can easily flow within countries — say, from Nairobi to Kisumu in Kenya or from Dakar to Kolda in Senegal — cross-border transactions, such as from Cameroon to Nigeria, remain difficult. And that’s mostly due to regulatory issues. So, what can be done to help solve this? While there is a strong case — beyond remittances — for government investment in providing basic infrastructure, there are three areas that governments could prioritize to encourage the uptake of mobile remittances. First, use public-private partnerships to drive investment in critical infrastructure such as network towers. Next, remove regulatory barriers and review taxes to encourage more competition and growth. Finally, explore digital government-to-person payments and virtual currencies as ways to familiarize consumers with digital channels from a government perspective.
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New Frame: Zimbabweans struggle as remittance lifeline shrinks
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IOM, EU bolster response to economic impact of COVID-19 on returning migrants across West and Central Africa
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Reuters: Rich world’s jobs crisis jolts money flows to millions
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IMF’s Ralph Chami: Umbilical cord of remittances under threat
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Brian Caplen: Triple-funding whammy stalks emerging markets
Trade in services in the context of COVID-19 (WTO)
The crisis is leading to a greater focus on online supply in sectors such as retail, health, education, telecommunications and audiovisual services. Suppliers are accelerating efforts to expand their online operations and consumers are adopting new habits that may contribute to a long-term shift towards online services. In the future, increased supply of services through digital networks could increase trade through mode 1 (cross-border supply). Extract: It seems likely that trade statistics for 2020 and beyond will show not only a substantial drop in services trade, but also, over the medium term, an intensification and acceleration of the trends that led to a change in the structure of cross-border trade in services over the last decade. In relative terms, services trade has shifted away from the “traditional” categories of transport and travel-related services toward telecommunications, computer and information services, business services, financial services and audiovisual services.
pdf Trade in services in the context of COVID-19 - WTO Information Note (270 KB)
The evolution of services trade policy since the Great Recession (World Bank)
Are changes in services markets provoking reform, restrictions, or inertia? To address this question, this paper draws on a new World Bank-World Trade Organization Services Trade Policy Database. The paper analyzes the services trade policies of 68 economies in 23 subsectors across five broad areas -- financial services, telecommunications, distribution, transportation, and professional services. Policy measures are quantified into a Services Trade Restrictions Index following a novel, consistent and transparent framework. The paper identifies patterns of services trade policies across sectors and economies, and secular trends over the past decade.
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COVID-19 and trade in SSA: Impacts and policy response
COVID-19 will have a severe economic impact in Sub-Saharan Africa: Trade is the Key Channel
The COVID-19 pandemic is first and foremost a public health crisis. However, measures adopted to curtail the spread of the virus have led to a sharp contraction of the global economy and an even larger decline in global trade, with significant implications on the livelihoods of people in Sub-Saharan Africa (SSA). To date, the number of confirmed cases of COVID-19 has been relatively low in Africa when compared to other regions. However, nowhere will the pandemic hit harder, or with greater adverse impacts on the economic, social, and political life of people, than in SSA, mainly due to the inherent vulnerabilities in the region. Economic growth in SSA is expected to decline to between -2.1 and -5.1 percent in 2020, the first continent-wide recession in a quarter of a century. The economic impact will be hardest felt through trade, due to the rare mix of global shocks in demand and supply. Trade is also key to the solution, both in the direct measures to control the spread of the virus and in minimizing the economic fall out. This brief focuses on trade impacts and policy responses with respect to the latter.
The trade impacts of COVID-19 are amplified since countries most affected by the pandemic also represent a significant share of global production and trade. Countries most affected by the pandemic, mainly the United States, China, Japan, Germany, the United Kingdom, France and Italy, together account for about 60 percent of global GDP, 65 percent of global manufacturing and more than 40 percent of global manufacturing exports, while forming key parts of the global value chains (GVCs). The COVID-19 related trade collapse is expected to exceed the trade slump of the 2008-2009 financial crisis. Global goods trade is projected to plummet by 13 to 32 percent. In stark contrast to the 2008-2009 global crisis, where the impact on global trade slowdown was indirect and mainly demand driven, there is now a precipitous slump in production (supply) as well as a sharp collapse in demand. The containment measures adopted in countries most affected by the pandemic result in significant demand shocks, affecting exports and economic growth in SSA.
Though Africa accounts for a very small share of global trade (3 percent), the share of trade in the national income of most economies in the region is relatively large, compared to other regions. In 2017 the share of trade in GDP was 31 percent in North America, 40 percent in South Asia, 56 percent in SSA and 57 percent in EAP. Africa’s share of exports to the rest of the world ranged between 80-90 percent during 2000-2017, higher than any other region. Given that the countries most afflicted by the pandemic account for a significant share of global trade and output and are the largest trading partners of the region, the trade impacts are expected to be severe. Hence, despite a relatively low percentage of confirmed cases of COVID-19 in SSA thus far, the largest shocks to the region are going to be external. In addition, the lion’s share of foreign direct investment (FDI) to SSA comes from these regions, creating a confluence of triple shocks: falling demand for African exports; global supply shocks further curtailing production in export-oriented sectors; and a slump in FDI flows. The impact of disruptions in GVCs driven by the global demand slump would be predominant in countries with strong forward linkages – mainly exporting raw materials used in the production for export in other countries. This accounts for the largest share of the region’s trade and GVC integration.
The supply shocks introduce direct supply disruptions in African countries that are increasingly becoming more integrated into GVCs. Non-resource rich SSA countries that have been centers of robust growth in the region over the last two decades will be the most affected by these supply shocks. The largest declines in trade are likely to be in sectors with highly integrated global value chains (GVCs). The manufacturing sector will be hard-hit due to the relatively strong GVC linkages. Subsequently, exports are expected to fall due to shortage of intermediate inputs. SSA economies which have been transitioning or are well integrated into manufacturing GVC including South Africa, Kenya, Ethiopia, Lesotho and Eswatini, will be affected the most. These disruptions in production translate into closures of businesses, especially those that export, raising unemployment and poverty. This perfect storm of shocks could potentially derail early successes in economic growth and poverty reduction achieved in some countries in the region. The short-term and long-term employment and poverty impacts from the disruption in production depend on policy responses by governments and businesses on withstanding the crisis. The impact is worsened by disruptions in international transport networks, which raise the cost of trading. The impacts could be even more severe in countries where commercial services trade such as international passenger and cargo transport and international tourism represent a large share of national income. Since service trade is often complementary to goods trade, the collapse in goods trade will also be followed by a collapse in services trade.
The external trade shocks are compounded by disruptions that are internal to the region, as African countries impose restrictions on the movement of people and goods to limit the spread of the virus. These restrictions have slowed down regional trade with significant economic implications. The share of intraregional exports in total trade is the lowest in Africa; while a large share of the regional trade is informal. Intraregional trade is dominated by manufacturing exports, accounting for 457 percent of intra-African exports. Hence, lockdown measures to control the virus will have negative impacts on the manufacturing sector in the region. In addition, a large share of regional trade, often missing from official trade statistics, is informal. The nature of informal trade is that it is dominated by small-scale producers and traders, engaged in agriculture and other primary sectors. As of May 26, 2020, 43 African countries had closed their borders. Small-scale cross-border trade contributes to the income of about 43 percent of Africa’s entire population while supporting the livelihoods of significantly more people indirectly. Such trade, dominated by agricultural and livestock products, is an essential part of food security in the region. Substantial disruption to regional trade and agricultural supply chains could lead to increased risks of food insecurity and poverty in a region that is already home to the largest number of the global poor and the food insecure.
Trade Policy Responses to Mitigate the Shocks
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The first policy action is to do no harm. Blanket Protectionist policies would do more harm than good. Open trade in both goods and services plays a key role in overcoming the pandemic and limiting its health and economic impact, especially on the poor.
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Countries should strengthen trade facilitation to streamline and simplify regulatory and border procedures across the region by improving the efficiency of services and increasing access to trade finance.
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Deeper regional coordination in trade and COVID-19 response is necessary, both to limit the spread of the pandemic in the region, and to minimize the immediate and long-term economic fallout.
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Through the African Union (AU) and other regional and global forums, African countries could benefit from coordinating their responses and mobilizing support from international financial institutions.
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African countries should position themselves to seize opportunities that may arise from the desire to diversify global supply chains and expand into new destinations.
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States, in coordination with domestic firms, lead firms, and workers’ unions should adopt strategies to sustain businesses through the pandemic and ensure that the recovery is smooth.
The above extracts are taken from a new Africa Knowledge in Time Policy Brief from the Office of the Chief Economist, Africa Region, World Bank. The author, Woubet Kassa, is a research analyst at the World Bank. Republished here with thanks to the author.
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tralac’s Daily News selection
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The OACPS hosts (3 June) first-ever Inter-Sessional Summit on the theme: Transcending the COVID-19 pandemic. It will be chaired by Kenya’s President Uhuru Kenyatta.
ecomConnect Day (4 June): e-commerce, economic recovery and AfCFTA. The programme and registration details can be accessed here.
EAC Ministers/Cabinet Secretaries of Health, Transport and EAC Affairs: EAC partner states adopt the EAC regional electronic cargo and drivers tracking system
The system is expected to share truck driver’s information leveraging on that which is managed and operated by revenue authorities in the region, and the existing health information systems in partner states. The system allows the users to share information across borders in a transparent manner, and the truck drivers will need to upload the phone app on their phones. Continuous screening will be done at selected check points along the transport corridors, which have already been designated, and information made available for all partner states. Verification of documents will be done by customs, immigration, law enforcement agencies/persons who will confirm if a particular traveller is fit to proceed on their journey. The Digital surveillance tracker will interface and connect directly to designated laboratories in the Partner States to allow the Partner States, for purposes of COVID-19 laboratory results needed to generate the COVID-19 Test Certificates / attestation Certificates for COVID-19 test results.
pdf SADC Council of Ministers: meeting outcomes (311 KB)
Council noted that while the regional Guidelines on Harmonization and Facilitation of Movement of Essential Goods and Services across the SADC Region which were adopted on 6 April, 2020, have played a critical role in facilitating movement of goods, there are challenges which require urgent attention. In this regard, Council directed the expanded Technical Committee on Health to review the Guidelines by the 6th of June 2020 and report to Council. Recognizing the urgent need to cooperate with other RECs and the AU, Council directed the Secretariat coordinate with COMESA, and the EAC in the context of the Tripartite arrangement, and the AU at Continental level, to align and harmonize measures and regulations.
Council received the preliminary report on the socio-economic impact of COVID-19 and its implications on the SADC region and noted that the pandemic will have short, medium and long-term negative impact on all social and economic sectors, given its cross-cutting nature. The report also indicated that the global economic activity is projected to contract against a background of declining commodity prices and rising debt, and that subsequently, SADC economies are projected to contract by 3% in 2020, reversing the gains made in the past years on industrial development and trade. The report further highlighted that increased expenditures in response to the COVID-19 pandemic will affect the fiscal positions for SADC Member States and subsequently, most Member States will not be able to meet the SADC Macroeconomic Convergence programme targets of 3-7% inflation range; fiscal deficit of 3% of GDP; public debt of not exceeding 60% of GDP; and GDP growth of at least 7%.
In line with the Preliminary Report on the socio-economic impact of COVID-19’s findings, Council urged Member States to implement the recommendations outlined in the report.
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Uganda’s Daily Monitor: Everyone calls us Corona, but we are also scared – driver
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South Africa’s City Press: Drivers transporting goods from SA to Botswana complain of inhumane treatment
South Africa’s April 2020 merchandise trade statistics: a deficit of R35.02bn (SARS)
The R35.02bn trade deficit for April 2020 is attributable to exports of R53.01bn and imports of R88.03bn. Exports decreased from March 2020 to April 2020 by R65.06n (55.1%) and imports decreased from March 2020 to April 2020 by R6.11bn (6.5%). Exports for the year-to-date (1 January to 30 April 2020) decreased by 3.5% from R394.72bn in 2019 to R381.08bn in 2020. Imports for the year-to-date (pdf) of R381.41bn are 5.5% less than the R403.58bn imports recorded during the same period in 2019. The cumulative trade deficit for 2020 is R0.33bn. [Bank of Uganda: Exports, imports fall - BoU]
US-Kenya trade agreement negotiations: USTR posts a summary of specific negotiating objectives
Our vision is to conclude an agreement with Kenya that can serve as a model for additional agreements in Africa, leading to a network of agreements that contribute to Africa’s regional integration objectives. In addition, our goal is to conclude an agreement that builds on the objectives of AGOA and will serve as an enduring foundation to expand US-Africa trade and investment across the continent. We seek to support higher-paying jobs in the United States and grow the U.S. economy by improving U.S. opportunities for trade and investment with Kenya. The current health crisis and economic challenges posed by COVID-19 underscore our desire to strengthen our economic relationship with Kenya and lay the foundations for stronger, more resilient economies to address the current and future health crises. Our specific objectives for this negotiation will comply with the specific objectives set forth by Congress in section 102 of the Trade Priorities and Accountability Act. In doing so, we aim to address both tariff and non-tariff barriers and to achieve fairer, more balanced trade. Extracts from the 19 page document:
On technical barriers to trade:
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Require application of decisions and recommendations adopted by the WTO TBT Committee that apply to standards, conformity assessment, transparency, and other areas.
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Include strong provisions on transparency and public consultation that require the publication of drafts of standards, technical regulations and conformity assessment procedures, allow stakeholders in other countries to provide comments on those drafts, and require authorities to address significant issues raised by stakeholders and explain how the final measure achieves the stated objectives.
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Ensure national treatment of conformity assessment bodies without conditions or limitations and encourage the use of international conformity assessment systems, including mutual recognition arrangements.
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Obtain commitments that Kenya will not foreclose export opportunities to the United States with respect to third-country export markets, including by requiring third countries to withdraw or limit the use of any relevant standard, guide, or recommendation developed in accordance with the TBT Committee Decision.
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Establish an active TBT Chapter Committee that will discuss bilateral and third-party specific trade concerns, coordination of regional and multilateral activities, regulatory cooperation, and implementing good regulatory practices.
On trade remedies:
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Preserve the ability of the United States to enforce rigorously its trade laws, including the antidumping (AD), countervailing duty (CVD), and safeguard laws.
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Facilitate the ability to impose measures based on market distortions due to ongoing subsidization or dumping.
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Promote cooperation between trade remedies administrators, particularly with regard to the sharing of information that would improve the ability of administrators to effectively monitor and address trade remedies violations.
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Strengthen existing procedures and create new procedures to address AD/CVD duty evasion, including the ability to conduct AD/CVD duty evasion verification visits.
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Establish transparency and due process obligations reflected in U.S. AD/CVD laws, regulations, and practice.
On labor:
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Require Kenya to adopt and maintain in its laws and practices the internationally recognized core labor standards as recognized in the ILO Declaration, including:
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Freedom of association and the effective recognition of the right to collective bargaining;
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Elimination of all forms of forced or compulsory labor;
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Effective abolition of child labor and a prohibition on the worst forms of child labor; and
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Elimination of discrimination in respect of employment and occupation.
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Require Kenya to have laws governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.
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Establish rules that will ensure that Kenya does not waive or derogate from labor laws implementing internationally recognized core labor standards in a manner affecting trade or investment between the Parties.
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Require Kenya to prohibit the importation of goods produced by forced labor, regardless of the source country.
As a part of the process of formulating these objectives, on March 23, 2020, the Office of the USTR solicited public comments by Federal Register notice regarding objectives and positions for a U.S.-Kenya trade agreement and received over 5,000 submissions.
pdf United States-Kenya Negotiations: Summary of Specific Negotiating Objectives - May 2020 (852 KB)
Commodity exports to China could fall by $33.1bn in 2020, UNCTAD study finds
Global exports of commodities to China could plunge by $15.5bn to $33.1bn in 2020 – a drop of up to 46% compared with annual growth projections before the coronavirus pandemic hit, according to new UNCTAD research. The findings raise concerns for economies that rely on exports of primary goods, such as energy products, ores and grains. Some two-thirds of developing countries are commodity dependent according to UNCTAD data. For commodity-dependent developing countries, some of the most vulnerable on the planet, the drop is projected to be between $2.9bn and $7.9bn, which would constitute a 9% loss in terms of annual growth rate. Because China absorbs about one-fifth of world commodities’ exports, such a drop in its imports would have a dramatic impact on producers of primary goods. “Assessing the impact in China says a lot about possible general tendencies,” says Marco Fugazza, an UNCTAD economist who conducted the study. There have been few assessments done so far at a relatively disaggregated product level using up-to-date information,” he says, adding that UNCTAD awaits similar statistics from other big markets, such as the European Union, to expand the analysis. Extract (pdf):
As shown in column 1 of Table 1, commodities represent close to one fourth of China’s imports. Column two indicates that Commodity Dependent Developing Countries (CDDCs) account for 65% of these commodities exports. One fifth of world commodities exports are shipped to China as shown in column 3. The last column reports that one fourth of exports of commodities from CDDCs go to China. As a matter of comparison, Table 1 contains the same information for both the United States of America and the European Union. While the European Union absorbs about one fifth of world exports of the commodities considered here, the corresponding share of the United States of America is less than 9%. The incidence of imports from CDDCs is slightly larger for the European Union than for China. However, the corresponding figure for the United States of America is about 41%. Column 3 of Table 1 further indicates that imports of the European Union capture about 18% of total exports and those of the United States of America 9%. We also have that 23% of CDDCs exports are directed towards the European Union and about 7% towards the United States. Table 2 reports a series of figures illustrating further the increasing relative importance of the Chinese market for CDDCs exports. In 2018, 80 CDDCs exported at least one of the commodities listed in table 3. About one third of them directed one third or more of their exports towards the Chinese market. The corresponding figures for the European Union and the United States of America were 18% and about 7% respectively.
Textile and garment supply chains in times of COVID-19: challenges for developing countries. Given its non-essential nature, the fashion industry faces significant risks. Indeed, in times of COVID-19, as consumers around the world remain in lockdown, they no longer need new products. This industry is characterised by a highly integrated global supply chain. In it, many developing countries play the role of the supplier of low-cost inputs. This article highlights some of challenges and concerns that some of these countries face, many of which are dependent on textile and garment exports.
The impact of COVID-19 on the African oil sector: a special report by AFREC on the implications on African countries
For African crude oil exporting countries, the expected fall in demand means that exports of crude oil in 2020 will be down by at least 10% on average compared to recent years. Prices are also expected to fall. At $40/barrel or lower, the value of African oil exports could fall to levels last seen 20 years ago. These lower prices coupled with reduced output could see Africa’s larger oil producers facing $20bn or more of lost oil value in 2020. For consuming countries, the low per capita consumption of oil for transportation in many African countries will not significantly gain from lower prices which limited by low demand and a very likely limitation on storage. This report (pdf) looks at the impact of the COVID-19 pandemic on production, revenue and demand across Africa. It does so by first examining the sector in Africa, before looking at the global economic situation and the response taken across the oil sector. It then considers the impact for Africa as a whole and for specific regions and example countries. It concludes with some possible opportunities as well as some challenges for the future.
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Rasmané Ouedraogo, Amadou N Sy: Can digitalization help deter corruption in Africa? (IMF)
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Madagascar: Does better information curb customs fraud? (World Bank)
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Employment-intensive land reform in South Africa: presenting key policy recommendations from a CBPEP research study
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Assessing potential for employment-intensive land reform in South Africa: key research findings from a CBPEP study
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EAC partner states adopt the EAC Regional Electronic Cargo and Drivers Tracking System
EAC Partner States have adopted the EAC Regional Electronic Cargo and Drivers Tracking System that will be hosted at the EAC Headquarters in Arusha, Tanzania.
The system is expected to share truck driver’s information leveraging on that which is managed and operated by Revenue Authorities in the region, and the existing health information systems in Partner States.
The system allows the users to share information across borders in a transparent manner, and the truck drivers will need to upload the phone app on their phones.
Continuous screening will be done at selected check points along the transport corridors, which have already been designated, and information made available for all Partner States.
Verification of documents will be done by customs, immigration, law enforcement agencies/persons who will confirm if a particular traveller is fit to proceed on their journey.
A Joint Consultative Meeting of the EAC Ministers/Cabinet Secretaries of Health, Transport and EAC Affairs that was held via Video Conferencing on 29th May, 2020 the system will be supported by four (4) Command Operating Centres (COCs) located in four locations at designated national Revenue authorities in Kenya, Uganda, DRC and Rwanda, with one additional COC to be set up at the Nimule border post for the Republic of South Sudan.
The report of the the Joint Consultative Meeting which was chaired by Rwanda’s Minister for Health, Hon. Dr. Daniel Ngamije, was signed by Partner States' Heads of Delegation/Health Ministers, namely: Hon. Dr. Ngamije (Rwanda); Hon. Mutahi Kagwe (Kenya); Hon. Dr. Jane Ruth Aceng (Uganda), and; Hon. Elizabeth Achuei (South Sudan).
The Ministers/Cabinet Secretaries were further informed that the truck driver and crew members’ mobile phones will be used as the tracking devices once they commence their journey along the corridors, and command centres will be able to communicate directly with the drivers as long as the phones are not switched off.
Among other directives issued by the Ministers/Cabinet Secretaries were to: Partner States to designate, provide, establish or ensure that the required key enablers for the digital system to work are put in place; the EAC Secretariat to fast track the implementation of the EAC Digital Surveillance Tracker; the EAC Secretariat to coordinate rollout of the existing EAC regional Electronic Cargo Tracking System to cover the Central Corridor, and; the Secretariat in collaboration with the Partner States and National transporters’ associations to sensitize key stakeholders on the EAC Digital COVID-19 Surveillance tracker.
The Ministers/Cabinet Secretaries further adopted the EAC COVID-19 Test Certificate for truck drivers and crew members.
The Ministers/Cabinet Secretaries were informed that a system has been developed to facilitate a common approach to certifying results of those tested for COVID-19, by using the system to generate a COVID-19 test certificate for drivers and crew members.
Consequently, the generated COVID-19 certificate for drivers and crew members who have undergone tests would be shared with all respective stakeholders both at accredited designated testing points and border crossing points in the region. This certificate that is recognised in the EAC is expected to be valid for 14 days, and would allow the owner to travel in the region without being subjected to re-testing unless he or she is found to have signs and symptoms for COVID-19, on screening at check points using the screening tool.
The Certificates will be issued only for those drivers and crew members that test negative for COVID-19. Those that test positive will be expected to follow existing national protocols to access care and other services.
The Ministers/Cabinet Secretaries were further informed that the EAC Secretariat was planning to develop harmonised sensitization material/content that is to be disseminated in the region and customized by individual Partner States.
Further, the EAC Secretariat informed the meeting about resources mobilised for Risk and Community engagement to reduce the spread of COVID-19 in the region. The framework will be implemented by Partner States and partners including the International Federation of the Red Cross (IFRC).
The Ministers took note of the Framework for the regional sensitization and communication on COVID-19, and directed the EAC Secretariat to mobilise more funds to support the implementation of regional sensitization and communication initiatives for COVID-19.
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The impact of COVID-19 on African Oil Sector: A special report by AFREC on the implications on African Countries
The Coronavirus (COVID-19) is bringing unprecedented changes to the world.
Its impact and the necessary response of governments will mean that the next one to two years at least will be very challenging for economic and social development in all countries of the world. One of the sectors that will see significant challenges is the oil sector, globally and in Africa.
For African crude oil exporting countries, the expected fall in demand means that exports of crude oil in 2020 will be down by at least 10% on average compared to recent years. Prices are also expected to fall. At $40/barrel or lower, the value of African oil exports could fall to levels last seen 20 years ago. These lower prices coupled with reduced output could see Africa’s larger oil producers facing $20 billion or more of lost oil value in 2020. For consuming countries, the low per capita consumption of oil for transportation in many African countries will not significantly gain from lower prices which limited by low demand and a very likely limitation on storage.
This report looks at the impact of the COVID-19 pandemic on production, revenue and demand across Africa. It does so by first examining the sector in Africa, before looking at the global economic situation and the response taken across the oil sector. It then considers the impact for Africa as a whole and for specific regions and example countries. It concludes with some possible opportunities as well as some challenges for the future.
The report uses high-level analysis to illustrate the potential impact of what might happen to oil production and consumption in Africa in 2020 and beyond. It does not make specific detailed predictions of what will happen in individual countries, nor will the identified actions and opportunities apply to all countries. The actions and recommendations proposed in this report need to be studied in details at a country level. The report aims to raise awareness to help facilitate the correct choice of action in all countries, now and in the longer term.
The evolving situation provides a further opportunity for countries with an oil sector to explore:
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How economies can be diversified away from an reliance on oil;
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How to maximise the local value added of the whole oil chain including exploring the merits of:
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Investment in refining facilities;
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Increasing cross boarder trading between African countries and investment in its relevant infrastructure; and
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Reducing oil demand in the power sector by expanding renewables.
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All countries can take this opportunity to explore how to improve the efficiency of oil consumption; where possible, take the advantage of lower prices to see if fuel subsidies can be reduced or eliminated; and strengthen National Energy Information Systems to support decision making and investment at the national level.
The African Energy Commission (AFREC) is a specialized agency of the African Union in charge of developing, coordinating and harmonizing the energy policies with an objective of protection, conservation, development, rational exploitation, commercialization and integration of energy resources on the African continent. The report uses the AFREC’s Africa Energy Database as the main source of information for Africa. This reflects the work underway across African countries to enhance their energy data.
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Summary of Specific Negotiating Objectives for the initiation of United States-Kenya trade agreement negotiations
Introduction
On March 17, 2020, the Trump Administration notified Congress that the President intends to negotiate a trade agreement with the Republic of Kenya, in accordance with section 105(a)(1)(A) of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (the Trade Priorities and Accountability Act). This notification was made following a February 6, 2020, meeting at the White House between President Trump and Kenyan President Uhuru Kenyatta where the two presidents agreed to pursue negotiations on a trade agreement between the United States and Kenya.
In pursuing negotiations on a trade agreement with Kenya, the Office of the United State Trade Representative (USTR) is responding to Congress’ support, as expressed in the African Growth and Opportunity Act (AGOA), to negotiate reciprocal and mutually beneficial trade agreements that serve the interests of both the United States and the countries of sub-Saharan Africa. The vision is to conclude an agreement with Kenya that can serve as a model for additional agreements in Africa, leading to a network of agreements that contribute to Africa’s regional integration objectives. In addition, the goal is to conclude an agreement that builds on the objectives of AGOA and will serve as an enduring foundation to expand U.S.-Africa trade and investment across the continent.
The USTR seeks to support higher-paying jobs in the United States and grow the U.S. economy by improving U.S. opportunities for trade and investment with Kenya. The current health crisis and economic challenges posed by COVID-19 underscore the desire to strengthen the US economic relationship with Kenya and lay the foundations for stronger, more resilient economies to address the current and future health crises. The specific objectives of the USTR for this negotiation will comply with the specific objectives set forth by Congress in section 102 of the Trade Priorities and Accountability Act. In doing so, the aim is to address both tariff and non-tariff barriers and to achieve fairer, more balanced trade.
As a part of the process of formulating these objectives, on March 23, 2020, the Office of the USTR solicited public comments by Federal Register notice regarding objectives and positions for a U.S.-Kenya trade agreement and received over 5,000 submissions.*
Featured submissions:
* In light of COVID-19, the hearing scheduled for April 28, 2020 was cancelled. The USTR extended the deadline for written comments until April 28.
Summary of Specific Negotiating Objectives for the Initiation of United States-Kenya Negotiations
Overall
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Seek a mutually beneficial trade agreement that can serve as a model for additional agreements across Africa.
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Support regional integration, where appropriate.
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Build on the objectives of the African Growth and Opportunity Act, promote good governance and the rule of law.
Trade in Goods
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Ensure fair, balanced, and reciprocal trade with Kenya.
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Increase transparency in import and export licensing procedures.
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Discipline import and export monopolies to prevent trade distortions.
Trade in Services
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Secure commitments from Kenya to provide fair and open conditions for services trade, including through:
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Rules that apply to all services sectors, including rules that prohibit:
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Discrimination against foreign services suppliers;
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Restrictions on the number of services suppliers in the market; and
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Requirements that cross-border services suppliers establish a local presence.
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Specialized sectoral disciplines, including rules to help level the playing field for U.S. delivery services suppliers in Kenya; and
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Where any exceptions from core disciplines are needed, the negotiation, on a negative list basis, of the narrowest possible exceptions with the least possible impact on U.S. firms.
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Retain flexibility for U.S. non-conforming measures, including U.S. non-conforming measures for maritime services.
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Improve the transparency and predictability of regulatory procedures in Kenya.
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SARS releases merchandise trade statistics for April 2020
The South African Revenue Service (SARS) today released trade statistics for April 2020 recording a trade deficit of R35.02 billion. These statistics include trade data with Botswana, Eswatini, Lesotho and Namibia (BELN).
The year-to-date (01 January to 30 April 2020) trade deficit of R0.33 billion is an improvement from the R8.87 billion deficit for the comparable period in 2019. Exports decreased by 3.5% year-on-year whilst imports deteriorated by 5.5% over the same period.
Including trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)
The R35.02 billion trade deficit for April 2020 is attributable to exports of R53.01 billion and imports of R88.03 billion. Exports decreased from March 2020 to April 2020 by R65.06 billion (55.1%) and imports decreased from March 2020 to April 2020 by R6.11 billion (6.5%).
Exports for the year-to-date (01 January to 30 April 2020) decreased by 3.5% from R394.72 billion in 2019 to R381.08 billion in 2020. Imports for the year-to-date of R381.41 billion are 5.5% less than the R403.58 billion imports recorded during the same period in 2019. The cumulative trade deficit for 2020 is R0.33 billion.
On a year-on-year basis, the R35.02 billion trade deficit for April 2020 is a deterioration from the R3.56 billion deficit recorded in April 2019. Exports of R53.01 billion are 48.8% less than the R103.45 billion exports recorded in April 2019. Imports of R88.03 billion are 17.7% less than the R107.01 billion imports recorded in April 2019.
March 2020’s trade surplus was revised downwards by R0.31 billion. Due to the ongoing Vouchers of Correction (VOC’s), the revision was from the preliminary surplus of R24.25 billion to the revised surplus of R23.94 billion.
Excluding trade data with Botswana, Eswatini, Lesotho and Namibia (BELN)
The trade data excluding BELN for April 2020 recorded a trade deficit of R37.42 billion. This deficit is a result of exports of R48.60 billion and imports of R86.02 billion.
Exports decreased from March 2020 to April 2020 by R57.45 billion (54.2%) and imports decreased by R4.48 billion (4.9%) over the same period. The cumulative deficit for 2020 is R25.52 billion compared to R38.29 billion deficit in 2019.
Botswana, Eswatini, Lesotho and Namibia (Only)
Trade statistics with the BELN countries for April 2020 recorded a trade surplus of R2.41 billion. This surplus is a result of exports of R4.41 billion and imports of R2.01 billion.
Exports decreased from March 2020 to April 2020 by R7.61 billion (63.3%) and imports decreased from March 2020 to April 2020 by R1.63 billion (44.8%). The cumulative surplus for 2020 is R25.19 billion compared to R29.43 billion in 2019.
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COVID-19: Act now or risk ‘unimaginable devastation’ globally, warns UN chief
Unless countries across the world act together now, the COVID-19 pandemic will cause “unimaginable devastation and suffering around the world”, UN Secretary-General António Guterres said on Thursday at a virtual high-level meeting on financing for development.
Painting a picture of 60 million pushed into extreme poverty; famine of “historic proportions”; some 1.6 billion people left without livelihoods; and a loss of $8.5 trillion in global output – the sharpest contraction since the Great Depression of the 1930s – he called for a response with “unity and solidarity”.
“We are asking for immediate, collective action in six critically important areas”, Mr. Guterres said at the online event to leverage more funds for sustainable development.
Beginning with the global liquidity crisis, he said that this was where the health and economic crises meet; “a dangerous nexus that could prolong and deepen both”, calling for extending Special Drawing Rights to supplement public spending reserves.
Noting that the economic fallout from the pandemic threatens a wave of defaults in developing countries, stymieing the effort to reach the 2030 SDGs, the UN chief’s second call was for “durable solutions on debt, to create space for investments in recovery and the Sustainable Development Goals”.
Next, he urged private creditors holding a growing share of developing countries’ sovereign debt to find incentives to encourage more creditors to provide debt relief.
Mr. Guterres then drew attention to external funding, saying that aligning incentives in global financial systems with the SDGs would boost confidence “to relaunch investment in sustainable development”.
Turning to illicit financial flow, such as tax evasion and money-laundering, which deprive developing countries of hundreds of billions of dollars annually, he said that “we must plug the leaks” by revising national systems and international frameworks.
The UN chief’s final point was the overarching need to “recover better” from the ravages of the coronavirus pandemic.
Stay the development course
COVID-19 has exposed and is exacerbating deep inequalities and injustices that need to be tackled, including for women, who, with typically fewer savings and lower incomes, experience economic impacts worse than men.
“All our efforts must go towards building sustainable and resilient pathways that enable us not only to beat COVID-19, but to tackle the climate crisis, reduce inequality and eradicate poverty and hunger”, underscored the UN chief.
He upheld that we must face these challenging and the corresponding dangers, with “all urgency, seriousness and responsibility”.
“Getting through COVID-19 and recovering better will cost money. But the alternative will cost far more”, concluded the Secretary-General. “This is a global crisis, and it’s up to all of us to solve it”.
New financial architecture
Even before COVID-19, financial constraints posed challenges for developing countries to meet the SDGs. Today, economic and financial shocks triggered by the coronavirus have left many struggling to respond to the pandemic and its social and economic consequences.
President of the General Assembly, Tijjani Muhammad-Bande, maintained that to achieve the SDGs by 2030, “we have to rethink our economic systems”, requiring “leadership, political will and collaborative efforts among a wide variety of actors to safeguard the future for generations to come”.
He highlighted the need to mobilize public, private and external financial resources, for both rapid recovery and for longer-term progress in achieving the 2030 development agenda.
Noting that many developing countries are financially ill-equipped to halt the spread of COVID-19 as well as its social and economic consequences, the Assembly president maintained that “concrete proposals and timely action” were needed to prevent them from “sliding into disorderly defaults”.
“Now is the time to revise the international financial architecture”, he said, arguing that plans must “not only address current liquidity shortages, but also provide durable solutions that create vital fiscal space for investments in sustainable development for countries in need”.
Mr. Muhammad-Bande stressed that COVID -19 and its related economic and social fall-out cannot be addressed in a vacuum, but instead integrated into broader discussions on financing for sustainable development.“The United Nations provides us with a forum to convene all actors and specialised policy communities to address these challenges”, he reminded the meeting.
Our interconnected world
Prime Minister of Canada, Justin Trudeau, called the pandemic “a stark reminder” of how interconnected our world has become, spelling out that “to keep our citizens safe and healthy, we must defeat COVID-19 wherever it is found”.
This requires a global, coordinated plan that will also facilitate global and domestic economies to bounce back.
Jobs and businesses in every country depend on “the health and stability of economies elsewhere” – all of which is hinged on the success of the global economy in weathering this storm, said the co-convener of the high-level summit.
“COVID-19 is an unprecedented challenge for our modern world, but it’s also a unique opportunity to build a better future, to create a safe and prosperous world”, he added.
‘Wake-up call’
Sharing the gavel, Andrew Holness, Prime Minister of Jamaica, called the pandemic “a wake-up call” for the international community to reinvigorate a comprehensive system of global economic governance “that can cope with global disruptions while promoting inclusive development”.
He said a big challenge for the international financial system, was to channel public and private credit flows, into productive, inclusive developmental capital flows:
“The work streams on global liquidity and financial stability as well as debt vulnerability, should inform our response to the financial dimensions of this crisis”, endorsed the Jamaican Prime Minister.
Global response actions
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Safeguard development gains by expanding liquidity in the global economy and maintaining financial stability.
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Save lives and livelihoods of people worldwide by addressing debt vulnerabilities for developing countries.
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Create a space for private sector creditors to engage in timely solutions.
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Enhance external finance for inclusive growth and job creation.
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Prevent illicit financial flows by expanding fiscal space and fostering domestic resource mobilization.
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Align recovery policies with the Sustainable Development Goals (SDGs) to ensure a sustainable and inclusive recovery.
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tralac’s Daily News selection
Happening tomorrow:
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The SADC Council of Ministers meets. They will review the regional guidelines for the harmonisation and facilitation of movement of critical goods and services across the SADC region during the COVID-19 pandemic, which Council adopted on 6 April, 2020. The Ministers will also discuss the need to accelerate implementation of regional strategies and instruments aimed at responding to crises such as the COVID-19 pandemic; they include the Regional Development Fund, the Preparedness and Response and Disaster Fund, and the Regional Resilient Strategic Framework 2020-2030.
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South Africa’s April merchandise trade figures will be released. Business Day reports that the median forecast among economists polled by Bloomberg is of a surplus of R13bn, down from the March surplus of R24.2bn.
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Transport ministers from Kenya, Uganda, and Rwanda will meet to discuss the use of the Naivasha Inland Container Depot. (See more below)
A selection of perspectives on the global trading system, African development issues, COVID-19:
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The Africa Report: Will Kenya’s Amina Mohamed be the WTO’s first African leader? ”Despite accounting for 35% of WTO developing country membership, no African has ever led the organisation. Although Amina Mohamed’s credentials are suited for the role, the appointment is based more on international wheeling and dealing than just suitability.”
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Alan Wolff (WTO Deputy Director General): ”My list of the underlying values of the WTO has 16 entries. They include a number of basic principles. The first two, not obvious to all of us today, are supporting peace and stability. This was the key concern of the founders of the multilateral trading system in 1948 and the central objective of conflict-affected and fragile acceding members today. Other values, such as nondiscrimination, transparency, reciprocity, international cooperation and the rule of law are more obvious. Still others are more nuanced, less obvious perhaps, and emerge only upon reflection. They include well-being, equality, sovereignty, universality, development, market forces, convergence and morality. A recent addition to the list is sustainability. A serious discussion of WTO reform is long overdue. The pandemic simply adds to the urgency of it taking place.”
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George Chikoti (ACP Secretary General): ”The multilateral system is not some abstract political design, it is the extended hand of solidarity from one nation to another, and in the 21st century, never have we been more dependent on our ability to act together.”
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Peter Maurer (ICRC President): ”We have to see Covid-19 response as a value chain in which each and every one of us has to add something. The health system across African is still very uneven. Universal health coverage is not a reality, and let’s be frank, it will be very difficult for governments to finance in the near future, national health services that can essentially be funded just from the public purse. We need to look at intermediate steps; micro-health insurance sector working with governments could massively expand the coverage for hundreds of millions of people, to cover the major health risks. These are the things that throw people back into poverty and 40% of people who have escaped from extreme poverty actually fall back into it often because of health crisis.”
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Deborah Wetzel (World Bank’s Director of Regional Integration for Africa): ”The Lake Chad region remains a priority area of engagement given the common nature of the challenges faced by the sub-region and the huge potential for regional cooperation. The framework being created by both PROLAC and the MCRP AF will lay the foundation for future regional and coordinated investments that will improve access to regional markets, promote value-chains development and revive cross-border and regional trade”. [World Bank: Lake Chad Region Recovery and Development Project]
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Guy Ryder (ILO Director General): ”The COVID-19 economic crisis is hitting young people – especially women – harder and faster than any other group. If we do not take significant and immediate action to improve their situation, the legacy of the virus could be with us for decades. If their talent and energy is side-lined by a lack of opportunity or skills it will damage all our futures and make it much more difficult to re-build a better, post-COVID economy.”
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Tao Zhang (IMF’s Deputy Managing Director): ”The IMF has launched a number of initiatives to support countries’ response to COVID while continuing support to member countries as they pursue the SDGs. These include increased financial support for low-income developing countries - as of May 20, we have provided more than $16bn of SDRs via emergency financing facilities to 59 countries; bolstering support to fragile and conflict states to address their unique challenges; and enhanced policy advice and capacity building on measures to promote inclusion and sustainable macroeconomic environment.”
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President Cyril Ramaphosa (AU Chairperson): ”South Africa supports the call of the African Union for a debt standstill for two years. We support the allocation of more IMF Special Drawing Rights to help central banks, the corporate sector and small and medium-sized businesses to withstand the shocks caused by the pandemic. We endorse the call of Secretary-General Guterres for the development of a comprehensive debt framework. This should start with an across-the-board debt standstill for countries unable to service their debts, followed by targeted debt relief and a comprehensive approach to structural issues in the international debt architecture to prevent defaults. We further welcome the Secretary-General’s call for a global response package amounting to at least 10% of the world’s GDP. This means more than $200bn of additional support for Africa.”
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WTO’s Committee on Trade and Development discusses impact of COVID-19 on developing economies’ participation in world trade. The plight of African countries was stressed, as many depend on importing medical products. The continent is also affected by shrinking demand for its exports from both developed and developing countries. This is having a particularly negative impact on its agricultural sector and its participation in supply chains. Some delegations called on members to ensure that policy measures taken in response to the COVID-19 pandemic do not affect Africa more than necessary and said they should be transparent, proportionate, temporary and non-discriminatory. They also highlighted the benefits of regional integration through the African Continental Free Trade Area.
Multi-country statement circulating at the WTO: pdf The importance of MSMEs in the time of COVID-19 (66 KB) . We note the significant negative impact that the COVID-19 pandemic has had on our citizens and our businesses, in particular on those that operate as Micro, Small and Medium-sized Enterprises in economies at all levels of development. We recognize that addressing this global health crisis and economic shock requires a coordinated global response to stabilize our economies and to help MSMEs affected during this challenging period.
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We will continue careful monitoring of all MSME-related developments. We will take further action where necessary to help MSMEs’ involvement in international trade and promote that supply chains remain open and connected. In cooperation with other international organizations and stakeholders, we will look to explore solutions and share good practices to facilitate trade, accelerate efforts towards trade digitalization, including access to digital tools, as well as improve MSMEs’ access to trade finance and to trade-related information through online platforms.
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We reaffirm our support for the central role of the WTO in international trade. We will continue to work together to deliver a free, fair, predictable, and stable trade environment and to keep our markets open with a view to support the global recovery. We invite the WTO Secretariat to continue working closely with other international organizations to facilitate MSMEs’ participation in international trade.
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It is clear that timely and accurate information on COVID-related trade measures reduces uncertainty and allows MSMEs to make informed decisions. We therefore encourage Members to continue informing and updating the WTO, as soon as practicable, of any trade-related COVID-19 measures they implement in order to ensure transparency and predictability.
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We will continue our efforts to deepen and multilateralize MSME conversations at the WTO, for the benefit of our MSMEs and our economies. We will work together to help MSMEs overcome this crisis, and build resilience to future shocks.
South African notification under article 12.1(a) of the WTO’s Agreement on Safeguards. The application was lodged by South African Iron and Steel Institute on behalf of the South African Fasteners Manufacturers’ Association and its members producing the subject products. The claim is that the subject product is being imported into the SACU market in such increasing quantities in absolute terms and relative to SACU production and under such conditions, to be causing serious injury to the SACU industry.
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Prima facie information on which the investigation was initiated: The Commission found that the applicant submitted prima facie information to indicate that volumes of bolts with hexagon heads of iron or steel increased both in absolute terms and relative to domestic production in the 2017/18 (1 July 2016 to 30 June 2019) period.
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The Applicant submitted that a confluence of events forms the basis of the unforeseen development that supports this application. This confluence of events is led notably by China which is the biggest producer of global fasteners, accounting for more than 50% of global fasteners capacity and output. The Applicant stated that during the Uruguay Round of negotiations, South Africa did not foresee the following events:
Collen Dlamini: We dodged one bullet – we needn’t play American roulette (Daily Maverick)
In April, the Office of the United States Trade Representative released its Special 301 Report watchlist, “an annual review of the state of IP protection and enforcement in US trading partners around the world”. South Africa was not included on the watchlist. There are several ways to interpret South Africa’s omission from the watchlist. In her Maverick Citizen piece last week, Linda Daniels chose to interpret the omission as a free pass on the bill. Daniels seems to suggest that South Africa’s omission from the watch list means that the threat posed by the Copyright Bill to SA’s exports has been neutralised. Another implication of her piece is that the response of the United States to the bill is not motivated by any real inadequacies of the bill, but rather a malicious plot to thwart the bill and punish South Africa. However, her analysis is flawed on both counts. There are significant constitutional flaws in the bill, and the threat the bill poses to the economy is very real too. [The author is the chairperson of the Copyright Coalition of SA]
Uganda reluctant to use Naivasha as key transit cargo depot (The Star)
Uganda is unwilling to use the Naivasha Inland Container Depot as its key transit cargo handling facility despite Kenya’s push to relocate operations from Mombasa and Nairobi. But according to Uganda’s Minister of Works and Transport Edward Katumba-Wamala, the use of the Naivasha ICD for transit cargo would not reduce traffic, as truck drivers will still be required to pick containers from Naivasha to their destination. “Therefore, it is our considered opinion that the use of Naivasha ICD which is part of our long term regional infrastructure development should remain optional,” Katumba says in a letter to Macharia. He says if Kenya makes it more attractive, big industry players and shippers such as Bollore Logistics , Mukwano Group of Companies and others “can be encouraged to start using this facility because of economies of scale.”
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The Star editorial comment: East Africa needs to have genuine common market
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Arusha’s Regional Commissioner directs truck drivers to cooperate on border agreement implementation
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Dar firm launches new service to boost business for freight forwarders
EAC Secretariat cautions on likely impact of above normal rains, June-September 2020
According to the Greater Horn of Africa Climate Outlook Forum Statement, parts of South Sudan, Western Kenya, Uganda, Northern Tanzania and Rwanda are expected to receive above normal rainfall between June and September 2020, while the rest of the EAC Region is expected to experience the normal dry season. “It is against the backdrop of the ongoing COVID-19 pandemic, the heavy floods that have caused havoc in parts of the region and the second wave of desert locust invasion, the EAC Secretariat urges the Partner States to take appropriate measures to ward off further threats to our people” says the EAC Deputy Secretary General in charge of Productive and Social Sectors, Mr Christophe Bazivamo. The Senior Meteorology Officer at the EAC Secretariat, James Kivuva, warns that “a warmer than usual season is expected in the coastal parts of the region from Kenya to Tanzania and beyond, Burundi, Rwanda, and western South Sudan, but it will be colder than usual in the central parts of Tanzania and Kenya, the eastern parts of Uganda and South Sudan and around the Lake Victoria basin”.
Kenya’s horticulture sector: extract from CBK’s MPC statement (pdf, CBK)
Horticultural exports are normalising as the volume increased by 6.9% in April 2020 compared to April 2019. Further, these exports in the first half of May 2020 were 63% of exports in the entire month of May 2019. The volume of flower exports was lower by 36.5% in April 2020 compared to April 2019, but higher prices moderated the impact of the lower volumes. The sector will continue to benefit from the recent cessation of restrictions in key destination markets and increased cargo capacity. [Flower exports rise as EU markets ease lockdown; Kenya’s first quarter tea exports: prices decline on Corona woes]
Today’s Quick Links:
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10 Quick Facts about the AU’s Gender Parity Project 2025
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Why Nigeria’s 2020 Q1 GDP is not a surprise
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Egypt’s non-oil imports decline by 24% in first 4 months of 2020
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CBK: 75% of Kenya’s small, medium businesses at risk of collapsing by end of June
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COMESA: COVID-19 situational update #15
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McKinsey: The COVID-19 recovery will be digital - a plan for the first 90 days
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COVID-19 heightens need for pharmaceutical production in poor countries
UNCTAD and the WHO have teamed up to respond to the urgent call to boost local production of essential medicines in developing countries.
With more than 100 projects to develop a COVID-19 vaccine underway around the globe – eight of which have entered the clinical stage – hope is growing for a miracle breakthrough. But so is concern over who would and would not have access to the shot, if and when one is approved.
“Once a vaccine for COVID-19 is available, the massive demand is likely to outstrip supply quickly,” said James Zhan, UNCTAD’s director of investment and enterprise.
“If the pharmaceutical industry cannot keep up with demand, populations in poor countries will be the ones left behind,” he said while opening a webinar organized with the World Health Organization (WHO).
Lack of access to essential medicines is a tragic reality for many families in developing nations. For example, nearly half a million children in sub-Saharan Africa die each year from vaccine-preventable diseases, according to the WHO.
Back in the spotlight
COVID-19 has thrust the issue back in the spotlight.
Fears that access would be based on some sort of pecking order peaked on 13 May when French pharmaceutical giant Sanofi Pasteur said the first doses of their vaccine, if approved, would go to the United States because its government had invested first in the required research and development.
The following day, more than 140 world leaders and public figures signed an open letter calling for global public health interests to be given priority over nationalism and corporate profits.
The call for a “people’s vaccine” followed a European Union-led event that a week earlier had secured nearly $8 billion from governments within and outside the bloc to help ensure universal and affordable access to COVID-19 medication.
And on 19 May, the World Health Assembly adopted a historic resolution co-sponsored by more than 130 countries calling for equitable access to vaccines and treatments against the virus.
Untapped local production
While the resolution and funds will help, they provide a temporary solution. And with discussions focused on the issue of patents and profits, a fundamental issue is being overlooked: the lack of productive capacity in developing countries.
Vaccine production is currently concentrated in a few developed countries, in the hands of a few major players. According to the WHO, nearly one third (32%) of vaccines have fewer than four suppliers, while nearly two thirds (63%) have two or fewer prequalified products.
“COVID-19 has shown just how vulnerable medical product supply chains are when relying on a small number of manufacturers for raw materials and final products,” said Emer Cooke, director of the WHO’s regulation and prequalification department.
According to UNCTAD and the WHO, many developing countries need help to build their capacity to produce essential medical products, whether they are vaccines, antibiotics or personal protective equipment.
Those that have so far succeeded in establishing a local pharmaceutical industry capable of complying with international quality standards are mostly middle-income and low middle-income countries in Asia, such as India and Thailand.
Productive capacity has remained largely untapped in Africa, where the majority of the least developed countries are located.
25 million doses
Of the 40 vaccine manufacturers in 14 nations that are part of The Developing Countries Vaccine Manufactures Network, only one is African: the Biovac Institute based in Cape Town, South Africa, which currently delivers over 25 million doses of vaccines each year for illness such as measles, polio and tuberculosis.
Biovac’s chief executive officer, Morena Makhoana, said Africa’s public health security requires ramped-up local production.
Otherwise, the continent’s 1.2 billion people remain vulnerable to shocks in global supply chains and foreign governments’ trade policies. Since the pandemic began, nearly 80 countries have imposed some form of restriction on the export of medical supplies.
“African governments should look at domestic capacity as an insurance for the next pandemic,” Mr. Makhoana said. “We cannot continue to rely on external sources.”
Correcting market failures
“Meeting health standards is costly, and the local producers usually don’t have the money,” said Christoph Spennemann, an UNCTAD legal officer who works on the issue of local pharmaceutical production.
“They need to attract investments,” he said, “but in the case of vaccines, the market fails to encourage long-term investments because once the threat of a pandemic goes away, the drug may no longer be profitable.”
He said a comparable market failure occurs in the case of antibiotics.
Although investment is a big piece of the puzzle, it’s not a silver bullet. All policies – investment, trade facilitation, intellectual property, health – must be aligned.
For example, disruptions and delays in transportation and customs clearance make the imported active pharmaceutical ingredients costly for local producers.
The same is true for import tariffs. While vaccines or antibiotics can be imported tariff-free in many developing countries, this isn’t the case for the ingredients needed for local production. The result is that local companies are less competitive.
There is also the need to strengthen regulatory systems, improve the business environment and align research and development with market demand.
“The job cannot be done by ministries of health alone,” Mr. Spennemann said.
“In addition to bringing together different agencies, it’s important to forge partnerships between the local producers, their governments and the patent-holding companies,” he said.
New development project
UNCTAD and the WHO have recently teamed up on a three-year project to help build the needed partnerships and guide governments on the policies needed in the East African Community (EAC) and Ethiopia.
EAC-based producers currently use less than 50% of their capacity, due to COVID-19-related restrictions and shortages in essential active pharmaceutical ingredients imported from abroad.
The project will help align local production of antibiotics in the EAC to the regional public health needs, to increase currently undersupplied antibiotics while reducing excess supplies of those causing antibiotic resistance in patients.
UNCTAD will lend its expertise in the areas of investment, trade facilitation, intellectual property, business development and industrialization, while the WHO will help governments and businesses understand the regulatory laws and standards.
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The inaugural virtual meeting of the Kenya-US Free Trade Agreement Negotiations Secretariat took place today, Kenya’s CS Trade and Industry Betty Maina has announced.
Ghana’s Foreign Affairs Minister, Shirley Ayorkor Botchway: ”While dealing with the pandemic and saving lives, Africa continent must prefer urgent action on plans and programmes that will advance continental trade and development. We must move ahead with the most ambitious steps towards pan African integration with the creation of the Africa Continental Free Trade Area, ensuring it is operationalised as soon as possible.”
Dr Arkebe Oqubay (Senior Minister and Special Advisor to the Prime Minister of Ethiopia): ”Multiple insights may be gained from Ethiopia’s early response to the pandemic, although the country will clearly encounter an inevitable surge in the coming months to which stronger responses will be required.”
Two cross-border trade updates:
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Traffic flow at Malaba border resumes as truck drivers agree to end sit-down strike. The drivers had used their trucks to block the road from Kenya, arguing that the standard operating procedures put in place by the Kenya and Uganda governments were a violation of their rights. The truck drivers were enduring long hours of waiting at the border to have their coronavirus test results. The drivers agreed to end the strike after the Kenyan authorities met owners of the trucks and threatened to take legal action against them for blocking the international road. Mr James Malinzi, the Eastern regional manager Uganda Revenue Authority said some of the trucks have developed mechanical problems that need to be addressed and this might affect the speed. He said during the strike, drivers parked three lanes that stretched over 50 kilometers that require to be cleared before trucks destined to Kenya from Uganda can get space to cross.
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West African food trade under strain as COVID-19 shuts borders. Trading across borders in West Africa, with its rutted roads and bribe-hungry police, has never been easy. But restrictions imposed by governments in response to COVID-19 are crippling the trade in perishable goods and livestock like never before, according to commercial data and interviews with traders. “If the trucks stop, the produce spoils,” said Boureima Diawara, whose traders’ collective slashed the number of trucks it runs to Dakar from up to nine a day to only one or two. The breakdowns in trade are contributing to fears of a spiralling food crisis. Brahima Cisse (CILSS regional markets expert: “There is an entire disorganisation of the market that makes the impact unprecedented. People in rural areas don’t even know where to go to sell their products to survive.”
Angola: Road Sector Public Expenditure Review (World Bank)
Considering its regional economic position, natural endowment, and its socio-economic development aspirations, it is becoming imperative to Angola to develop a safe, clean, and efficient transport sector. The government has recognized that the Angola’s economy needs the support of a well-integrated and efficient transport sector and made significant efforts to reconstruct its dilapidated road infrastructure and it has established a road maintenance fund. This study has made good use of the Angola’s Ministry of Finance BOOST data base to review and analyze the volume and structure of public spending in the road sector and identify any trends. The road network evaluation tools model (RONET), developed by the World Bank, is used to evaluate the preservation (maintenance and rehabilitation) requirements of the Angola road network. Extract (pdf):
Had the resources been spent efficiently, Angola could have built three times more kilometers of national roads and doubled the length of its current municipal road network. Real increases in spending have not been accompanied by commensurate increases in physical road output and quality. During the period (2008-2017), central government has spent a total of around $20.64bn on the national road network (fundamental and complementary roads), or around $2.52 million/km. This is a very high unit cost compared to the unit cost to build a new two-lane road which, on the high range, is estimated to be around 0.8-1.0 million/km. Considering the total amount of road sector expenditure during this same period, Angola could have added a total of around 25,795 km of new roads to its national network, three times more than the actual road length of 8200km reported by INAE and MINCON.
Zambia: Digital Economy Diagnostic Report (World Bank)
This digital economy diagnostic assesses Zambia’s strengths and weaknesses with respect to five pillars that together form the foundation upon which the benefits of digital transformation can be realized. This report suggests that the digital transformation strategy include four strategic thrusts:
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promoting greater use of digital technologies in the economy
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reducing government transaction costs and reducing the cost of doing business through digitally optimized government systems
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improving the adoption of innovative digital solutions by enabling entrepreneurship
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leveraging data and digital systems to improve sector-specific outcomes in secondary towns and rural areas.
Two key recommendations are provided (pdf):
First, develop an early-stage entrepreneurship strategy, which should include a subsection on technology entrepreneurship specifically. It appears that Zambia has not yet introduced a business life-cycle perspective into its policy and regulation framework. Such a strategy would necessarily entail collaboration between the Ministry of Commerce, Trade and Industry; the Ministry of Higher Education; and the Science, Technology and Innovation Council in its formulation. As illustrated by the emergence of several private initiatives over the past few years, the government also has a real opportunity to develop this strategy and the implementation plan in coordination with the private sector, thus leveraging financing and know-how. This is an opportune time to develop such a strategy, given the ongoing review of the MSME Policy and the Science, Technology and Innovation Policy. A framework for collaboration with the private sector in the implementation of these two policies to leverage private sector know-how and resources could also be included, and the institutional stewardship of the early-stage-entrepreneurship— including technology—agenda could be clarified
Louise Fox, Landry Signé: COVID-19 and the future of work in Africa. How to shore up incomes for informal sector workers (Brookings)
Donors and international financial institutions have promised substantial funds to support public sector budgets and the health sector, but support for informal sector workers, so far, is scant. Governments cannot ignore the damage already occurring to the livelihoods of these millions of people. The policy response should (extract):
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Maintain household consumption among the bottom 75 to 80% of households, who have very limited savings. Limiting short-term household welfare damage, speeding up the overall economic recovery, and unlocking Africa’s business potential will depend on supporting demand in the economy. People need resources to buy needed consumption items. As in the US, cash transfers are the best option, and as Berk Ozler writes for the World Bank, experience shows that these programs are not hard for developing country governments to implement.
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Protect the incomes of urban wage and salary employees. Although wage and salary work accounts for a small share of total non-farm employment—and tends to be more remunerative than informal sector work—wage and salary earners use their incomes to buy from informal sellers of goods and services, thus supporting the sector.
UNCTAD’s James Zhan, Christoph Spennemann: Ten actions to boost low and middle-income countries’ productive capacity for medicines
Building and expanding local productive capacity cuts across multiple policy sectors and requires concerted actions by all stakeholders in order to effectively address the five key bottlenecks [mentioned earlier]. Together, we can create a global enabling framework and national ecosystems to enable local manufacturing to contribute to both the local and global public health endeavor, and ultimately to achieving SDGs 3, 8 and 9. We envisage a two-pronged strategy to pursue our ten actions:
Our proposal addresses a gap in the international COVID-19 response by boosting productive capacity in LMICs. UNCTAD will closely coordinate and cooperate with existing initiatives, especially the WHO voluntary technology pool and the ACT Accelerator Global Response Framework, with a view to adding value and creating synergies.
UNCTAD will intensify collaboration with our five partner agencies (WHO, The Global Fund, UNICEF, UNIDO, UNAIDS) to implement the May 2019 Interagency Statement on Promoting Local Production of Medicines and Other Health Technologies. Other partners will also be welcome to join us at our World Investment Forum later this year to mobilize key global players to commit to longer term productive capacity building. Drawing the lessons from the COVID-19 crisis, we intend to increase LMICs’ resilience in pandemic preparedness beyond the pandemic.
COVID-19 heightens need for pharmaceutical production in poor countries (UNCTAD)
Those that have so far succeeded in establishing a local pharmaceutical industry capable of complying with international quality standards are mostly middle-income and low middle-income countries in Asia, such as India and Thailand. Productive capacity has remained largely untapped in Africa, where the majority of the least developed countries are located. Of the 40 vaccine manufacturers in 14 nations that are part of The Developing Countries Vaccine Manufactures Network, only one is African: the Biovac Institute based in Cape Town, which currently delivers over 25 million doses of vaccines each year for illness such as measles, polio and tuberculosis.
Biovac’s chief executive officer, Morena Makhoana, said Africa’s public health security requires ramped-up local production. Otherwise, the continent’s 1.2n people remain vulnerable to shocks in global supply chains and foreign governments’ trade policies. Since the pandemic began, nearly 80 countries have imposed some form of restriction on the export of medical supplies. “African governments should look at domestic capacity as an insurance for the next pandemic,” Mr Makhoana said. “We cannot continue to rely on external sources.”
Repurposing Africa’s manufacturing: A means to address medical equipment shortages and spur industrialisation (OECD Development Matters)
Other countries that are encouraging repurposing initiatives include Kenya, Ethiopia, Ghana, and Senegal. Based on our analysis (shown in figure 3, 4) most repurposing initiatives on the continent focus on producing PPEs and sanitizers, with only two initiatives manufacturing testing kits, in Kenya and Senegal. Educational institutes as well as textile and beverage companies are emerging as key drivers of these repurposing efforts, with PPEs like masks and gowns in large-scale production phase and ventilators in the prototype phase. A case in point, Mologic, a UK diagnostics company, is partnering with Institut Pasteur’s new diatropix facility based in Dakar, a local research institute and manufacturer, to develop and produce eight million rapid testing kits. This aims to significantly ramp up testing capacity and in turn enable Senegal and possibly neighbouring countries to conduct mass testing and screening. Such joint ventures between international and local manufacturers and institutes have the potential to boost African countries’ ability to rapidly scale up medical equipment production. [The authors - Rajkumar Mayank Singh, Antoine Huss, Jonathan Said, Kekeli Ahiable - are attached to the Tony Blair Institute]
Smart containment: How low-income countries can tailor their COVID-19 response
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The AfCFTA Secretariat, through the AUC, invites qualified and competent applicants who are citizens of AU Member States to submit applications for the positions of:
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Director of Trade in Goods and Competition
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Director of Services, Investment and Intellectual property Rights
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Director of Administration and Human Resources Management
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Director of Finance
Note: The closing date for applications is 29 June 2020
Standard Bank Group’s Vinod Madhavan: Enabling digitally-led trade growth is a key opportunity (The Eagle)
In many of the 20 countries in which Standard Bank operates, there are stringent and specific requirements around the roll-out of digital solutions. Some of the countries have taken market-appropriate approaches towards moving to digitising trade. In certain places on the continent, if one wants to issue a guarantee, for example, the standard is to issue on a physical piece of paper. While the core nature of trade is unlikely to fundamentally change in the near to medium term, future – financial institutions are on a journey to streamline these processes, very often through leveraging the ABCD (artificial intelligence, blockchain, cloud computing and data analytics) of disruptive technologies.
From the point of view of adoption of robotics/intelligent automation and Artificial Intelligence (AI) in trade business processing, Standard Bank has had good success in South Africa and Uganda. Ghana is not far behind in adoption. Purely by leveraging this technology, one could materially quicken up the issuance of a local guarantee, reducing the time taken to issue a guarantee, for example, by 80%. If we take it a step further and combine AI with Optical Character Recognition, we can bring increased operational efficiencies to the areas of manual document sorting and data entry, starting the journey of reducing the manual nature of trade processes. Such technologies allow for banks to take documentation needed to validate a transaction (sometimes 50-100 pieces of paper) and evaluate or validate that documentation against the letter of credit instrument in a much shorter time period.
Standard Bank is currently in conversations with multiple regulators, exploring how we could go about amending regulations, even though it may be a temporary dispensation for the duration of COVID-19, to facilitate digital trade. These engagements are happening in multiple markets across our network. With the challenges brought about by the virus outbreak, there is now an exciting dialogue in markets that will help to influence some of the necessary changes. [The author is head of trade for Standard Bank Group]
UBA Africa Day Conversations 2020: Why Africa can’t afford further delay on AfCFTA (Premium Times)
The devastating impact of the coronavirus pandemic on Africa’s economy has shown that the continent can ill-afford a further delay in the implementation of the AfCFTA, panelists in a web conference on Africa’s economic recovery, post-COVID-19, said on Monday. The panelists consisted of the Senegalese President Macky Sall and his Liberian counterpart George Weah; the president of Afreximbank, Benedict Oramah; US Senator and member of the Foreign Relations Committee on Africa, Chris Coons; the president of the International Committee of the Red Cross, Peter Maurer, and the president of the Africa CEO Forum, Amir Yahmed.
In his presentation, Mr Oramah said despite not having too much health problems or deaths as a result of the pandemic, Africa has become the epicentre of the economic devastation COVID-19 has unleashed upon the global economy. He blamed the situation on excessive dependence on commodity export without any effort to build infrastructure to promote intra-regional integration and trade as well as avoid bailouts from outsiders. “If there was any doubt about the importance of the agreement reached about two years ago, the COVID-19 pandemic has showed this is the way to go. We have to put away all reservations we have and build supply chains across Africa. This is the only way we can begin to foster dynamic growth in the African continent. If we do not do that, we will remain perpetual commodity exporters. And we have seen what commodity exporters suffer in times of global crisis like this.” [CNBC Africa interview with Afreximbank’s Hippolyte Fofack]
Former Zambian President Kenneth Kaunda: ”Our colonial borders have long separated us. Now a united Africa should rise and reach its dreams and the African Continental Free Trade Agreement is a step in this direction”
100 Days of COVID-19 in Africa: What we’ve learned and what’s ahead. To mark this milestone, COVID-19 Africa Watch reached out to ten African leaders and veteran African watchers to ask for their reflections on two key questions:
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Over these first 100 days, what African leader or organization deserves special recognition for their response to COVID-19?
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Looking ahead, what will be the most consequential impacts of the COVID-19 pandemic one to two years from now?
We feature responses to these questions from Edem Adzogenu, Mimi Alemayehou, K.Y. Amoako, Aubrey Hruby, W. Gyude Moore, Zemedeneh Negatu, Hannah Ryder, Ayo Sogunro, Vera Songwe, and Rachel Strohm.
Small cross-border traders adopt new business tactics to manage pandemic restrictions (COMESA)
Since the first case of Covid-19 was reported in the Great Lakes region in mid-March 2020, small scale traders have been unable to cross borders as they have traditionally done either to buy or sell goods. To support cross border trade, which is the lifeline of a huge community in the region, the Great Lakes Trade Facilitation Project engaged stakeholders to come up with innovative means of trading across the borders of the three countries covered by the project. Subsequently, a new concept of bulk-buying has been developed whereby goods are procured in large consignments in collaboration with suppliers across the borders. This ensures there is no mass movement of traders crossing the borders.
Led by the Cross-Border Traders’ Associations, this concept has helped traders minimize the risk of Covid- 19 spread and allow safe trade. It consists of packaging similar goods from either side of the borders and moving them across the border using joint means of transport. This limits the movement of people to the strict minimum. Only the driver conveys the goods accompanied by the group representative, responsible for cash transactions as well distribution of the merchandise among the members. In the points, small scale cross-border trade is conducted by grouping goods from CBTAs who note down the requirements of their members. This constitutes the consolidated list of orders to be sent to their counterparts on the other side of the border. Prices are discussed and agreed over the phone. A truck escort is authorized to accompany the vehicle in order to receive payments with mobile money transactions also used. Once the goods arrive, the traders share them out and proceed with trading at their different points of sale. For this innovation to succeed, a lot of goodwill and trade policy support is required from the respective governments.
Botswana’s COVID border checks rile truck drivers (VOA)
Botswana’s strict COVID-19 border checks have riled truck drivers, who say they spend days waiting to be cleared. Botswana has so far confirmed only 35 COVID-19 cases and one death but began requiring the border testing amid rising concerns about imported infections. Truck drivers are growing frustrated with long delays at Botswana’s borders due to required COVID-19 testing. The truckers say they wait for up to five days before being cleared to deliver goods in Botswana, or transit through the country. Botswana’s COVID-19 taskforce team head Dr Kereng Masupu acknowledged the challenges faced by truck drivers. But he says remedial action cannot be taken overnight. Steps will be taken to improve the lives of drivers while awaiting their results, says Masupu, and their welfare should be taken seriously as they provide an essential service.
EAC transport ministers meet today to resolve border cargo delays: They are expected to issue a joint statement on Covid-19 testing protocols to be adopted by all member states amid tensions caused by truck drivers protesting disputed results, a lengthy wait for results or harassment.
SADC Agriculture and Food Security, Fisheries and Aquaculture: ministerial outcome statement
The joint meeting of SADC Ministers responsible for Agriculture and Food Security, Fisheries and Aquaculture met through video-conferencing on 22 May 2020, to review progress on the implementation of the SADC Programmes and related strategies on Agriculture and Food Security and Fisheries and Aquaculture with a focus on impacts of COVID-19 pandemic and proposed measures to be implemented by Member States.
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The ministers noted the various guidelines developed by the Secretariat for Member States to adopt and consider for implementation in support to mitigate challenges against the negative impacts of COVID-19 pandemic. The guidelines were developed for both the Agriculture and Food Security, and Fisheries and Aquaculture sectors.
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The ministers noted that the impact of COVID-19 will lead to a decline in the nutrition status of the vulnerable population due to insufficient access to foods, increase in household food insecurity, inadequate access to health, nutrition and water, sanitation and hygiene (WASH) services, which may result increased morbidities.
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The ministers noted the outbreak of the African migratory locusts, which were reported in Botswana, Malawi, Namibia, South Africa and Zambia, affecting cereal crops and pastures.
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The ministers considered and approved the SADC Animal Genetic Resources Conservation and Utilisation Strategy and the SADC Strategy for Elimination of Dog-Mediated Human Rabies, for domestication and implementation for the Member States.
- pdf Download (45 KB)
IGAD Agriculture and Livestock: ministerial outcome statement
Ministers responsible for Agriculture and Livestock of the Member States of IGAD, including representation from Saudi Arabia and Yemen, held a virtual ministerial meeting with key desert locust control organizations to upscale desert locust control operations and boost coordination efforts between IGAD and the Middle East region. The objective of the inter-regional meeting was to provide a platform for IGAD Member States, neighbours, regional and international partners to share experiences in pest control, deliberate on establishing a Joint Inter-Regional Contingency and Response Action Plan, that will guide the upscaling of cross-border and cross-regional control operations, improve coordination and join efforts to contain the desert locust invasion both in the IGAD region as well as in the breeding areas of the Arabian Peninsula. IGAD calls for (extracts):
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Strengthening of transnational control institutions, particularly the DLCO-EA and CRC that have the mandate to fight the desert locust and other migratory pests;
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Member states to continue supporting DLCO-EA to better deliver on its regional mandate, establishing a data sharing protocol and strengthening the existing joint Integrated Regional (and member state) Pest Early Warning System by honouring their subscription commitments;
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Operationalize the IGAD Regional Disaster Response Fund to support timely response to all disaster emergencies in the region.
Wandile Sihlobo: Restricting maize imports during a pandemic? Bad idea (Fin24)
Since the pandemic started, several countries have adopted restrictive trade policy approaches such as export bans and export quotas. The justification for such policies was consumer focused, as the countries needed to ensure domestic food security during this pandemic. Fortunately, when International Grains Council data showed ample global grain supplies in the 2019/20 and prospects for a larger crop in the 2020/21 production season; countries such as Russia, Cambodia and Vietnam, among others, reversed these protectionist policies. These countries had intended to restrict their wheat and rice trade.
Unfortunately, on the African continent we continue to witness restrictive trade policy, although the policies are producer focused instead of consumer focused as has been the case in other continents. Consider Namibia, where the country’s Agronomic Board recently announced that there will be a suspension of imports of maize and millet from 1 June 2020 until the domestic harvest has been absorbed by domestic millers. The Namibian authorities expect this ban to be in place at least until November 2020, which is a period they expect the domestic supplies to last. The rationale provided is that the policy will ensure that domestic farmers have a market for their produce, which will support them during this pandemic. But I can’t stop to wonder if this policy is practical if one seriously considers Namibia’s maize market as an example. Maize is one of the major staple crops in the country, although largely dependent on imports. [The author is chief economist of the Agricultural Business Chamber of South Africa; NAMC chief economist Sifiso Ntombela: If farmers want to attract investment, ESG is the key]
Rethinking land reform in Africa: New ideas, opportunities and challenges . The purpose of this AfDB collection of papers is to help inspire fresh and critical reflection, inquiry and evidence informed policy debate and dialogue. The 13 authors were given free rein to choose their own topics, frameworks and questions and to write in their own voices and styles. Independently, the authors chose some of the most contested issues in land reform in Africa.
- COVID-19: Time to reboot intra-COMESA trade
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Silver Kayondo: A commercial perspective on the implementation of the COMESA Treaty in Uganda
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South Africa launches safeguard investigation on bolts with hexagon heads of iron or steel
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WTO’s Chair of agriculture negotiations announces he will step down on 30 June
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Trudi Hartzenberg: Some reflections on Africa Day 2020, COVID-19 and the AfCFTA
We will all remember Africa Day 2020. Africa Day, which we have been celebrating on 25 May each year since the establishment of the Organisation of African Unity (OAU) in 1963, and its transformation into the African Union in 2002, is different this year. While government measures and responses to the COVID-19 pandemic make the usual Africa Day celebrations impossible, we hear that many are embracing digital platforms to listen to broadcasts by Presidents, participate in continental workshops and music concerts. We now know it is possible to have policy discourses among stakeholders, to make and implement policy and regulations, and to trade with the support of digital solutions.
In some quarters, it is lamented that the African Continental Free Trade Area (AfCFTA) negotiations have all but stopped, and that trade under the AfCFTA regime will not begin on 1 July 2020. Careful scrutiny of the negotiations process reveals that the initial impressive momentum of negotiations had already slowed down well before the pandemic struck.
Africa deserves a continent-wide free trade agreement that addresses the real challenges that the continent is facing, not only now, during the pandemic, but more generally in a digital 21st century. We know that non-tariff barriers are far more pernicious impediments to intra-Africa trade than tariffs. COVID-19 is serving to bring into very sharp relief this reality, and many other lessons about trade and integration on the continent and in the global economy. And ironically, the pandemic is providing an important opportunity to reflect and appraise where we stand in the AfCFTA negotiations, and to recalibrate where necessary. Let’s not miss this opportunity.
Remarks by the Chairperson of the African Union, President Cyril Ramaphosa, on the occasion of Africa Day: “COVID-19 knows no borders, nationality or skin colour. To address the escalating humanitarian crisis we need to deepen our solidarity. We must ensure the pandemic does not reverse our developmental gains. We must forge ahead with meeting the aspirations of Agenda 2063. We must move ahead with the most ambitious step towards pan-African integration to date, the creation of the African Continental Free Trade Area, and ensure that it is operational soon.” [ pdf Download Remarks (302 KB) ]
A commentary by the Chairperson of the AUC, Moussa Faki Mahamat: It is time for Africa to develop new forms of resilience
There is an urgent need for Africa to develop new forms of resilience. In a world in which multilateralism is sorely tested, Africa must stop expecting solutions from others. Africa should no longer be satisfied with this role of a never-ending reservoir for some, and dumping ground for others. There is an urgent need for Africa to chart its own course. Its food dependency and insecurity are unacceptable and intolerable, as is the state of its road, port, health and educational infrastructure. Africa’s land, forests, rich fauna, mines, energy potential, maritime and inland waterways, hold the necessary resources to provide an adequate response to the needs of its peoples. We should, in full lucidity, boldly opt for an innovative approach that is inward-looking, rather than outward-looking. Let us live on what we have, using what we have, in other words, let us live within our means!
As we embark on this path, our leaders will be closer to our citizens, and our nations will become stronger. In my opinion, this inward-looking and self-reliance approach, will be a catalyst for the renaissance of our nations. It is only when they are tested that nations and states truly emerge. We are now at that point in history. The COVID-19 pandemic brutally reminds us of a major issue, which is the imperative to put a stop to dependency on the exterior. This can be achieved through the twofold objective of living on our own resources, and resolutely focusing on our industrialisation process. Other entities with less resource than we have, were able to achieve this in record time. [ pdf 25 May: African Liberation Day – Declaration by H E Moussa Faki Mahamat (81 KB) ] [Speeches, statements made at the First OAU Summit, 1963]
Africa Regional Integration Index (AU, ECA, AfDB)
The 2019 Index, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every REC and their member countries. The report observed that although 20 countries score above average, no African country can be considered well integrated in its region. Even the most integrated country, South Africa, scores 0.625 less than two-thirds of its potential on the scale. The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1.
“Whereas the Index edition we are releasing today has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks such as the one being experienced today,” said Stephen Karingi, Regional Integration Division Director at the ECA. “This index is both a measurement exercise and a call to action; to build resilient economies through integration. It will identify the solutions needed to truly build an integrated Africa.”
Table of contents (pdf):
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Section 1. Principal findings
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Section 2. The strengths and weaknesses of the continent and its regions
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Section 3. Africa’s most and least integrated countries
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Section 4. Country scores
Figures
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Overall scores of REC member countries
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Scores on the five dimensions of regional integration
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Countries’ scores and rankings on regional integration
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Scores and rankings on each dimension of regional integration
Maps
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Map 1. Africa’s most and least integrated countries
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Map 2. Africa’s high performers on the five dimensions of regional integration
Top five performers in each dimension of regional integration
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Map 3. Trade integration
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Map 4. Productive integration
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Map 5. Macroeconomic integration
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Map 6. Infrastructural integration
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Map 7. The free movement of people
pdf Informal traders: A balancing act of survival (495 KB) (UNECA)
Informal traders in Africa’s urban cities and towns have saluted the easing of restrictions and introduction of relief schemes. The eagerness to persist with business amid the COVID-19 pandemic captures a desperate survival strategy. The policy measures introduced so far, however, seem to have overlooked a large section of informal traders. Many informal traders reside in cross-border communities or travel long distances to trade across borders. These informal cross border traders are not eligible to concessions targeted at domestic informal trading. Unlike in Harare, in Mutare, a border town close to the border with Mozambique, many informal vendors have had their produce confiscated and set on fire by Zimbabwe Republic Police.
Yet, informal cross border trade is a significant phenomenon in Africa. Several studies suggest that the value of informal trade may even exceed the value of formal trade with neighboring countries. This trade not only serves border communities, but also provides a lifeline for urban cities spanning entire corridors. Along the Abidjan-Lagos corridor in West Africa, traders refer to this as a “chain effect” resulting from the interconnectedness of ECOWAS economies. Informal cross border traders are also acutely vulnerable to COVID-19, both in health terms and economically. This opinion piece tables five priority short-term interventions needed to “optimize” the COVID-19 impact on informal cross border traders. Some combination of the above responses need to happen as soon as possible. There is no time to wait to see how the COVID-19 pandemic unfolds. Informal cross border traders are amongst the most vulnerable in Africa. Delaying action risks detrimental and irreversible damage to these communities, perhaps much larger than the risk of COVID-19 itself. [The authors: David Luke, Gerald Masila, Lilly Sommer; Asmita Parshotam: Mitigating the impact of COVID-19 for Africa’s women traders - what more can we do?]
Related blogs by John Stuart, tralac Associate:
The AfCFTA and measures to facilitate trade could significantly mitigate COVID-19’s economic impact in Africa (Brookings)
Overall, we find that, if the situation were to deteriorate more than expected, with global growth at -4 percent, Africa would experience a decrease in GDP of 7.9 percentage points (Figure 1). In case of the second scenario, we estimate that loss to be 12.31 percentage points. The fall in the world GDP will no doubt lead to a severe fall in the exports demand for African products due to the fall in the global demand. Given the specificities of African economies, the negative impact would be more than proportional. In addition, the impacts will be higher the more trade between Africa and the rest of the world is important. The AfCFTA will thus have the advantage of boosting intra-African trade, contributing to mitigate the rapid decline in African GDP. Notably, we estimate that Eastern and Western Africa will be hardest hit, with decreases in GDP of -9.76 and -8.87 percentage points, respectively, in the first case, and -14.55 and -13.51 percentage points in the second case. These two subregions will likely experience the stronger trade shock due to their dependence not only on minerals, gas, and oil exports, but also on the production and export of electronics.
Indeed, a successfully implemented AfCFTA will empower the region to more successfully navigate the hit the region’s economies will take (and are already taking) (Figure 2). In the case of immediate implementation by all African countries—so if 90% of intra-African tariffs are removed according to the AfCFTA modalities—the drop in Africa’s GDP would be -5.2 instead of -7.9 percentage points, in the case of a 4% drop in world GDP (“COVID1” versus “AfCFTA” in Figure 2). The decreasing world demand is then partially compensated by new export possibilities across the continent for African economies, due to the removal of intra-African trade tariffs. In terms of immediate priorities, this acceleration of tariff dismantlement could be supported by customs green lanes, in particular for medical, pharmaceutical, and food products.
With these potential impacts in mind, there are a number of policy measures that policymakers should consider as Africa faces COVID-19 head-on: [The authors: Nassim Oulmane, Mustapha Sadni Jallab, Patrice Rélouendé Zidouemba]
Kenya: Key imports face instant tax demands (Business Daily)
Importers of a wide range of consumer goods - including food, used cars, alcohol, clothing and office supplies - will from 12 August be required to pay taxes immediately their cargo enters the country. The Kenya Revenue Authority has issued a notice that will eliminate use of bonded warehouses for these goods, meaning the benefits of delayed payments of taxes and stock management will soon disappear. Only local manufacturers and new motor vehicle dealers such as East African Breweries Limited, BAT Kenya and Toyota Kenya have been spared from the policy change. “The Commissioner of Customs and Border Control notifies the public that at the expiry of 90 days from the date of this notice, the following goods shall not be warehoused,” Pamela Ahago, who holds the office at KRA, said in a notice published in the Kenya Gazette dated May 13, 2020.
“The above restrictions are likely to have the undesired effect of making the country uncompetitive and less attractive to investors; and is counterproductive to the government’s agenda of developing infrastructure to make Kenya a global and regional logistics hub,” business advisory firm PricewaterhouseCoopers said in a review of the policy change. “Understandably, Customs is tasked with curbing illegitimate trade. However, in its efforts to ensure the proper enforcement of Customs laws and regulations, it must continually strive to facilitate legitimate trade.”
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CNBC Africa: How COVID-19 is impacting trade & cross border truck drivers in East Africa
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Kenya’s Ministry of Transport, Infrastructure Housing, Urban Development and Public Works: Notice on transit cargo
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Tanzania Horticultural Association praises Kenyatta, Magufuli over border row solution
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Andrew Mwenda: COVID’s nail in the EAC
pdf Africa Human Capital Plan One Year Progress Report (2.52 MB) : Game changers for investing in Africa’s people (World Bank)
In April 2019, we launched the Africa Human Capital Plan. This ambitious plan sets out clear targets and commitments to boost Africa’s potential through its human capital. After just one year, the plan is well underway, helping African countries build momentum by leveraging investments and policy reforms across key sectors, empowering women, developing solutions tailored to the challenges of fragile and conflict-affected settings, mobilizing technology and innovation, and building knowledge and partnerships.
Extract: The World Bank is also focused on using technology to enhance project delivery and results on human capital. Project teams in Africa have benefited from training on applying blockchain, artificial intelligence, machine learning, and other innovative tools to human capital projects. Since the launch of the Africa Human Capital Plan, training on the Geo-Enabling Initiative for Monitoring and Supervision (GEMS) jumped from 150 to 450 projects, encompassing over 2,000 World Bank clients, partners, and field staff in nearly 30 African countries. GEMS is a tool for project monitoring, supervision, safeguards, procurement, and impact evaluation. It offers geolocated data, with a focus on fragile countries.
Rich geotagged data on more than 100,000 subprojects and activities in Africa have been collected through GEMS. In Mali, for example, over 8,000 project activities have been mapped for increased portfolio coordination through GEMS. Clients and project teams have used the GEMS methodology and tools to enhance their operations related to nutrition, education, and health. Many projects saw a significant impact on measuring project outcomes that support the human capital agenda.
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COVID-19 must enable a new Africa – President Ramaphosa
Africa has marked the 57th Africa Day amid the Coronavirus pandemic with African Union Chair, President Cyril Ramaphosa, calling on the continent to use the global crisis as an opportunity to re-imagine a new Africa.
Africa Day is celebrated on 25 May 2020 and marks the establishment of the Organisation of African Unity (OAU).
Africa has not been spared from the COVID-19 pandemic with almost 96 000 people infected with almost 3 000 having lost their lives.
Delivering the keynote address on the Africa Day special virtual broadcast on Monday, President Ramaphosa said the pandemic will have a lasting impact on the continent’s ability to meet the aspiration of the African Union’s Agenda 2063 of a peaceful, united and prosperous continent.
“The virus has exposed the deep inequalities that continue to exist on our continent and across the world.
“It has shown how far we are from realising our developmental goals and our responsibilities to the citizens of our continent. But at the same time, this global crisis should enable a new Africa to come to the fore,” said President Ramaphosa.
While noting the impact of the pandemic, the AU Chair called on Africa to ensure the pandemic does not reverse the continent’s developmental gains.
“We must forge ahead with meeting the aspirations of Agenda 2063. We must move ahead with the most ambitious step towards pan-African integration to date, the creation of the African Continental Free Trade Area, and ensure that it is operational soon.
“We must not let up on our efforts to drive the African agenda of security, peace and stability, of democracy and human rights, of women’s emancipation and the protection of the environment,” said President Ramaphosa.
The 57th Africa Day marked was under the theme: silencing the guns – creating conducive conditions for Africa’s development and intensifying the fight against COVID-19.
In line with this year’s theme, President Ramaphosa urged the continent not to let up on its efforts to drive the African agenda of security, peace and stability, democracy and human rights, women’s emancipation and the protection of the environment.
“We must not under any circumstances allow this global health emergency to derail our efforts to silence the guns on the continent.
“The tragic conflicts that are breeding instability in a number of countries on our continent are exacting a heavy toll on human life and must end. We must continue to affirm the supremacy of dialogue over military intervention,” he said.
Calls for financial support to Africa
With countries tasked with fighting the scourge of COVID-19, President Ramaphosa made a clarion call to developed countries, multilateral institutions and the donor community to provide vulnerable countries across the world especially in Africa with the necessary support in the form diagnostic and therapeutic medical supplies as well as necessary financial support to sustain the livelihoods of vulnerable people.
President Ramaphosa repeated the call for an economic stimulus package for Africa that includes debt relief and other support measures for the continent’s immediate humanitarian needs and necessary economic recovery.
He also reiterated the call for the unconditional lifting of sanctions that have been imposed on Zimbabwe and Sudan during the pandemic.
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Africa Regional Integration Index says continent can build more resilient economies through integration
The second Africa Regional Integration Index (ARII 2019) was launched Friday by the Economic Commission for Africa (ECA), the African Development Bank and the African Union Commission (AUC), with a call to action to African economies to deepen their integration.
The 2019 Index, which builds on the first edition published in 2016, provides up-to-date data on the status and progress of regional integration in Africa. It also helps to assess the level of integration for every Regional Economic Community (REC) and their member countries.
The report observed that although 20 countries score above average, no African country can be considered well integrated in its region. Even the most integrated country, South Africa, scores 0.625 less than two-thirds of its potential on the scale.
The report found that much more needs to be done to integrate regional economies to make them more resilient to shocks such as the current COVID-19 pandemic. Overall, the Index shows that levels of integration on the continent are relatively low with an average score of 0.327 out of 1.
“Whereas the Index edition we are releasing today has data cut off points in 2019, the present COVID-19 pandemic has reopened the question of whether enough is being done in advancing regional integration as a means to help Africa withstand systematic shocks such as the one being experienced today,” said Stephen Karingi, Regional Integration Division Director at the ECA.
“This index is both a measurement exercise and a call to action; to build resilient economies through integration,” he added. “It will identify the solutions needed to truly build an integrated Africa.”
Jean-Denis Gabikini, Acting Director of the AUC’s Economic Affairs Department, welcomed the collaboration in producing the Index. He noted that the Index covers issues of intellectual property, competition policy, investment and digital trade which are critical to the successful negotiations of Phase II and III of AfCFTA.
“To achieve an “integrated, prosperous and peaceful Africa, representing a dynamic force in the concert of nations”, this ARII report will support AU Member States and RECs to address industrialisation and value addition priorities for the development of the continent,” Gabikini said.
With the establishment of RECs and the creation of AfCFTA, Africa has reinforced regional integration as a major development priority for the continent under the 2012 Boosting Intra-African Trade (BIAT) Action Plan.
The Index ranks the level of integration of African countries within their respective RECs and also with the rest of the continent. It scores across five key dimensions: trade, productive capacity, macroeconomic policy, infrastructure, and free movement of people.
Among the eight RECs recognised by the AU, the East African Community (EAC) scored highest for overall integration, with the Southern African Development Community (SADC) coming last.
The African Development Bank’s Director for Regional Development and Regional Integration, Moono Mupotola, said the Index was a useful tool for tracking progress on the regional integration front and would help countries identify priorities to improve integration.
“The crippling effects of COVID-19 illustrate the need for enhanced production of African finished goods and services that can readily be traded across the continent,” Mupotola said.
David Luke, coordinator of the African Trade Policy Centre (ATPC) at the ECA pointed out that the productive and infrastructure dimensions of regional integration are intricately linked. Tackling these two dimensions along with implementing the AfCFTA would be a massive boost for trade, he said.
For Africa to succeed in its long-standing efforts towards closer economic integration, ARII 2019 made the following recommendations:
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Improve regional networks of production and trade by enhancing countries’ productive, distributive, and marketing capacities;
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Build innovative, regional value-chain frameworks in different sectors using improved technology, higher-quality inputs, and updated marketing techniques;
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Fully implement the AfCFTA to remove non-tariff barriers, which remain a major challenge for regional integration;
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Enhance African workers’ competencies to match the technology and production capacities of today and tomorrow to succeed in the global economy;
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Improve infrastructure through increased public–private partnerships, tapping into national resources and using regional and global infrastructure development funds and other innovative financing tools, accompanied by rigorous competition and transparency in procurement and construction processes; and
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Implement the Protocol on the Free Movement of People, which will enhance economic growth through increased opportunities for tourism, trade and investment, human capital mobility, and allow firms to find skills more easily, in turn driving productivity.
The second edition of the Africa Regional Integration Index has been prepared by the African Union Commission, the United Nations Economic Commission for Africa and the African Development Bank.
For more information visit the website: https://www.integrate-africa.org/ as well as https://arii.uneca.org/, a dedicated platform developed by the ECA for anyone interested in accessing, extracting and using data contained in ARII 2019 for further analysis and policy making.
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The 2nd edition of the African Regional Integration Index will be launched tomorrow. Further details of the webinar can be accessed here.
South Africa: Masondo punts common currency as key to intra-African trade (Moneyweb)
A post-Covid-19 global economy could deepen the trend of economic protectionism, and Africa should seize this moment to build intra-continental regional value chains and trade, which will only succeed through the introduction of a common currency, says Deputy Finance Minister David Masondo. Masondo was speaking in a webinar hosted by the University of Johannesburg on Wednesday, which focused on how Covid-19 will influence the emerging global world order. In Africa, Masondo said in addition to tackling the transport infrastructure and other capacity issues that have been a barrier to facilitating more intra-African trade, the continent needs to introduce a common currency. He said the AfCFTA agreement was “a good base to respond to the regionalisation and economic nationalism” across the world but if trade were to take place in multiple currencies it would introduce “exchange rate risks” that would restrict the number of imports and exports that can be facilitated. [Trade barriers, changing currencies: Economic experts weigh in on a post-coronavirus world]
- Adetayo Adetuyi: The implications of the postponement of the implementation of the AfCFTA on intra-African trade
Pandemics know no borders: In Africa, regional collaboration is key to fighting COVID-19 (World Bank Blogs)
Many African countries are all too familiar with the social and economic upheaval posed by outbreaks of infectious diseases. Recent experiences with Ebola are fresh in peoples’ minds across West and Central Africa, as are those with TB and HIV/AIDS in Southern Africa. As a result, African countries understand the need for regional coordination in overcoming public health challenges. The World Bank Group has responded swiftly to each of these health emergencies – often through a regional response designed to counter immediate threats while also strengthening countries’ capacity to be proactive in detecting and responding to outbreaks. There are important lessons to draw from these experiences as we combat the coronavirus pandemic:
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First, leverage existing regional networks and operations to catalyze an immediate, large-scale response.
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Second, maximize economies of scale for scientific collaboration across borders
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Third, while providing social support now, lay the groundwork for regional cooperation to support recovery of the economy and jobs – so essential for reducing poverty as we go forward.
COVID-19 presents a classic example of why regional coordination, cooperation, and integration are key to Africa’s future. Given the ease with which diseases can spread across countries, we will continue to draw on our regional programs to support countries in managing pandemic prevention and control. The virus knows no borders, and efforts to support regional coordination and cooperation will be essential to defeating it, both in Africa and around the globe. [The author, Deborah Wetzel, is Director, Regional Integration for Africa, the Middle East and North Africa]
The impact of Covid-19 on the manufacturing sector in Kenya (KPMG)
On sales: An overwhelming number of respondents (93%) have experienced a fall in turnover, with at least 23% registering losses in the range of 65-100%, and 51% between 30-65%. 78% attributed this to a fall in demand of products. 4% have seen an increase in turnover, while another 4% have not seen any changes. The sectors that have seen an increase in turnover are Metal & Allied (18%), Chemical & Allied (6%), Paper & Paperboard (5%) and Food & Beverage (3%). The worst hit sectors are the Textile & Apparel and Timber, Wood & Furniture sectors followed by the Leather & Footwear sector.
On liquidity: 8 out of every 10 participants are experiencing cash flow constraints while 9 out of every 10 agree or strongly agree that they are facing challenges in being paid by their customers, as they too need to look at their finances and prioritize their payments. What was a common issue before businesses were affected by Covid-19 has been exacerbated further by the pandemic. For MSMEs, the numbers are grimmer: 64% are having challenges in meeting tax obligations, 76% are finding it difficult to pay salaries and wages, and 79% are struggling to pay for other operating costs.
On logistics: 76% of the respondents experienced challenges in locally sourcing or shipping in raw materials. An example is the leather industry which has been impacted “because with the lock down people are not able to get the raw hides from up country”, as Niaz Hirani, Chair – Leather & Footwear Sector explains. With the majority of raw materials and machinery coming in from countries such as China, India and Egypt, and the added challenges of: seeking credit insurance covers from banks; depreciation of the Kenya Shilling; suppliers invoking the force majeure clauses in their contracts; and other countries imposing their own restrictions, many will not be able to replenish their stocks if the lock down measures are not lifted in the short term. Currently, 69% of manufacturers have raw material stock levels that could only last for 0-3 months.
Kenya: World Bank approves $1bn financing to address COVID-19 financing gap
The World Bank Board of Directors yesterday approved a $1bn budget support operation for Kenya, which helps close the fiscal financing gap, while supporting reforms that help advance the government’s inclusive growth agenda, including in affordable housing and support to farmers’ incomes. The Kenya Inclusive Growth and Fiscal Management Development Policy Financing, is the second of a two-operation programmatic series aimed at recreating fiscal buffers over the medium term and crowding in private investment. Preparation of this DPF preceded the COVID-19 pandemic, but its approval is timely, since it will help to fill the financing gap generated by the severe, ongoing shock to Kenya’s economy. The DPF thus complements the recently approved Kenya Covid-19 Emergency Response Project which seeks to prevent, detect and respond to the COVID-19 outbreak and strengthen national systems for public health emergency preparedness.
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World Bank Group: 100 developing countries get support in response to COVID-19
Impact of Covid-19 on the South African economy: an initial analysis (SA-TIED)
This paper reports ‘first pass’ estimates of the costs of the lock-down implemented by the South African government beginning on 27 March 2020. It also presents a series of recovery scenarios. Four channels by which a lockdown and other efforts are expected to influence economic activity are distinguished. In total, these lockdown measures have profound economic implications. The implications of the pandemic in the rest of the world, and hence on demand for South Africa’s export, are not as large as the effects of the domestic lockdown but are still very large by any normal measure. In terms of recovery, the ‘Quick’ recovery scenario results in a GDP decline of about 5% by the end of 2020 - an economic outcome that would have been considered catastrophically bad a little more than one month ago. Persistent effects of the Covid-19 would bring even worse outcomes for GDP in line with the ‘Slow’ and ‘Long’ recovery scenarios. [The authors: Channing Arndt, Rob Davies, Sherwin Gabriel, Laurence Harris, Konstantin Makrelov, Boipuso Modise, Sherman Robinson, Witness Simbanegavi, Dirk van Seventer, Lillian Anderson]
Rwanda: GDP growth to slacken in 2020 due to coronavirus. Rwanda’s economic growth is expected to slow to 2% this year from 9.4% in 2019 as the COVID-19 pandemic hits tourism, transport and hospitality, the finance minister said on Thursday. Presenting the draft budget for 2020-21 fiscal year, Uzziel Ndajigimana said growth was expected to rebound next year to 6.3% and improve further to 8% in 2022.
PwC’s Africa COVID-19 CFO Pulse results (pdf): The report captures the views of 55 CFOs in nine countries across sub-Saharan Africa, and compares them to those of 867 CFOs from 40 countries across the globe. The top findings were:
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Nearly two-thirds (65%) of African CFOs predict a decline of at least 10% in their company revenue and/or profit this year.
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The vast majority (89%) are implementing cost containment measures, or deferring or cancelling planned investments (60%).
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62% of African CFOs estimate it will take more than three months to restore ‘business as usual’.
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Developing alternate sourcing options (64%) and changing contractual terms (56%) are the main priorities in supply chain strategy.
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76% of respondents are very confident about meeting customers’ safety expectations and providing a safe working environment for their employees at their places of business.
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60% say remote work is here to stay for some roles, as companies plan to alternate crews and reconfigure worksites.
President Xi Jinping’s address to the 73rd World Health Assembly: Helping Africa must be the top priority in our Covid-19 response. For the sake of boosting international co-operation against Covid-19, I would like to announce the following:
China will provide $2bn (R36bn) over two years to help with Covid-19 response and with economic and social development in affected countries, especially developing countries. China will work with the UN to set up a global humanitarian response depot and hub in China, ensure the operation of anti-epidemic supply chains and foster “green corridors” for fast-track transportation and customs clearance. China will establish a co-operation mechanism for its hospitals to pair up with 30 African hospitals and accelerate the building of the Africa CDC headquarters to help the continent ramp up its disease preparedness and control capacity. Covid-19 vaccine development and deployment in China, when available, will be made a global public good. This will be China’s contribution to ensuring vaccine accessibility and affordability in developing countries. China will work with other G20 members to implement the Debt Service Suspension Initiative for the poorest countries.
In brief:
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COVID-19 in COMESA: Situational Update 14
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Special ERG call on the economic impacts of coronavirus. "PEDL, alongside its new partner CDC Group, is looking to fund research that can inform policymakers and other stakeholders on the economic impacts of coronavirus in developing countries so that the costs can be mitigated as much as possible."
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The WTO Secretariat has issued a new information note on the pdf Standards‐ and regulation-related policies WTO members have adopted in response to COVID-19 (239 KB) and formally notified to the WTO. Around half of the measures are trade facilitating.
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FAO needs $350m to avert rising hunger as countries reel from COVID-19 pandemic’s impact
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How COVID-19 is changing the world: a statistical perspective
WTO establishes nomination window for DG selection: WTO members have established a month-long period in which candidates seeking to succeed Roberto Azevêdo as Director-General may submit their nomination bids. General Council Chair David Walker of New Zealand informed members on 20 May the appointment process for the next Director-General would formally commence on 8 June with nominations accepted from that date until 8 July.
Decisive reforms needed for Vietnam to see full benefits of EU trade agreement (World Bank)
Vietnam needs to fill major legal gaps and address key implementation issues to reap the full benefits of the European Union Vietnam Free Trade Agreement (EVFTA), according to a new World Bank report, expected to be ratified by Vietnam’s National Assembly in its May meeting. The report, Deepening International Integration and Implementing the EVFTA, released today, estimates that by simply enjoying the tariff reduction as agreed, EVFTA could boost Vietnam’s GDP and exports by 2.4% and 12% respectively by 2030, while lifting an additional 100,000-800,000 people out of poverty by 2030. Such benefits are particularly urgent to lock in positive economic gains as they country responds to the COVID-19 pandemic. The report argues that Vietnam could benefit even more from the next-generation trade deals such as EVFTA and Comprehensive and Progressive Agreement for Trans-Pacific Partnership if they stimulate a comprehensive agenda of economic and institutional reforms to facilitate compliance with non-tariff agreements. The report estimates that such reforms would result in a “productivity kick”, increasing GDP by 6.8%, relative to the baseline scenario, by 2030. The report highlights the need for Vietnam to increase capacity to handle certain key issues, including rules of origin, animal and plant sanitary standards, and investor-state dispute settlement.
Related World Bank reports on Vietnam:
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Stand in solidarity to preserve Africa’s hard-won progress, urges UN chief
The coronavirus pandemic threatens the hard-earned gains Africans have made throughout the continent, the UN chief said on Wednesday, urging the world to stand in solidarity with the people, “now, and for recovering better”.
At the virtual launch of a UN briefing paper focusing on the impact of COVID-19 across Africa, Secretary-General António Guterres pointed out that citizens across the continent have done much to advance their own well-being, detailing strong economic growth, an on-going digital revolution, and a bold free-trade area agreement.
But, he added, “the pandemic threatens African progress”.
The UN chief elaborated on the coronavirus’ potential to aggravate long-standing inequalities and heighten hunger, malnutrition and vulnerability to disease, saying “much hangs in the balance”.
Demand for Africa’s commodities, together with tourism and remittances, are in decline, he observed. “The opening of the trade zone has been pushed back – and millions could be pushed into extreme poverty”.
Moreover, the virus has taken more than 2,500 African lives: “Vigilance and preparedness are critical,” underscored Mr. Guterres.
‘Spectrum of urgent challenges’
Noting that while UN agencies, country teams, peacekeeping operations and humanitarian workers continue to provide support, “a spectrum of urgent challenges”, require more urgent assistance.
“We are calling for international action to strengthen Africa’s health systems, maintain food supplies, avoid a financial crisis, support education, protect jobs, keep households and businesses afloat, and cushion the continent against lost income and export earnings,” the UN chief spelled out.
As African countries requires quick, equal and affordable access to any eventual vaccine and treatment, Mr. Guterres recalled his appeal last month to support the Global Collaboration to Accelerate the Development, Production and Equitable Access to new COVID-19 Tools.
“It will also be essential for African countries to sustain their efforts to silence the guns and address violent extremism,” he continued, noting that upcoming elections “offer potential milestones for stability and peace”.
Women and youth
The UN chief underscored that as women will be central to every aspect of the response, stimulus packages must prioritize increasing social protection and putting cash in their hands.
“Many difficult decisions will need to be taken as the pandemic unfolds, and it will be essential to retain the trust and participation of citizens throughout,” Mr. Guterres said. Moreover, African youth must be empowered, and human rights respected.
Looking ahead
The UN chief underscored his message to the international community that “failure to respond quickly and adequately could jeopardize progress towards Silencing the Guns by 2020 and achieving the Sustainable Development Goals and Africa’s Agenda 2063”.
Meanwhile, various political processes and elections in the coming months offer potential milestones for stability and peace.
“Despite the impact of COVID-19, the African Union has demonstrated unwavering commitment for continued operations,” he stated.
And on the part of the UN, Mr. Guterres said that its field presences continue to protect civilians, undertake community outreach while strictly adhering to host-countries’ COVID-19-related measures and remain actively engaged with parties to peace negotiations.
Key recommendations
The policy brief suggests specific actions in five targeted areas:
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Health – Medical testing capacities and supply access must continue to expand and improve, along with deploying more community health workers.
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Economy – A “people-first” approach that requires scaled up support to government and protect livelihoods.
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Food security – Prioritize agriculture as a critical sector that should not be interrupted by COVID-related measures, with secure food corridors and uninterrupted supplies for farmers.
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Peace and security – Silencing the guns is the top concern, including by implementing the Secretary-General’s and the African Union Commission Chairperson’s ceasefire appeal, and sustaining peace processes and critical peace operations.
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Recovery phase – Strategies must be devised to minimize inequalities and bolster health systems, social protection, cohesion, and inclusion.
In closing, he asserted that Africa was still in the early days of coronavirus infection, compared with other continents, warning that disruption could escalate quickly.
“Ending the pandemic in Africa is essential for ending it across the world,” concluded the Secretary-General.
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PSC Report comment: towards a new post-COVID-19 world order?
We are likely to see increased competition between the US and China, rising nationalism and weak global leadership.
As the world grapples with the COVID-19 pandemic, the reality of its aftermath cannot be overlooked. International relations experts agree that, just as 9/11 marked a turning point in global security relations, so the pandemic will be not just a health issue but also a major catalyst for new dynamics in the international system. The resulting shifts have the potential to redefine inter-state relations and global governance in ways that require Africa and the global South, in general, to reposition themselves.
Implications for Africa and the global South
For the global South, comprising largely developing countries and heavily dependent on the North, the disruptions caused by COVID-19 call for new ways of doing things. There is a strong possibility that developed countries will have to reduce development aid while addressing the economic consequences of the pandemic.
Even if development partners have committed themselves to maintaining their support for African countries, a divided focus can certainly be expected. This has direct implications for Africa's dependence on the developed world for aid in many key areas, including peace and security.
As the world order will have to struggle with significant unknowns, Africa and countries in the global South will have to reposition themselves to deal with the new actors that will most likely fill the gap.
Regional solidarity among African states through existing multilateral institutions – particularly the African Union (AU) and regional economic communities (RECs), which have played important roles in the management of the COVID-19 pandemic on the continent – will be key. Africa will have to reconsider its current over-dependence on external support and rather commit to its agenda to find African solutions to African problems.
Signs of a weakened international order
Before the outbreak of the pandemic, it was clear that the role of the United States (US) as a central pillar in global governance in a unipolar post-Cold War era was waning. Not only was the US projecting less leadership, but its absence in the mobilisation of multilateral responses was also evident.
This was compounded by the rise of Donald Trump and Trump-style populism in the global North and the resultant assault on global multilateral institutions, environmental governance structures and regional relations. Brexit, for instance, is not just a European crisis, but also a classic demonstration of fundamental challenges to multilateralism.
The injection of domestic populist nationalism into global diplomacy also worsened relations between China and the US, two of the world's major powers, with dire consequences for global economic stability. Apart from the US’ receding role in global leadership under Trump, there has been clear contestation over its unipolar leadership through China's projection of both economic power and influence.
The rise in tension between the two countries has affected many areas of global relations, with major implications for the global South.
The emergence of COVID-19 within this context and the inability of the global powers to take leadership in its management point to the eroding influence that these weaknesses have had on the contemporary global management of crises.
The way in which the pandemic has been handled is thus both a symptom of existing weaknesses in the international system and a major catalyst in the deterioration of those challenges in ways that will affect the nature of global inter-state relations going forward.
Power contestation between the US and China
With the pandemic worsening existing structural weaknesses in the international system, the post-COVID-19 global order is bound to undergo three major changes.
First, tensions between the US and China may go beyond trade wars. It is clear that COVID-19 has put both the US’ and China’s systems to the test and exposed their respective strengths and weaknesses.
While China has had an opportunity to recover and project strength in the handling of the pandemic, fault lines in the US’ healthcare infrastructure, its handling of the pandemic and domestic political leadership have all exposed structural challenges in the American system. The implications of this for the two powers’ contestation for influence and the associated mutual suspicions are bound to remain even after the pandemic is contained.
Control over the narrative of China's initial handling of the crisis is already a major point of disagreement between the two countries. The US’ attack on the World Health Organization's (WHO) handling of the pandemic is clear evidence of this.
The timing of the US’ suspension of funding support to the health body amid an existential threat to humankind is a dangerous assault not just on global health governance but also on multilateralism in general. Its most immediate impact is most likely going to be felt in the developing world, where the services of the WHO could be crucial in supporting health systems’ recovery after the pandemic.
The continued rise of nationalism
The second expected change after COVID-19 is the continued rise of nationalism, resulting in inward-looking states. This is bound to emerge not just from a rise in mistrust among states but also from the realisation that there are dangers associated with over-reliance on China as the world's primary supply chain source for certain essential commodities.
Indications that the US aggressively outbid other countries to prevent them from accessing personal protection equipment (PPEs) in April, an occurrence that has become known as ‘medical piracy’, at a time every country needed such equipment, illustrates the major powers’ self-seeking approach in the response to the pandemic.
As much as the absence of the US’ leadership has affected the struggle to address the crisis, its increasing abdication of global leadership is likely to increase in a post-COVID-19 world. It is likely that all states will have to pay more attention to internal economic recovery efforts and preparations to shield themselves from similar pandemics in future.
In the US, in particular, Trump will be forced to focus on the economy and job creation, which will compound the challenges the country’s leadership is facing across the world. The flaws that have marked the ongoing global response to the pandemic are a mere foretaste of the US’ abdication of global leadership.
Finally, the global South will have to get used to the US’ increasing absence from a post-COVID-19 global order, especially if Trump is re-elected. The lacuna that is likely to result from the decline of the US' influence will not be filled immediately. China's rise is projected through economic power, but it is difficult to establish whether it has what it takes to also provide political answers in the global South, as the US has done since the end of the Cold War.
What is interesting, however, is the emergence of influential multinational entities and foundations such as the Jack Ma and the Bill and Melinda Gates foundations, which have played a major role in equipping African countries to manage the pandemic. It remains to be seen whether these can be harnessed widely in Africa’s response to the challenges it faces.
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World Bank Group: 100 Countries get support in response to COVID-19 (Coronavirus)
Unprecedented Crisis Could Push Up to 60 Million into Extreme Poverty
The World Bank Group on 19 May 2020 announced its emergency operations to fight COVID-19 (coronavirus) have reached 100 developing countries – home to 70% of the world’s population. Since March, the Bank Group has rapidly delivered record levels of support in order to help countries protect the poor and vulnerable, reinforce health systems, maintain the private sector, and bolster economic recovery.
This assistance, the largest and fastest crisis response in the Bank Group’s history, marks a milestone in implementing the Bank Group’s pledge to make available $160 billion in grants and financial support over a 15-month period to help developing countries respond to the health, social and economic impacts of COVID-19 and the economic shutdown in advanced countries.
“The pandemic and shutdown of advanced economies could push as many as 60 million people into extreme poverty – erasing much of the recent progress made in poverty alleviation,” said World Bank Group President David Malpass. “The World Bank Group has moved quickly and decisively to establish emergency response operations in 100 countries, with mechanisms that allow other donors to rapidly expand the programs. To return to growth, our goal must be rapid, flexible responses to tackle the health emergency, provide cash and other expandable support to protect the poor, maintain the private sector, and strengthen economic resilience and recovery.”
Of the 100 countries, 39 are in Sub-Saharan Africa. Nearly one-third of the total projects are in fragile and conflict-affected situations, such as Afghanistan, Chad, Haiti, and Niger. The International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) have also fast-tracked support to businesses in developing countries, including trade finance and working capital to maintain private sectors, jobs and livelihoods.
The Bank Group’s support through grants, loans and equity investments will be supplemented by the suspension of bilateral debt service, as endorsed by the Bank’s governors. IDA-eligible countries that request forbearance on their official bilateral debt payments will have more financial resources to respond to the COVID-19 pandemic and fund critical, lifesaving emergency responses.
“The bilateral debt-service suspension being offered will free up crucial resources for IDA countries to fund emergency responses to COVID-19,” said Malpass. “Nations should move quickly to substantially increase the transparency of all their governments’ financial commitments. This will increase the confidence in the investment climate and encourage more beneficial debt and investment in the future.”
The Bank Group’s operational response will strengthen health systems, support the poorest households, and create supportive conditions to maintain livelihoods and jobs for those hit hardest. Country operations will deliver help to the poorest families through cash transfers and job support; maintain food security, nutrition and continuity of essential services such as clean water and education; target the most vulnerable groups, including women and forcibly displaced communities, who are most likely to be hit hard; and engage communities to support vulnerable households and foster social cohesion. The scale and speed of the Bank Group’s response is critical in helping countries mitigate the adverse impacts of this crisis and prioritize the human capital investments that can accelerate recovery.
The Bank Group’s operations in 100 countries aim to save lives, protect livelihoods, build resilience, and boost recovery by:
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Strengthening health systems, monitoring, and prevention, particularly in low-income countries and in fragile and conflict-affected situations: The Bank Group’s health response addresses emergency containment and mitigation needs for COVID-19, including strengthening countries’ health systems to treat severe cases and save lives. Establishing and supporting efforts in fragile and conflict-affected situations is a priority, given the rapidly growing number of cases in some of these countries.
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Disbursement is already underway on $20 million to Senegal and $35 million to Ghana, which includes funding to strengthen disease surveillance systems, public health laboratories, and epidemiological capacity for early detection. A $20 million IDA grant was approved for Haiti that aims to enhance testing, minimize spread through contact tracing of confirmed cases, and provide laboratory and protective equipment for health care staff.
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Scaling up social protection: The Bank Group is leveraging countries’ existing social protection systems to help families and businesses restore income, preserve livelihoods, and compensate for increasing prices and unexpected medical expenses. These safety nets will need to be augmented with safe, direct food distribution, accompanied by key information on nutrition, social distancing, and hygiene.
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In Uzbekistan, a $95 million financing package includes funding for cash support to low-income families and one-off unemployment benefits, while in Tunisia $100 million is being reallocated from the existing portfolio to help finance additional social benefits and grants to small and medium-size enterprises.
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Supporting businesses and preserving jobs: The International Finance Corporation (IFC) continues to implement its $8 billion fast-track financing facility, which aims to keep companies in business and preserve jobs. Close to 300 clients have requested support, and the facility may be oversubscribed. Building on this effort and market demand, IFC aims to provide $47 billion in financing to developing countries over 15 months. Cumulative COVID-19 related commitments under IFC’s Global Trade Finance Program, which supports small and medium-sized enterprises involved in global supply chains, have totalled 1,200 transactions across 33 countries for $1.4 billion, with 51% of this volume in low-income and fragile countries.
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Procuring medical equipment and supplies: Many developing countries import most, and in some cases all, of the medical supplies critical for fighting COVID-19, leaving them extremely vulnerable to supply disruptions and export restrictions.
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In Pakistan, the first consignments of personal protective equipment (PPE) – including masks, gloves, protective suits, gowns, coveralls, shoe covers, goggles, and face shields – have already been delivered to doctors and paramedics. This assistance is part of a larger package that includes $25 million for emergency cash transfers to poor and vulnerable households. On April 23, the World Bank approved $100 million for the Philippines to procure materials including PPE, essential medicines, test kits, and key equipment such as mechanical ventilators, cardiac monitors, and portable x-ray machines. In Iraq, the World Bank redeployed $33.6 million to help finance the supply of essential equipment and supplies and strengthen intensive care unit (ICU) capacity at public hospitals.
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The Bank Group is helping countries access critically needed supplies and equipment, for example, by identifying interested suppliers and negotiating prices and conditions.
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WTO goods barometer flashes red as COVID-19 disrupts world trade (WTO)
The volume of world merchandise trade is likely to fall precipitously in the first half of 2020 as the COVID-19 pandemic disrupts the global economy, according to the WTO Goods Trade Barometer released today. The index currently stands at 87.6, far below the baseline value of 100, suggesting a sharp contraction in world trade extending into the second quarter. This is the lowest value on record since the indicator was launched in July 2016. The Goods Trade Barometer provides real-time information on the trajectory of world merchandise trade relative to recent trends. The current reading captures the initial phases of the COVID-19 outbreak, and shows no sign of the trade decline bottoming out yet.
All of the barometer’s component indices are currently well below trend. The automotive products index (79.7) was weakest of all, due to collapsing car production and sales in major economies. The sharp decline in the forward-looking export orders index (83.3) suggests that trade weakness will persist in the short-run. Declines in the container shipping (88.5) and air freight (88.0) indices reflect weak demand for traded goods as well as supply-side constraints arising from efforts to suppress COVID-19. Only the indices for electronic components (94.0) and agricultural raw materials (95.7) show signs of stability, although they too remain below trend.
UNCTAD’s Global Merchandise Trade Nowcast, May 2020
After the slowdown registered at the end of 2018 and most of 2019, global merchandise trade values were showing signs of recovery in late 2019 and early 2020, when the global economy was hit by the measures taken to contain the COVID-19 pandemic. Based on the data available on 5 May 2020, UNCTAD nowcasts point to a fall of 3.0% in the first quarter of 2020 with respect to the previous quarter. Most of the impact of these measures, however, will affect global trade in the second quarter of the year, with an estimated quarter-on-quarter decline of 26.9%t. Global merchandise trade volumes are also nowcast to fall through the first half of the year, although at more moderate rates.
Trade financing and COVID-19: major interventions needed to backstop trade recovery, warns ICC
In a new paper issued today (pdf), ICC estimates that as much as $5 trillion in market capacity will be needed to return trade volumes close to 2019 levels in 2021. With the WTO projecting that the effects of COVID-19 could cause merchandise trade to drop by over 30% this year, ICC has cautioned that a rapid economic recovery will only be possible if sufficient credit is available to bring trade close to its pre-pandemic trend over the next 18 months. ICC has also called on policymakers to enact emergency legal reforms to avoid delays in the processing of bank-intermediated trade finance products. Building on an earlier memo to central banks and governments, the new paper urges all governments to immediately void legal requirements for trade documents to be presented in hard-copy – with banks facing difficulties maintaining the in-person staffing needed to process paper-based transactions in the context of public health measures to contain the spread of the virus.
Impact of COVID-19 in Africa (UN)
It is too early to know the full impact of COVID-19 on Africa. To date the experience has been varied. There are causes for concern, but also reasons for hope. Early estimates were pessimistic regarding the pandemic’s impact on the continent. But the relatively low numbers of COVID-19 cases reported thus far have raised hopes that African countries may be spared the worst of the pandemic. While the virus is present in all African countries, most countries have recorded fewer than 1,000 cases. The African Union acted swiftly, endorsing a joint continental strategy in February, and complementing efforts by Member States and Regional Economic Communities by providing a public health platform.
This pdf Policy Brief (1.27 MB) takes a snapshot of immediate impacts of the pandemic on health, economies, peace, security, human rights and humanitarian assistance in Africa. It outlines response measures currently being taken by African and external stakeholders and provides recommendations to protect gains in the fight against the pandemic and maximise opportunities in the recovery for a more inclusive and sustainable future as countries emerge from this crisis.
South Africa: Results from Wave 2 survey on the impact of the COVID-19 pandemic on employment and income (Stats SA)
8,1% of respondents reported that they lost their jobs or had to close their businesses and 1,4% became unemployed, according to the Wave 2 survey on the impact of the COVID-19 pandemic on employment and income in South Africa released by Statistics South Africa. According to the report, almost nine in ten (89,5%) respondents who were employed before the national lockdown remained employed during the lockdown. The survey also found a decrease in the proportion of respondents who usually derive their income from salaries and wages, as well as from own business during the lockdown. On the other hand, the results indicated an increase in the proportion of those who derived their incomes from savings and investments (increasing from 4,8% prior to the lockdown to 6,0% during the lockdown), loans from friends, family and/or businesses (increasing from 1,7% to 3,3%), and claims from UIF (increasing from 0,3% to 2,1%). The percentage of respondents who reported no income increased from 5,2% before the lockdown to 15,4% by the sixth week of national lockdown.
The survey further indicated that about a quarter of respondents (25,8%) reported that their incomes decreased during the national lockdown, while over half (56,2%) said that their income had stayed the same. Approximately one-third of respondents (33,4%) reported that COVID-19 and the national lockdown will have no impact on their ability to cover their financial obligations, while 18,7% and 18,2% of respondents indicated that it would have a major or moderate impact, respectively. [TIPS: The economy and the pandemic - Week 11 to 17 May]
When digital payment goes viral: Lessons from COVID-19’s impact on mobile money in Rwanda (Next Billion)
Since the lockdown was implemented, the growth in person-to-person (P2P) transfers, in both value and volume, has been phenomenal. After a rapid increase in the first week of lockdown, this high level has remained as the “new normal,” with slower but continued growth up to the end of April (see figure). For comparison purposes, in the first week of January, the total value of funds sent via a P2P transfer was RWF 7.2 billion ($7.6m). In the last week of April, the value sent reached RWF 40 billion (over $42m) – an increase of over 450%.
COVID-19 and African businesses: A focus on Mauritius (ATPC)
Among the respondents to the continental survey, 84 represent companies that have activities in Mauritius and which can further be divided into 38 international firms (i.e. 45%) that operate not only in Mauritius but also elsewhere in Africa and 46 national enterprises (55%) operating solely in the Mauritian market and therefore that are not exporting. In terms of size, the 84 surveyed enterprises operating in Mauritius can be divided into: 25 micro (11 international and 14 national), 27 small (9 international and 18 national), 19 medium (8 international and 11 national) and 13 large (10 international and 3 national). In other words, from the sample, the majority of SMEs (i.e. 60%) operate exclusively in Mauritius, while large companies tend to do business in Mauritius as well as in other African countries (over three-quarter of the total).
The vast majority of interviewed Mauritian businesses (78%) indicated being highly to severely impacted by COVID-19 crisis. This perception does not vary according to the type of business (i.e. goods or services) or whether the firm is exporting or not. However, larger-sized companies tend to be slightly less affected, with around two-thirds of the respondents reporting high to severe impacts on their business. Mauritian companies are on average running at 50% of normal capacity, with local firms operating at relatively lower capacity (41-50%) than those that trade (51-60%). But among exporting companies, the micro enterprises are relatively most currently underperforming (at around 31-40% of capacity utilisation) than others, while amongst non-exporting companies, micro enterprises are the ones running with relatively highest capacity (51-60%). [Mauritius free of Covid-19 cases for past three weeks]
Uganda: COVID-19 causes Shs789 billion revenue shortfall to government (Daily Monitor)
Government revenues suffered the hardest beating in April, falling below target by a whopping Shs789.8 billion. This is the latest indicator of how the coronavirus has battered Uganda’s economy since March when it broke out. According to the Ministry of Finance Performance of the Economy Report for April 2020 (pdf), all the projections were below target. In its projections, the government had hoped to receive Shs1.8 trillion but could managed to collect Shs965 billion. The government had planned to collect Shs1.5 trillion but only managed to get Shs931 billion which means that there was a shortfall of Shs547 billion, which is one of the biggest deficit in a single month in recent times. Although the government hoped to get 128 billion in grants (money that comes from donors to support the budget) it received Shs28 billion. In the report, the government says that import taxes had the biggest shortfall of up to Shs314 billion with companies in countries of origin or destination countries remaining closed for long periods in the month as countries struggled to control the virus. [Download: Performance of the economy report - April 2020]
Corona row threatens Sh61 billion Tanzania, Kenya trade (Business Daily)
In brief:
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Dr Menachem Katz: State of Nigeria’s economy amid COVID-19, policy responses and the way forward
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Kingsley Moghalu: China, Africa and the world after COVID-19
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Tony Elumelu: Covid-19 presents opportunity to reset Africa
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Ronak Gopaldas: Risks of delaying Africa’s free trade deal
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When a global virus meets local realities: Coronavirus in West Africa
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ACI and IATA outline roadmap for aviation industry restart
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World Bank Group: 100 countries get support in response to COVID-19
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World Bank Blog: Working with Africa’s apparel makers to produce personal protective equipment
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ITC survey: Tell us how your business is affected by COVID-19
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ITC Action Plan: Supporting small businesses through the COVID-19 crisis and towards the future
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WEF’s COVID-19 Risks Outlook: A preliminary mapping and its implications